The Securities and Futures Commission’s guidelines prohibit crypto “gifts” designed to incentivize retail investments, which likely includes airdrops.

Hong Kong’s Securities and Futures Commission (SFC) will begin accepting applications for crypto trading platform licenses on June 1, according to a Tuesday announcement.

The regulator has agreed to allow licensed virtual asset providers to serve retail investors, provided that operators assess understanding of the risks involved, according to a report on its consultation on policy recommendations released Tuesday. The SFC opened its initial policy recommendations to public feedback in February.

The rulebook explicitly bans crypto “gifts,” designed to incentivize retail customers to invest – which likely includes airdrops.

The guidelines, some of which were changed based on public feedback, place the onus squarely on platform operators to conduct due diligence, stressing that being included in two acceptable indices is just the minimum criterion for being listed for trading.

Under the rules, crypto exchanges are to maintain at all times no less than 5,000,000 Hong Kong dollars ($640,00) in capital, and at the end of each month, submit the platform’s available and required liquid capital, a summary of bank loans, advances, credit facilities as well as a profit and loss analysis to the SFC. Approved tokens on regulated exchanges need a 12 month “track record,” according to the rules.

The document also provides more detail on allowing retail investors to use trading platforms and on conducting due diligence on token listing. All tokens listed on exchanges will need to go through due diligence procedures before being listed on exchanges even if they are already listed on another platform. They will have to go through smart contract audits by independent assessors. Platform operators will not need to appoint independent external members to token review committees so long as they adequately deal with conflicts of interests, according to the conclusions.

The SFC will allow platforms to segregate client and its own assets through an escrow arrangement or via the licensed platform setting funds aside. Client virtual assets should be fully covered by each platform’s compensation arrangement.

In response to suggestions that third-party custodians could be engaged to safe-keep client assets, the SFC replied that since there is no regulatory regime for custodians of virtual assets, allowing that would hinder their supervision and enforcement.

The SFC said it will consult a separate review on allowing derivatives, which it acknowledges are very important to institutional investors.

On implementing the Financial Action Task Force’s (FATF) travel rule for sharing information on crypto transactions between financial institutions, the SFC said that when required information cannot be submitted to the beneficiary institution right away, it will accept submission as soon as practicable after the virtual asset transfer until January 1, 2024.

The guidelines also include clarifications on anti-money laundering requirements and criteria for fining platforms for breaching them.

The revised guidelines come into force on June 1.

Related

Source: Vietnam Insider

Taiwan, Hong Kong, Tibet. Which of them would be the first to completely lose its separate and independent identity under the watch of expansionist Chinese president, Xi Jinping? Critics say while the world pays more attention to Taiwan and Hong Kong and the Ladakh stand-off against India, Tibet is his chosen prey.

President Xi has used the Covid-prompted isolation since January to create the atmosphere – in terms of an ideological justification coupled with amendments to laws and governance of autonomous regions – for the felling of Tibet.

At the two-day seventh Central Symposium on Tibet Work in Beijing three weeks ago, President Xi underlined the Communist Party of China’s policies on governing Tibet for a new era: To build a new, modern, “socialist Tibet”.

*Build a new modern socialist Tibet that is united, culturally advanced.

*Developing newTibet a major contribution to overall work of the Party and the state.

*The system of socialism with Chinese characteristics and the system of regional ethnic autonomy must be upheld to carry out work related to Tibet.

*Work related to Tibet must focus on safeguarding national unity.

*More education and guidance should be provided for the public to mobilize their participation in combating separatist activities.

*Patriotism should be incorporated into education in all schools.

*Enhance recognition of the great motherland, the Chinese nation, the Chinese culture, the CPC and socialism with Chinese characteristics by people of all ethnic groups.

*Tibetan Buddhism should be guided in adapting to the socialist society and should be developed in the Chinese context.

*Building of leadership teams at all levels, cadre teams and primary-level Party organizations
These measures are to be implemented at once. There is a new law already in place to execute these principles of annexation. Under the CPC’s supervision, the Beijing-controlled legislature of the Tibet Autonomous Region passed the “Regulations on the Establishment of a Model Area for Ethnic Unity and Progress in the Tibet Autonomous Region.” It came into force this May. It will do to Tibet what the new security law is doing to Hong Kong – erase its independent identity and turn its ethnically different people into a subjugated minority.

The Tibet legislation has four devastating provisions. First, it asks for combating separatism and “strengthening ethnic unity” in every Tibetan sphere.

Article three states that “safeguarding oneness of the motherland, strengthening ethnic unity, and taking an unambiguous stand against separatism are common responsibilities of all people from all ethnic groups”.

Article four wants to establish “model districts” of ethnic unity in the region which will “guarantee advancing the people of all ethnic groups to build a better home, create a better future, and share the glorious dream of the great rejuvenation of the Chinese nation”.
Article 46 asks organizations to give “education” to their employees who disturb ethnic unity or spread separatist ideas. If the offense is deemed too severe, “public security bureaus will handle the related organization or individuals according to law”.

The world, busy handling the Covid pandemic and focused more on the China-sponsored standoffs in Ladakh and South China Sea, is yet to grasp the CPC’s ulterior motive in passing the new law. Tibetans in exile are already crying foul, saying it will soon be used to “Sinicise” Tibet.

The word Sinicization is coined to describe the process the CPC executes to translocate indigenous mainland Chinese, the Han Chinese, to rebellious regions inhabited by people of independent cultures, thus turning the latter into minority groups in their own land. This is what happened in Xinjiang where the Uighur Muslims will soon be reduced to the status of an ineffective minority, robbed of its distinct culture, language, customs and history, forced to accept China as the motherland and adopt Chinese customs, culture and politics.

