Beijing passes Hong Kong national security law opposed by foreign business groups


China’s central government on Tuesday unanimously passed a National Security Law to be imposed in Hong Kong, according to multiple reports from local media, each citing unnamed sources. The measure moved forward despite widespread opposition from lawmakers and citizens in Hong Kong as well as foreign business groups and governments, notably the U.S.

Proponents say the law will bring “stability” to a city rocked by months of protests opposing Beijing’s heavy-handed influence in Hong Kong. Critics say the law—and the manner in which it was promulgated—is a death knell for the unique characteristics that made Hong Kong a thriving international hub for business.

Turnaround

Beijing has moved incredibly fast to pass the law, doing so in a little over a month. The central government announced it would impose a national security law for Hong Kong on May 21, during the first day of the Two Sessions, the annual meeting of China’s ‘rubber stamp’ parliament that announces targets and laws for the year ahead. A proposal for the law was filed on May 22 and approved by China’s parliament on May 28.

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In Hong Kong, Beijing’s announcement came as a surprise. Under Basic Law—the mini constitution that defines Hong Kong’s status as a Special Administrative Region—Hong Kong is supposed to create and implement a national security law by itself. The local government attempted to do so in 2003, but the measure was shelved after months of questioning by lawmakers and a massive street protest.

Beijing’s promulgation of the new law has sidestepped Hong Kong’s legislative process. Central authorities have even expedited their own approval process to fast-track the law. Laws need to be reviewed twice by China’s top legislative body, the NPCSC, in order to pass. The NPCSC normally meets once every two months but met twice in June—once on June 20 and again on June 28—to give the national security law its due process. The expedited timeline ensured the law would go into effect before Hong Kong’s local elections in September that could have swept pro-democracy lawmakers into office.

Official approval

According to the Basic Law, Beijing must consult Hong Kong’s leadership throughout the process of promulgation, but Hong Kong’s top lawmakers—despite supporting the law—have admitted to not knowing any details of the bill beyond those aired by Chinese state media.

Chinese President Xi Jinping appears on a large screen in Beijing showing the evening news during a session of the National People’s Congress at the Great Hall of the People on May 25, 2020. Beijing introduced the Hong Kong security law during the meeting of its ‘rubber stamp’ parliament last month.
Kevin Frayer/Getty Images

Broadly, Beijing let it be known that the national security law would target sedition, terrorism, and acts of foreign interreference—later changed to prohibit “collusion with foreign forces.”

Despite not knowing details, Hong Kong officials loyal to Beijing have openly declared support for the bill. The Hong Kong government also spent $900,000 to advertise the impending law, plastering buses, billboards, trams, and escalator walls with adverts that simply read, “National Security Law. Preserve One Country, Two Systems. Restore Stability.”

Risky business

Hong Kong’s independent judiciary is often cited as a key factor in Hong Kong’s development as a hub for international business. Opponents of the national security law say Beijing’s refusal to consult local lawmakers on the process has undermined the local courts, creating an uncertainty that poses a major risk to business.

The American Chamber of Commerce in Hong Kong warned on May 22 that Beijing’s move to “bypass the Hong Kong legislative process to enact a Hong Kong security law may jeopardize future prospects for international business.” Yet the business group later released a survey that showed 70% of respondents planned to keep their business in Hong Kong, despite the impending new law.

A protester surveys the crowd as demonstrators march through
A protester surveys the crowd of demonstrators in Hong Kong last year. Critics see Beijing’s new security law as an attempt to quiet the unrest that has rocked the city for over a year.
Aidan Marzo/SOPA Images/LightRocket via Getty Images

Businesses with major operations in mainland China have voiced support for the new law. On June 3, HSBC Asia-Pacific chief executive Peter Wong signed a petition supporting the law after former Hong Kong chief executive C.Y. Leung publicly criticized the bank for remaining quiet on the issue.

U.S. Secretary of State Mike Pompeo said Beijing’s “browbeating” of HSBC was “a cautionary tale” for other companies that rely on China’s market. The White House has been vocal in its opposition to the law and the U.S. State Department determined in May that Hong Kong can no longer be considered a separate economic entity from mainland China, due to Beijing’s promulgation of the law.

Days later, President Donald Trump ordered his administration to “revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China.” The action could result in Washington imposing tariffs—like those imposed on China during the trade war—on Hong Kong exports while limiting the city’s free access to the U.S. dollar. Another consequence: on Monday the U.S. halted exports of sensitive technology to Hong Kong.

Handover

In negotiations with Britain over the return of Hong Kong in the 1980s, Beijing pledged the city’s “way of life” would remain unchanged for 50 years. The national security law is due to go into effect on Wednesday, July 1—the 23-year anniversary of Hong Kong’s return to Chinese sovereignty.

Police have denied permission for a march in protest of the national security law to be held in Hong Kong on Wednesday. Organizers have said they will hold the demonstration anyway. Those involved could be the first in Hong Kong to be in violation of the new national security law.

More must-read international coverage from Fortune:

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  • George Floyd protests force Britain to reckon with its role in slavery, leading some companies to pay reparations
  • The insurance case that helped end the slave trade
  • George Floyd protests, coronavirus face masks pose challenges for facial recognition
  • From beekeepers to giant pension funds, activist shareholders are being silenced by the coronavirus

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