A hotel-turned-security office signals Hong Kong’s big chill
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Priceline.com, the global travel site, touts the MetroPark Hotel in Hong Kong’s bustling Causeway Bay neighborhood as combining “warm hospitality with a lovely ambiance” and putting “everything the city has to offer just outside your doorstep.” Good luck trying to book a room there.
Occupancy rates at other Hong Kong hotels remain at all-time lows amid the pandemic. But the four-star, 266-room MetroPark is sold out, indefinitely, thanks to a VVIP who checked in Wednesday. The guest: the newly-established Office for Safeguarding National Security of the Central People’s Government of the People’s Republic of China in the Hong Kong Special Administrative Region.
The office, which has commandeered the MetroPark as its headquarters, is part of a sweeping new institutional infrastructure created to oversee the Hong Kong’s enforcement of national security legislation Beijing imposed on the territory last week.
The law also establishes:
- A new Committee for Safeguarding National Security to be chaired by Hong Kong’s chief executive but include a new national security adviser appointed by Beijing and operate “under the supervision of and accountable to” central government authorities.
- A new national security department within the Hong Kong police force with wide powers to interrogate, tap phones, monitor internet activity, seize private assets, and conduct warrantless searches.
- A new section in Hong Kong’s Justice Department to prosecute national security cases with the authority to conduct trials in secret, without a jury, and detain suspects without bail.
The office’s new chief, Zheng Yanxiong has said he would enforce the new law “without infringing on the legitimate rights and interests of any individual or organization.”
But the law grants Zheng’s office, which answers directly to Beijing, broad discretionary authority in dealing with those deemed a national security threat. It is unclear how many agents will work in the 33-story MetroPark tower, but the new law states explicitly that they are to operate beyond the scrutiny of Hong Kong’s residents or local courts and “shall not be subject to inspection, search or detention” by local police.
As Dan Strumpf notes in the Wall Street Journal, the speed with which MetroPark transformed into a base for mainland intelligence is a measure of “how quickly this cosmopolitan financial center is changing” since the June 30 enactment of the law—and of Beijing’s determination to quell large and increasingly violent anti-government protests.
Prior to the law’s enactment, mainland security agents weren’t allowed to come and go openly in Hong Kong (though that didn’t stop them from abducting a Hong Kong bookseller who peddled titles embarrassing to President Xi in 2015, or seizing a mainland billionaire from the Four Seasons Hotel in 2017). Now they will operate from a skyscraper overlooking Victoria Park, a rallying site for anti-government demonstrations.
It remains unclear whether Beijing’s surprise decision to foist a national security law on the city will damage Hong Kong’s status as the region’s financial capital. The main effect of U.S. attempts to punish China by pressuring Chinese companies to delist from American exchanges will be to redirect those companies to the Hong Kong exchange, providing a bonanza to the city’s financial industry.
Rumors this week that the Trump administration might seek to limit the ability of Hong Kong banks to purchase dollars drew ridicule from analysts and global bankers. Meanwhile, China’s central bank last week announced a “Wealth Management Connect” initiative that promises a torrent of mainland money for investment in financial products in Hong Kong and Macau. Hong Kong’s stock market has gained about 7% since the security law took effect.
But there’s no denying that the breadth of the new law—and the zeal with which it’s being implemented—has spooked foreign executives here and sent a chill through local dissenters.
One source of concern is the vagueness of the four new categories of national security offenses identified by the law: secession, subversion of state power, terrorism, and collusion with a foreign country.
Another is the severity of the potential punishments. Persons found guilty of committing “grave” offenses face up to life in prison and must be incarcerated for a minimum of ten years. Companies or organizations found guilty of national security offenses are subject to fines and may have their licenses and business permits revoked. The bill even includes an extraterritorial jurisdiction clause that asserts China’s authority to punish offenses committed “outside the region by a person who is not a permanent resident of the region.”
Foreign executives contemplate a kaleidoscope of risk scenarios: Must my firm publicly declare support for the security law? What if my employees participate in a protest or post something deemed seditious on social media? If the U.S. adopts sanctions against China and my company adheres to them, will we face prosecution on national security grounds in Hong Kong?
Many privately cheered announcements by Facebook, Twitter, and Google this week that they are suspending the processing of Hong Kong government requests for user data, effectively putting up a united front against the new law. But the tech firms can afford to take such a principled stand because they are shut out of China’s mainland. For other global businesses, it’s a much harder decision.
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Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.