The most powerful word that in the legislation is “re-education”. It is one way of brainwashing the Tibetans, like the Uighurs before, to forget everything they owned or believed in. The Tibetans may be forced into “re-education camps” – not dissimilar to concentration camps – like the Uighurs in their millions have been forced into.

The new legislation and President Xi’s nine-point charter to turn Tibetans into Chinese puppets is an established system of the CPC to repress an independent group of people and turn them into ineffective minorities.

The provisions are complemented by several infrastructural add ons that will change the Tibetan landscape once and for all: Concentration camps will dot the peaceful HImalayan mountain sides. Billets of the PLA will throng the plains to watch the Tibetans and turn them into a docile flock. The streets of Tibetan cities, towns and villages will be crowded with hundreds of poles, the surveillance cameras lofted high to watch the people. Tons of “re-education” material – mostly related Xi Jinping’s statements and utterances, the CPC ideology, Chinese customs and language – will be dumped on the Tibetans to remember by rote. There would certainly be brutal measures, as have been implemented in Xinjiang – to control the expansion of Tibetan population.

Unlike the Uighurs, the Tibetans are a much better known “commodity” of peoples. They caught the world’s attention when they rebelled against China for their “Free Tibet” cause. The Dalai Lama exiled himself in India. Tibetans in their thousands settled in Dharamshala in India’s Himachal Pradesh. There is a Tibetan government in exile. Tibetans freely practice their religion, their culture and education the world over even today.

Yet, with the world sympathy backing them, they may find themselves still feeble to stop President Xi’s sweeping onslaught as and when it comes. The Dalai Lama, now past 84, is old and keeps to his Indian “home”. He has sought the intervention of every US President, every European head of state, but in vain. China has shown neither consideration for the Tibetan cause nor remorse for what it proposes to do with the Tibetan region.

Yes, the Trump administration did impose visa restrictions on Chinese officials as a counter to restrictions of Americans travelling to Tibet. But he is engrossed more in his re-election. Tibetans in exile regularly hold public demonstrations against the impending Chinese aggression in Europe and Australia, but they do not eke out anything more than sympathy. Some Tibetan monks have self-immolated themselves too.

Bhutan and Nepal, immediate Tibetan neighbours, are being pressurised by China to stop sympathising with the Tibetans and refuse to shelter them in the future. They are also being asked to restrict the hitherto free movement of exiled Tibetans in these countries. China is blackmailing other countries whose financial debt it owns to stop supporting the Tibetan cause.

The question now is whether President Xi will launch his latest exercise in repression in Tibet right away or will wait for the melee over the taking over of a new Dalai Lama. There is a hitch, however, with the latter. China has said long ago that it would want to control the next Dalai Lama. It probably already has a strategy to anoint a new Dalai Lama whenever necessary. But the current Dalai Lama has often said his successor may reincarnated outside of Tibet. That will make it for President Xi to choose and control a successor. This can only further confirm his resolve to move into Tibet as quickly as possible.

An enslaved Tibet is what President Xi craves for to expand his dubious Border Rods Initiative that fronts his expansionist plans. His goal is to lay a road on which he can move freely across the Himalayas into west Asia and then to Europe. That is his expansionist route.

Of late, even as China populates Xinjiang with infrastructure, it is also executing plans of upgrading roads and other infrastructures in the Tibetan region. There does exist the Sino-Nepal Friendship bridge, north of Kathmandu, along the treacherous mountain road between Tibet and Nepal. The other key road is the one between Pakistan and Xinjiang. And then the controversial G219 highway that connects Xinjiang with Tibet, passing through Aksai Chin region of India’s Ladakh. The road network coming up on the Chinese side of the Doklam area bordering south-eastern Tibet is also there.

The Tibetan Autonomous Region that exists today is already a truncated territory that originally belonged to the Tibetans. China carved out several provinces out of it, including Yunnan, Gansu, Sichuan and Qinghai. There is nothing Tibetan in these provinces. That is the fate that awaits the remaining portion of the Tibetan homeland. It awaits total assimilation.

TWEETS

*President Xi’s enslavement policy comes out clearly when he says that all ethnic groups in Tibet must realise that the future is of a Chinese nation and promote a Chinese community of integrated ethnic groups.

*The United States holds a Damocles’ sword over China in the form of its Tibet Policy and Support Act that the selection of the new Dalai Lama is an internal Tibetan matter and no Chinese can interfere in it. It is enough to launch a Cold War.

*Tibet is roughly a quarter of China, but Tibetans are under half a per cent of total population. That disparity makes them vulnerable to demographic submersion. Already they don’t have democratic rights anywhere in China and are minorities in their own land now redesigned as Chinese provinces.

Contributed by Amitabh Dixit. Freelance Journalist and Conference Producer. APAC and Middle East region. Kuala lumpur, Malaysia

TikTok has been pulled from Apple’s App Store and the Google Play Store in Hong Kong, days after a sweeping new national security law was introduced in the city.

Users who had already downloaded the popular short video app can no longer use it.

TikTok, which is owned by Beijing-based ByteDance, flagged earlier this week it would be exiting Hong Kong “in light of recent events,” referencing the national security law passed at the end of June.

Under the new law, people found guilty of secession or subversion can be punished with a life sentence in prison. But the law also gives authorities powers to police online content including requiring technology platforms and internet service providers to delete content that falls foul of the legislation, or face fines.

Major U.S. organizations including Twitter and Facebook said they were pausing requests for user data from Hong Kong law enforcement while they evaluate what this law means.

