China moves on Hong Kong as trade war worsens

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The Hong Kong move and growing hostility between China and its major trading partners overshadowed the release of China’s economic blueprint for the year ahead at the opening session of the country’s parliament on Friday. China abandoned its GDP target for the first time to focus on employment and infrastructure spending.

Lawyers said that by drafting its own law on Hong Kong, China had effectively bypassed Hong Kong’s parliament and torn up the city’s mini-constitution, the Basic Law.

They said it marked the end of the territory’s “One Country Two Systems” model and would also undermine Hong Kong’s status as a regional financial centre.

“It is the end of Hong Kong as we know it. It is a broken promise. It is going to affect everything although it might take awhile for people to understand how that will play out,” one prominent Australian in Hong Kong said.

“There is a lot of shock. No-one anticipated this would happen so suddenly.”

Hong Kong’s stockmarket fell five per cent on Friday. Pro-democracy figures called for a revival of last year’s street protests to oppose the move.

Reuters said riot police were dispatched to Hong Kong’s financial district to stop a proposed lunchtime protest march which did not materialise. However, there were plans for “street action” on Friday evening.

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The surprise proposal, tabled with China’s National People’s Congress (NPC) on Thursday night, came after failed attempts by Beijing to get national security measures introduced by the Hong Kong government. A similar proposal in 2003 was abandoned following mass protests.

It also coincides with the extension of social distancing rules in Hong Kong, which ban large gatherings until June 4, making it easier for police to stop the mass protests that rocked the city last year.

Wang Chen, vice chairman of the Standing Committee of the National People’s Congress (NPC) said the increasing ” national security” risks in Hong Kong were harming the city’s rule of law and “threatened national sovereignty”.

“Law-based and forceful measures must be taken to prevent, stop and punish such activities,” he said on Friday.

Hong Kong’s Basic Law stipulates that any laws to stop treason, secession, sedition or subversion against the Chinese government would be enacted by the Hong Kong government.

But Mr Wang said China had run out of patience because those laws had still not been introduced 20 years after Hong Kong’s 1997 handover.

The draft legislation would allow to China to set up “agencies” in Hong Kong to safeguard national security. One source in Hong Kong said there were fears this would mean the establishment of a “secret police” operation answering directly to Beijing.

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The national security legislation would further threaten press freedom, the independence of the judiciary and scare off foreign judges serving on Hong Kong’s High Court, they said.

The Australian government is believed to be deeply concerned at China’s encroachment on Hong Kong, an important regional centre for hundreds of Australian companies.

While many of those still value Hong Kong’s importance as a huge capital market, many are skittish after the months of upheaval triggered by last year’s protests and a slowing economy.

Telstra, Commonwealth Bank, National Australia Bank, Westpac, Leighton Asia (owned by CIMIC Group) and Macquarie Group are among more than 500 Australian companies with a presence in the city.

The move is the latest in a series of aggressive foreign policy moves by China since the outbreak, including upping its presence in contested areas of the South China Sea.

Attempts by both the United States and China to deflect blame for their early handling of the crisis have soured relations between the two powers.

Donald Trump, who has suggested decoupling from China, said Washington would react “very strongly” to China’s move on Hong Kong.

Australia has also been drawn into the international pushback against China which has criticised foreign countries’ handling of the outbreak which was believed to have started in the Chinese city of Wuhan. This week, traders said some power stations in China had been told not to accept shipments of Australian coal.

“This is the end of Hong Kong,” Dennis Kwok, a pro-democracy lawmaker, told Hong Kong media. “If this move takes place, One Country, Two Systems will be officially erased.”