Beijing may base security agencies in Hong Kong as part of new laws

[May 22, 2020]  By Clare Jim and Jessie Pang

HONG KONG (Reuters) - A proposal to impose national security laws in Hong Kong could see mainland intelligence agencies set up bases in the global financial hub, raising fears of direct enforcement by Chinese authorities in the city and the prospect of fresh protests.

The details were unveiled on Friday, a day after Beijing proposed the new controversial national security legislation that critics see as an historical turning point for China's freest city.

Hong Kong activists called on Friday for people to rise up against the proposal, aimed at tackling secession, subversion, terrorism, and foreign interference, that has sent jitters across the business and diplomatic communities.

Foreign diplomats fear establishing new Beijing agencies in the Chinese-ruled city could give mainland security and intelligence officers enforcement powers that could potentially put rights and freedoms at risk.

Calls have emerged for flash mobs at night across the territory and democracy activists including Joshua Wong plan to meet the press to announce "street action" later on Friday.

"This is a great moment to reboot the protest," said university student Kay, 24, who participated in last year's mass scale and often violent anti-government and anti-Beijing protests which this year entered a lull due to the coronavirus.

The security law plan hit financial markets on Friday, due to concerns the semi-autonomous city's status as a financial hub was at risk, with Hong Kong stocks selling off as China's parliament sat to discuss the new law.

Hong Kong's Hang Seng index closed 5.6% down, the largest daily percentage drop since July 2015.

Hong Kong leader Carrie Lam said her government will "fully cooperate" with the Chinese parliament to complete the legislation, which she said will not affect rights, freedoms nor judicial independence.

The proposed legislation could heighten tensions between Beijing and Washington, whose relationship is already frayed by trade disputes and reciprocal accusations over the pandemic.

U.S. President Donald Trump warned Washington would react "very strongly" if Beijing went ahead with the security law.

"It is starting to look like a U.S.-China summer of discontent in the making," said Stephen Innes, chief global market strategist at AxiCorp.

Innes said the new law could potentially reignite the pro-democracy demonstrations of 2019, the biggest crisis the former British colony has faced since it returned to Chinese rule in 1997.

DRAFT PROPOSAL

In his annual report to the Chinese parliament, Premier Li Keqiang said China will establish a "sound" legal system and enforcement mechanisms to ensure national security in Hong Kong and Macau, its other semi-autonomous city.

The proposed legislation for Hong Kong requires the territory to quickly finish enacting national security regulations under its mini-constitution, the Basic law, according to a draft seen by Reuters.

Pro-democracy lawmaker Wu Chi-wai scuffles with police during a march against new security laws, near China?s Liaison Office, in Hong Kong, China May 22, 2020.

The document said the laws will safeguard the central government's "overall jurisdiction" as well as Hong Kong's "high autonomy".

"When needed, relevant national security organs of the Central People's Government will set up agencies," in Hong Kong to safeguard national security, the draft said.

Foreign diplomats fear this could formalise and expand the presence of mainland security and intelligence services in Hong Kong. Currently they can take no enforcement action in the city.

A previous attempt to adopt similar legislation in 2003 was met with a protest that drew around half a million people onto the streets and was eventually shelved.

Pro-democracy activists and politicians have for years opposed the idea of national security laws, arguing they could erode the city's high degree of autonomy, guaranteed under the "one country, two systems" handover agreement, which China says it is undermined by protesters.

"It is essentially declaring directly that 'one country two systems' is null and a failure," said Eric Cheung, principal lecturer at Hong Kong University's department of law.

Beijing said the legislation in fact strengthened that principle, was in Hong Kong's interest and will support its development. Lam said Beijing's intention was to tackle illegal activities that had damaged national security.

"THE END OF HONG KONG"

Local pro-democracy lawmakers denounced the plans on Thursday night as "the end of Hong Kong".

"Beijing is attempting to silence Hong Kongers’ critical voices with force and fear," pro-democracy activist Joshua Wong tweeted. "Deep down protesters know, we insist not because we are strong, but because we have no other choice."

Beijing's move is expected to lead to the flight of capital and talent from Hong Kong, bankers and headhunters said.

"In some cases where clients had a bit of inertia and hoped things that happened last year will just go away, they will now step on the gas to reduce their wealth concentration risk here," said a senior banker at a European private bank.

The U.S. State Department warned a high-degree of autonomy and respect for human rights were key to preserving the territory's special status in U.S. law, which has helped it maintain its position as a world financial centre.

(Reporting by Hong Kong newsroom; Writing by Marius Zaharia; Editing by Michael Perry)

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