Hong Kong TikTok users were greeted with the following message when they opened the app: “Thank you for the time you’ve spent on TikTok and giving us the the opportunity to bring a little bit of joy into your life!”

“We regret to inform you that we have discontinued operating TikTok in Hong Kong,” it continued.

TikTok has come under fire from Washington which has accused it of censoring content on its platform that may be sensitive to Beijing. The app has denied that it does this.

The U.S. is also concerned that TikTok’s data could be accessed by China. Secretary of State Mike Pompeo said earlier this week the Trump administration is “looking at” banning TikTok and other Chinese social media apps.

TikTok said it has “never provided user data to the Chinese government, nor would we do so if asked.”

The social media app has also come under fire in India where it was recently blocked along with 58 other Chinese apps. The Indian government said it took the action to ban the apps, alleging “they are engaged in activities which is prejudicial to sovereignty and integrity of India, defense of India, security of state and public order.” Meanwhile, tensions between India and China have been rising over their disputed border in the Western Himalayas and a clash earlier this month left 20 Indian soldiers dead.

TikTok has been trying to distance itself from its Chinese parent. It hired an American CEO in the form of Kevin Mayer, a former Disney executive. His priority was seen as rebuilding trust with regulators.

And on Friday, ByteDance told CNBC it is “evaluating changes to the corporate structure of its TikTok business,” but did not add further details as to what exactly that would entail.

ByteDance operates a version of TikTok in China called Douyin but a spokesperson said that the company “does not have plans” to make the app available on Hong Kong app stores. Douyin has local Hong Kong users who downloaded the app in mainland China, the spokesperson added.

@ CNBC

China’s new national security legislation for Hong Kong was written and passed behind closed doors, without the consultation of the city’s local government or legislature. It reportedly came into force on June 30, potentially rewriting the city’s legal system — despite the fact the overwhelming majority of residents have no idea of what precisely it will entail.

According to reports in Communist Party-controlled media, the law is expected to criminalize offenses such as secession, subversion against the central Chinese government, terrorism, and colluding with foreign forces. But hours after its reported passage, details remain vague, capping a particularly opaque process that has left analysts and activists guessing.

Speaking at a weekly press conference Tuesday morning, the city’s leader Carrie Lam initially refused to answer questions about the law, saying it was “inappropriate for me to comment.” Hours later she later defended it in a video speech to the United Nations Human Rights Council in Geneva, saying it will restore stability and prosperity to Hong Kong.

Her administration appears to have been cut almost completely out of the process — yet it has not stopped them predicting the law will only impact a tiny minority of individuals in the city, and won’t harm political freedoms and judicial autonomy.

In a statement last week, Lam said the legislation would be “in line with the rule of law” and the “rights and freedoms which are applicable in Hong Kong.”

Some aren’t taking any chances, however. Multiple opposition political parties had already disbanded by Tuesday afternoon, with members fearing prosecution under the new offenses of subversion or secession, which are applied broadly in China to crush anti-government dissent.

Chilling effect

Prominent activist Joshua Wong announced soon after the bill’s reported passage that he was leaving Demosisto, the political party he co-founded in 2016, but would continue to campaign independently. Other leading figures in the party, including former lawmaker Nathan Law and activist Agnes Chow, soon followed suit, and what was left of the party leadership eventually decided to cease operations.

Chow was barred from standing for election in 2018 over her membership in Demosisto, which had previously called for Hong Kongers to be allowed to decide their own future, including voting on a potential break from China.

Such talk could be illegal under the new law, if it follows the model of similar legislation in China as expected. Wong, Law and Chow have also been heavily involved in lobbying the international community to pressure Beijing over Hong Kong, which many expect to be classed as “colluding with foreign forces.”

Two other political parties, the Hong Kong National Front and Studentlocalism, also said they were ceasing operations in the city, though both groups — fringe pro-independence parties — said they would continue to work overseas.

Some pro-independence figures are known to have fled Hong Kong in recent months, fearing arrest in connection with last year’s often violent anti-government protests, or the upcoming law. On Sunday, Wayne Chan, convenor of the Hong Kong Independence Union, confirmed he had jumped bail and left the city. He had been facing protest-related charges.

“After the national security law is passed, we can anticipate that a large group of political figures will be arrested, and may be imprisoned immediately without bail,” Chan wrote on Facebook.
More subtle signs of a chilling effect were also in evidence Tuesday, as shops and businesses which had previously been highly visible supporters of the city’s protest movement began removing slogans and imagery that could be deemed illegal.
Legal limbo

While pro-government groups and politicians welcomed the passage of the law — former leader C.Y. Leung offered bounties for future prosecutions — there was great frustration among many Hong Kongers over the continued lack of detail, and a feeling of almost being in limbo, knowing the law has been passed but not what that means.

In a letter to the city’s government Monday, Hong Kong Bar Association chairman Philip Dykes said the secrecy of the law was “genuinely extraordinary” and called on the government to make clear how citizens’ minimum rights will be guaranteed.

The Global Times, a nationalist Chinese state-backed tabloid, said the law was already having its effect, pointing to the resignation of Wong and others. Stanley Ng, a Hong Kong delegate to China’s National People’s Congress, appeared to endorse this view, saying in a Facebook video that part of the reason for the secrecy around the law was to enable “intimidation and deterrence.”

Such uncertainty will likely persist beyond Tuesday night, when the bill is finally expected to be made public and gazetted. Regardless of how the offenses are described or the punishments laid down, many will be watching to see how strenuously police and prosecutors enforce them.

A key test will come on Wednesday, when Hong Kong marks the 23rd anniversary of the city’s handover to Chinese rule. The day has traditionally seen an anti-government march through the city, but the protest has been banned this year.

Organizers say they will go ahead anyway. Yet how many people join them, and what offenses — if any — those people are deemed to be committing if they do, remains to be seen.

@ CNN

‘If anyone can get to the bottom of it, Hong Kong can,’ doctor says.

After 23 days without a locally transmitted coronavirus case and with much of the city returning to normal life, health officials here are investigating how a 66-year-old woman and her granddaughter tested positive.

The test results, announced Wednesday, illustrate the continuing challenges for authorities world-wide in eliminating the disease even in places that were successful with containment earlier on.

Seven close contacts of the woman have shown symptoms and have been sent to the hospital for testing, officials said Wednesday. The woman has no recent history of travel and hasn’t had contact with known carriers of the disease, officials said. They added that they plan to test residents of their apartment buildings.

The positive results drew a collective sigh from Hong Kongers who have been slowly resuming their normal life routines. Some government health advisers have set a mark of 28 days—or two quarantine periods without a local infection—as a key milestone toward victory over the coronavirus. The two new infections bring the total recorded in the city of about 7.5 million residents to 1,051, with four deaths—which is still relatively low.

The cases “show that there is an invisible transmission link in the community because we haven’t yet found an obvious source,” said Dr. Chuang Shuk-kwan from the city’s Centre for Health Protection. “Of course we can’t rule out that there might be more cases and even community outbreaks,” she said.

While details are still murky, one possibility is that the woman contracted Covid-19 from an asymptomatic carrier, said Dr. David Owens, founder of Hong Kong medical practice OT&P Healthcare.

“We are going to see episodic cases” in Hong Kong even as the government works to contain the coronavirus, he said.

“If anyone can get to the bottom of it, Hong Kong can,” he said, referring to the origin of the new infections.

The virus spreads through “respiratory droplets” when an infected person speaks, coughs or sneezes, according to the WHO.

Health experts say measures that have so far kept the disease at bay in the city without imposing a strict lockdown include the near-universal wearing of masks, tracing the contacts of virus carriers and strict quarantining.

The city contained an initial outbreak brought by travelers from Wuhan, China, where the pandemic first emerged late last year, and then a second wave as travelers mostly from the West carried it back to the city, sparking clusters linked to bars and gyms. The government closed some of those facilities in February and introduced social distancing measures, though it has begun to relax restrictions.

In recent weeks, as days passed with no new infections reported, people headed out more to beaches and shopping malls. They are also socializing in groups again—limited to eight at a time—in bars and restaurants. Officials have been discussing how and when schools, which have been closed since late January, should reopen. Some older students are due to return to classes later this month, while international schools are allowed to reopen next week.

The new infections in Hong Kong come as countries around the world struggle to keep the pandemic at bay, in some cases even after strict efforts seemed to initially contain them.

South Korea, which was hit hard earlier this year but beat back an initial wave of infections, has pushed back the reopening of schools by a week following the discovery of a new cluster of cases connected to nightclubs and bars in Seoul.

In mainland China, seven provinces have reported new locally transmitted cases over the past two weeks, according to the country’s National Health Commission. Authorities in the city of Wuhan fired a local official after six new Covid-19 cases were confirmed last weekend in a housing complex under his jurisdiction. They were the first fresh cases recorded in Wuhan in about a month.

Globally, confirmed cases surpassed 4.26 million Wednesday, with about 1.37 million in the U.S., according to data from Johns Hopkins University. Deaths have passed 291,000 world-wide, with about a third in the U.S.

By WSJ

The U.S President Donald Trump on Friday announced he would begin taking steps to revoke Hong Kong’s favored trade status with the United States, in response to a controversial new security law passed by China’s parliament that would effectively bar political protest in Hong Kong.

“I am directing my administration to begin the process of eliminating policy exemptions that give Hong Kong different and special treatment,” Trump said during a Rose Garden event at the White House.

“My announcement today will affect the full range of agreements that we have with Hong Kong, from our extradition treaty, to our export controls and technologies,” Trump said. “We will take action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China.”

The shift in Hong Kong’s status immediately jeopardizes several aspects of the former British colony’s relationship with the United States, which has so far meant that Hong Kong has been spared punishing tariffs that are a hallmark of Trump’s trade war with Beijing.

But Trump did not provide details about precisely which steps would be taken or in what order, and a White House spokesman declined to comment when CNBC asked for additional clarification on the expected moves.

Trump also said he was ready to take action to mandate that Chinese and other foreign companies listed on U.S. financial exchanges abide by American accounting and audit standards.

The issue has long been a source of frustration among Washington policymakers, several of whom have introduced legislation that would bar trading in any shares where the company’s auditor hasn’t faced an inspection from the Public Company Accounting Oversight Board for three consecutive years. 

Trump has not said whether he will sign the bill, which is currently making its way through Congress.

But the president did say Friday that he would instruct his “presidential working group on financial markets to study the different practices of Chinese companies listed on the U.S. financial markets, with a goal of protecting American investors.” 

“Investment firms should not be subjecting their clients to the hidden and undue risks associated with financing Chinese companies that do not play by the same rules,” said Trump, adding that “Americans are entitled to fairness and transparency.”

A White House spokesman did not immediately respond to a question from CNBC about whether Trump would sign the legislation if it gets to his desk.

During the same address, Trump also announced that the United States would be terminating its relationship with the World Health Organization, a move likely to draw criticism from public health experts and U.S. allies.

The president said the organization had failed to make “the requested and greatly needed reforms,” and he blamed the global health group for a lack of “transparency.”  

Trump did not take any questions from reporters after he finished speaking.

Financial markets reacted positively to Trump’s announcement, reflecting overall relief that he did not announce some of the more drastic and punitive measures that analysts and investors had feared he might. These included additional tariffs on Chinese products, broad sanctions and a withdrawal from the U.S.-China trade deal. 

For weeks, the Trump administration has been ratcheting up pressure on Beijing over its alleged cover-up of early coronavirus cases. Trump has publicly blamed China for the virus itself and for its outsized severity in the United States.

Beijing, in turn, has suggested the virus originated in U.S. service members, a claim widely rejected by international health experts. 

In the past week, however, the pressure from the United States has taken a more serious turn in response to a proposed Chinese security law that threatens the long-standing semi-autonomy of Hong Kong. The law, formally approved Thursday by China’s People’s Congress, is expected to criminalize most forms of political protest under blanket bans on “sedition” and “subversion.”  

On Wednesday, Secretary of State Mike Pompeo delivered a report to Congress declaring that Hong Kong was no longer autonomous from China. 

“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” Pompeo said in a statement accompanying the report. 

Even as relations have grown more hostile, Trump has been reluctant to take action on China that could tip the strained bilateral relationship into an outright confrontation.

As president, Trump is acutely aware of the United States’ interdependence with China as a market for American exports and a supplier of manufactured goods. He also still believes that his “phase one” trade deal, signed in January, can and will be seen as one of the high points of his presidency, fulfilling a key campaign promise he made in 2016. 

Likewise, since the coronavirus arrived in the U.S., Trump has shown little appetite for signing any legislation he thinks could hinder the economic recovery. 

@ CNBC

Extension to visa rights promised if Beijing does not row back on national security law.

The UK government has opened a path to citizenship for more than 300,000 Hong Kong residents in a bold riposte to China’s security crackdown on its former colony.

Dominic Raab, foreign secretary, has pledged to extend visa rights for British National (Overseas) passport holders and facilitate their path to British citizenship unless Beijing rows back from plans to impose national security laws on Hong Kong.

The offer is a striking move from a government that is committed to restricting immigration and shut the door to free entry to the UK for EU citizens after voting through its Brexit deal last year.

It came after China formally approved a plan to impose national security legislation on Hong Kong, following increasing frustration in Beijing at the city’s failure to clamp down on pro-democracy protests. It will mark the first time the country has introduced a law that imposes criminal penalties into Hong Kong’s legal code, bypassing the city’s legislature.

About 315,000 people hold valid BNO passports, a document issued to Hong Kong residents born before the handover of the territory from UK to Chinese sovereignty in 1997.

Those residents who registered for BNO status before the handover have the right to consular assistance but they are not British citizens and only have the right to come to the UK for six months.

Speaking on Thursday, Mr Raab announced this period would be extended to 12 months and “provide a pathway to future citizenship”. UK government officials said it was “the right thing to do”.

Mr Raab said: “If China continues down this path and implements this national security legislation, we will . . . allow those BNO passport holders to come to the UK and to apply to work and study for extendable periods of 12 months and that would itself provide a pathway to future citizenship.”

Some called for him to grant automatic citizenship to the BNOs. Tom Tugendhat, chairman of the Commons foreign affairs select committee, welcomed the pledge and called for the government “to go further and recognise the full rights of British nationals”. 

The governments of the US, UK, Australia and Canada released a rare joint statement on Thursday condemning Beijing’s latest move, saying it would undermine the “one country, two systems” framework put in place after the 1997 handover.

That framework laid out how Britain would end its century-and-a-half long rule over Hong Kong when its lease terminated and has guaranteed the territory a level of autonomy.

The agreement also ensured that Hong Kong enjoyed rights not seen on the Chinese mainland.

In 1972, a previous Conservative government made a similar gesture when it accepted more than 28,000 Ugandan Asians with British passports after they were banished by the Ugandan President Idi Amin — less than a tenth of the number of Hong Kong residents who would qualify under the new proposals.

A Downing Street spokesman said: “We are deeply concerned about China’s legislation related to national security in Hong Kong. We have been very clear that the security legislation risks undermining the principle of one country, two systems.

“We are in close contact with our international partners on this and the foreign secretary spoke to US secretary [of state Mike] Pompeo last night.”

The spokesman added: “The steps taken by the Chinese government place the Joint Declaration under direct threat and do undermine Hong Kong’s high degree of autonomy.”

@ Financial Times

The U.S State Department announcement comes as President Trump weighs hard measures against China, which is expected to approve a national security law on Hong Kong on Thursday.

Secretary of State Mike Pompeo announced on Wednesday that the State Department no longer considered Hong Kong to have significant autonomy under Chinese rule, a move that indicated the Trump administration was likely to end some or all of the United States government’s special trade and economic relations with the territory in southern China.

Mr. Pompeo’s action came just hours before China was expected to pass a national security law that would allow Chinese security agencies to take broad actions limiting the liberties of Hong Kong residents, many of whom have protested the proposed law and clashed with police officers.

The United States and China appear to be on a collision course over the future of Hong Kong, a center of global capitalism and symbol of resistance to the Chinese Communist Party. Relations between the two nations are at their worst in decades, and disputes have flared over trade, national security and the origins of the coronavirus.

President Trump’s foreign policy aides are discussing actions that would be among the harshest punishments taken against China over the past three years. The actions could have far-reaching consequences for global commerce and transform how Chinese and foreign companies operate, as well as upend the lives of many of Hong Kong’s 7.5 million residents, who have been under enormous pressure from years of political crackdowns.

Hong Kong has been a financial and commercial hub since late last century. China relies on the bustling city of ports and skyscrapers on the edge of the South China Sea for transactions with other countries. Many Chinese and foreign firms use Hong Kong as an international or regional base, and members of elite Communist Party families or executives with ties to them do business and own property there. Many companies also raise capital by listing on the Hong Kong Stock Exchange.

Mr. Pompeo has said the security law would be a “death knell” for Hong Kong, which has had liberties under a semiautonomous system of governance that do not exist in mainland China, including freedoms of speech, the press and assembly, as well as an independent judiciary.

In recent days, protesters in Hong Kong have taken to the streets to voice outrage at the proposed law, only to be beaten back by police officers clad in riot gear and firing tear gas.

American diplomats said they called on Wednesday for a virtual meeting of the United Nations Security Council to discuss Hong Kong, but China blocked the move.

If it proceeds with punishments, the Trump administration could impose the same tariffs on exports from Hong Kong that it puts on goods from mainland China, said officials with knowledge of the discussions. Other trade restrictions that apply to China, including bans or limits on what American companies can sell to Chinese companies because of national security or human rights concerns, may be imposed on Hong Kong as well.

Some of Mr. Trump’s advisers are discussing visa bans on Chinese officials who enact the law.

“I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997,” Mr. Pompeo said Wednesday. “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.”

“Hong Kong and its dynamic, enterprising and free people have flourished for decades as a bastion of liberty, and this decision gives me no pleasure,” he added. “But sound policymaking requires a recognition of reality. While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself.”

Mr. Pompeo is the most vocal of a group of national security officials who advocate tough policies on China. Some of Mr. Trump’s top economic advisers prefer a more conciliatory approach to dealing with China, the world’s second-largest economy, and will likely urge caution. American corporate executives have said the administration should act with care.

Mr. Trump has rarely made any strong comments on the situation in Hong Kong, and he has praised Xi Jinping, the president of China, throughout his time in office, even insisting that they have a strong friendship. Mr. Trump has also been eager to promote a trade agreement he signed with China in January as an economic win for the United States. He wants to avoid jeopardizing that deal, even though Beijing is not meeting purchasing quotas mandated by it.

The president is keen to boost the U.S. economy, which has fallen into recession during the pandemic, ahead of the November presidential election.

But on Tuesday, when asked by reporters about China’s proposed national security law, Mr. Trump said he planned to act this week. “I think you’ll find it very interesting,” he said, adding that his response would come “very powerfully.”

The certification by the State Department is a recommendation on policy and does not itself catalyze actions immediately. American officials, including Mr. Trump, will now weigh what steps to take.

The United States is likely to choose specific areas in which to break off cooperation first with Hong Kong, including trade and law enforcement.

The president would need to issue an executive order to end the special relationship entirely, according to people familiar with the discussions. One possibility is for the United States to take piecemeal action over the next year before ending the special status if China does not change course, they said.

“We’re not hopeful that Beijing will reverse itself, but that is an option,” David R. Stilwell, assistant secretary of state for East Asia and the Pacific, said of the Chinese government’s push on the national security law.

Britain handed Hong Kong to China in 1997, after the two nations reached an agreement on the colony 13 years earlier. In 1992, the United States passed a law that said the American government would treat a Beijing-ruled Hong Kong under the same conditions it had applied to the British colony.

In November, after months of pro-democracy protests and crackdowns by the police in Hong Kong, Mr. Trump signed into law a bipartisan bill requiring the State Department to provide an annual certification to Congress to help determine whether to continue the special relationship with Hong Kong.

That certification depends on a judgment by department officials of whether China was ceding enough autonomy to Hong Kong.

Susan Shirk, a former State Department official now at the University of California, San Diego, said that given the mandate from Congress, Mr. Pompeo had no choice on his assessment “once Beijing blatantly overruled the Hong Kong legislature with a new law that integrates Hong Kong” into the Chinese security state.

“Of course, the big losers will be the people of Hong Kong, not the politicians in Beijing or Washington who produced this predicament,” she added.

Mr. Pompeo’s announcement is certain to draw condemnation from Beijing, where the government is holding its annual legislative session this week. Officials announced details of the proposed law Friday, at the start of the session.

“If anyone insists on harming China’s interests, China is determined to take all necessary countermeasures,” Zhao Lijian, a Chinese Foreign Ministry spokesman, said at a news conference earlier Wednesday in Beijing. “The national security law for Hong Kong is purely China’s internal affair that allows no foreign interference.”

Some American business executives are advising the Trump administration to tread carefully on changing the relationship with Hong Kong.

The U.S. Chamber of Commerce, which represents American companies in Hong Kong, said in a statement Tuesday that it was “deeply concerned” about the proposed national security law. It asked the Chinese government to “peacefully de-escalate” the situation and preserve the semi-autonomy of the “one country, two systems” framework that, under the 1984 treaty between Beijing and London, is supposed to exist until 2047.

“We likewise urge the Trump administration to continue to prioritize the maintenance of a positive and constructive relationship between the United States and Hong Kong,” the group said.

It added that “far-reaching changes” to Hong Kong’s status “in economic and trade matters would have serious implications for Hong Kong and for U.S. business, particularly those with business operations located there who exercise a positive influence in favor of Hong Kong’s core values.”

Julian Ku, a law professor at Hofstra University, said the Trump administration had flexibility on which options to exercise.

“I would expect the president would act on some agreements, but not on others,” Mr. Ku said. For example, he noted, the administration might terminate the extradition treaty with Hong Kong, since the national security law makes fair adjudication less credible, or it could put Hong Kong under the same controls that limit American technology exports to China.

“But he might leave the visa waiver treatment that Hong Kong residents currently receive when coming to the U.S. alone for now,” he said.

Mark Williams, the chief Asia economist at Capital Economics, said Mr. Trump’s tariffs on imports from mainland China — which are paid by American companies — would not automatically extend to Hong Kong despite the new State Department assessment. But the cumulative effect of various actions would erode Hong Kong’s status as an international business center, Mr. Williams wrote in a note to clients.

“The irony is that in punishing Hong Kong, we wind up martyring it rather than saving it,” said Daniel Russel, an assistant secretary of state for East Asia and the Pacific in the Obama administration. As for diplomacy between Washington and Beijing, he said: “The brake pads in the relationship have worn very, very thin. And it’s hard to see this confrontation going anywhere except escalation.”

In Congress, Senator Marco Rubio, Republican of Florida and a sponsor of the bill on Hong Kong that passed last fall, cheered Mr. Pompeo’s announcement.

“For years, the Chinese government and Communist Party have walked back on its commitment to ensure autonomy and freedom for Hong Kong,” Mr. Rubio said. “We cannot let Beijing profit from breaking the Sino-British Joint Declaration and trying to crush the spirit of Hong Kong’s people.”

On another front, the State Department plans to expand the list of Chinese state-run news organizations operating in the United States on which it has imposed new restrictions, including foreign employee quotas, American officials said. And the agency is watching to see if China will retaliate against American journalists in Hong Kong for the administration’s most recent round of visa restrictions against Chinese journalists. In March, China expelled American journalists from three news organizations, including The New York Times.

Reporting by By Edward Wong.
Michael Crowley and Ana Swanson contributed reporting from Washington, and Keith Bradsher from Beijing. @ New York Times

Hong Kong police fired tear gas and water cannon to disperse thousands protesting on Sunday against Beijing’s plan to directly impose national security laws on the city, signalling a return to mass protests that roiled the financial hub last year.

Crowds thronged the bustling shopping district of Causeway Bay, where echoes of “Hong Kong independence, the only way out,” and other slogans rang through the streets.

A protester wearing a black hoodie and surgical mask held a banner that said: “I stand for Hong Kong’s independence.”

Calls for independence are anathema to China’s Communist Party leaders, who say such a notion for the Chinese-ruled city is a “red line” that cannot be crossed.

The proposed new national security framework stresses Beijing’s intent “to prevent, stop and punish” such acts.

The protest – the first since Beijing proposed national security laws on Thursday – poses a fresh challenge to Chinese President Xi Jinping as authorities struggle to tame public opposition to China’s tightening grip over the global financial hub.

“I am worried that after the implementation of the national security law, they will go after those being charged before and the police will be further out of control,” said Twinnie, 16, a secondary school student who declined to give her last name.

“I am afraid of being arrested but I still need to come out and protest for the future of Hong Kong.”

The demonstrations come amid concerns over the fate of the “one country, two systems” formula that has governed Hong Kong since the former British colony’s return to Chinese rule in 1997. The arrangement guarantees the city broad freedoms not seen on the mainland, including a free press and independent judiciary.

Sunday’s rally, the largest since COVID-19 lockdowns began, was initially organised against a national anthem bill but the proposed national security laws sparked calls for more people to take to the streets.

The city government sought on Sunday to reassure the public and foreign investors over the security laws, that have sent a chill through financial markets and drawn a rebuke from foreign governments, human rights groups and some business lobbies.

Police conducted stop-and-search operations in Causeway Bay and warned people not to violate a ban on gatherings of more than eight, imposed to curb the spread of coronavirus.

They said protesters hurled umbrellas, water bottles and other objects at them and they responded with tear gas “to stop the violent acts of rioters.”

Some protesters used bins, traffic cones and other debris to set up road blocks, leaving key thoroughfares deserted. Police said more than 40 people were arrested.

Many shops and other businesses shuttered early.

The chaotic scenes evoked memories of sometimes violent anti-government protests that roiled the city last year, drawing as many as two million people to one protest alone.

China has dismissed other countries’ complaints about the proposed legislation as “meddling,” saying the proposed laws will not harm Hong Kong autonomy or foreign investors.

“RED LINE”

In a bold challenge to the mainland authorities, a small group of democracy activists protested outside Beijing’s main representative office in the city, chanting, “National security law is destroying two systems.”

“It’s a moveable red line. In future they can arrest, lock up and silence anyone they want in the name of national security. We have to resist it,” protester Avery Ng of the League for Social Democrats told Reuters.

Nearly 200 political figures from around the world said in a statement the proposed laws were a “comprehensive assault on the city’s autonomy, rule of law and fundamental freedoms”.

Hong Kong has increasingly become a pawn in deteriorating relations between Washington and Beijing, and observers will be watching for any signs that the broader community is growing resigned to greater Chinese control or if activists are gearing up for a fresh wave of unrest.

The Chinese government’s top diplomat said the proposed legislation would target a narrow category of acts and would have no impact on the city’s freedoms nor the interests of foreign firms.

Last year’s anti-government protests plunged the city into its biggest political crisis in decades, battered the economy and posed the gravest popular challenge to President Xi since he came to power in 2012.

Reporting by James Pomfret, Jessie Pang, Donny Kwok, Twinnie Siu, Pak Yiu; Writing by Anne Marie Roantree; Editing by William Mallard and Stephen Coates

@ Reuters

Stop debating Beijing’s intentions and take Xi Jinping both seriously and literally.

Can we pay the Chinese Communist Party the compliment of acknowledging that it means what it says and knows what it wants? That may be the key to understanding Beijing’s strategic ambitions in the coming decades.

A long-standing trope in the U.S. debate on that subject is that China itself doesn’t know what it seeks to achieve, that its leaders haven’t yet worked out how far Beijing’s influence should reach. Yet there is a growing body of evidence, assembled and interpreted by talented China experts, that the Chinese government is indeed aiming for global power and perhaps global primacy over the next generation — that it seeks to upend the American-led international system and create at least a competing, quasi-world order of its own.

It doesn’t take unparalleled powers of deduction to reach this conclusion. Top Chinese officials and members of the country’s foreign policy community are becoming increasingly explicit in saying so themselves.

President Xi Jinping more than hinted at this goal in his landmark address to the 19th Party Congress in October 2017. That speech represents one of the most authoritative statements of the party’s policy and aims; it reflects Xi’s understanding of what China has accomplished under Communist rule and how it must advance in the future.

Xi declared that China “has stood up, grown rich, and is becoming strong,” and that it was now “blazing a new trail for other developing countries” and offering “Chinese wisdom and a Chinese approach to solving the problems facing mankind.” By 2049, Xi promised, China would “become a global leader in terms of composite national strength and international influence” and would build a “stable international order” in which China’s “national rejuvenation” could be fully achieved.

This was the statement of a leader who sees his country not just participating in global affairs but setting the terms, and it testifies to two core themes in China’s foreign policy discourse.

The first is a deeply skeptical view of the existing international system. Chinese leaders recognize that the global trade regime has been indispensable to the country’s economic and military rise. Yet when they look at the key features of the world Washington and its allies have made, they see mostly threats.

In their view, American alliances do not preserve peace and stability; they stunt China’s potential and prevent Asian nations from giving Beijing its due. Seen through that lens, promoting democracy and human rights is neither moral nor benign, but propaganda supporting a dangerous doctrine that threatens to delegitimize the Communist government and energize its domestic enemies. U.S.-led international institutions appear as tools for imposing America’s will on weaker states. The Communist Party recognizes that the liberal international order has brought benefits, writes Nadege Rolland, a senior fellow at the National Bureau of Asian Research, but “the party abhors and dreads” the principles on which it is based.

The second theme is that the international order must change — not a little, but a lot — for China to become fully prosperous and secure. Chinese leaders have, understandably, been somewhat opaque in describing the world they want, but the outlines are becoming easier to discern.

If one studies the statements of Xi and other top officials, China expert Liza Tobin concludes, what emerges is a vision in which “a global network of partnerships centered on China would replace the U.S. system of treaty alliances” and the world would view Chinese authoritarianism as preferable to Western democracy.

Based on a similar analysis, Rolland agrees that China has “a yearning for partial hegemony,” a loose dominance over large swaths of the global south. When it comes to global governance, still other examinations show, Beijing wants a system in which international institutions buttress rather than batter repressive regimes. Meanwhile, Chinese strategists and academics are talking openly about building a “new China-centric global economic order.”

There is little indication, in any of this, that Beijing’s strategic horizon is limited to the Western Pacific or even Asia. Xi’s invocation of a “community with a shared future for humanity” indicates a global tableau for Chinese influence. One hardly has to read between the lines to understand that this agenda will require fundamentally resetting the current geopolitical balance. As Xi remarked several years ago, China must work resolutely toward “a future where we will win the initiative and have the dominant position.”

Of course, there’s not need to take literally everything national leaders say, or even everything that makes it into official speeches. In Beijing’s case, however, Chinese leaders are actually saying less than what the country is doing.

Whether it is the naval shipbuilding program that is churning out vessels at astonishing rate; the drive to control existing international organizations and build new ones; the projection of military power in the Arctic, the Indian Ocean and points beyond; the quest to dominate the world’s high-tech industries; the ever-more systematic efforts to support authoritarian regimes and weaken democratic institutions; or the Belt and Road Initiative that encompasses multiple continents, China is hardly acting like a country that lacks a grand geopolitical design.

As with so many aspects of the U.S.-China competition, there is a Cold War parallel. During the 1970s, some leading American Sovietologists insisted that Moscow was becoming a satisfied, status quo power. Yet that claim required ignoring what Soviet leaders said about detente and peaceful coexistence — that it was a way of ensuring the triumph of socialism without war — as well as their efforts to build military superiority and positions of strength in the Third World. The warning signs were evident then, as they are today.

China probably doesn’t have a step-by-step checklist for achieving global primacy, any more than the Soviet Union did in the 1970s. Chinese leaders aren’t insensitive to costs and obstacles: Xi may ritualistically restate the importance of unifying the Chinese nation, but that doesn’t mean he’s hell-bent on war over Taiwan.

Beijing may not even have decided which of its two paths to global influence is preferable: Establishing dominance in the Western Pacific and then expanding outward from there, or outflanking the U.S. position in the region by building up economic and political power around the world. Finally, China may ultimately fail to accomplish any of this. Perhaps the coronavirus will so weaken the U.S. and the liberal order that China’s ascent will be accelerated. Or perhaps China will run into so many internal problems, and so much external resistance, that its drive will stall.

Yet we ought to recognize that the debate about what China wants is growing stale, because China’s leaders and behavior have increasingly answered that question. When a proud and powerful challenger starts to advertise its global ambitions, Americans should probably err on the side of taking those ambitious seriously.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story: Hal Brands at Hal.Brands@jhu.edu

To contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.net

@ Bloomberg