China Politics

A proposed legal change in Hong Kong has businesses worried about the fate of the city

Key Points
  • A Hong Kong government proposal to allow extraditions to mainland China is stoking fresh anxiety about the resilience of local autonomy in the financially important former British colony.
  • The territory retained its own laws, courts, currency and civil service when Britain transferred sovereignty to the People's Republic of China in 1997 and those are widely seen as central to its attraction for foreign banks, businesses and investors.
  • The local bar association, business organizations, human rights groups and foreign governments are worried about erosion to the "one country, two systems" framework under which Hong Kong is run.
Protesters take part in a demonstration against Hong Kong's proposed extradition law on April 28, 2019.
Anthony Kwan | Getty Images

A Hong Kong government proposal to allow extraditions to mainland China is stoking fresh anxiety about the resilience of local autonomy in the financially important former British colony.

The territory retained its own laws, courts, currency and civil service when Britain transferred sovereignty to the People's Republic of China on July 1, 1997 in a historic handover broadcast worldwide. Hong Kong also enjoys freedom of speech and the internet in contrast to strict controls next door — and its transparent legal system is a key attraction for foreign banks, businesses and investors.

The proposed extradition law, however, is just the latest development suggesting the unique framework known as "one country, two systems" — in which Beijing handles defense and foreign affairs and promises to keep Hong Kong's local management in place until at least 2047 — is under increasing stress.

The local bar association, business organizations, human rights groups and others have expressed apprehension about the proposal, as have foreign governments.

The U.S.-China Economic and Security Review Commission, mandated by Congress, issued a brief Tuesday slamming the plan. If it's passed, the commission said, the rule would "increase the territory's susceptibility to Beijing's political coercion and further erode Hong Kong's autonomy."

Kurt Tong, the U.S. consul general in Hong Kong, described worries in the foreign community, including businesses, as "palpable" in an interview shown Saturday on public service broadcaster RTHK.

"We sense real concern about this," Tong said, adding that unease is compounded by a lack of "careful explanation."

The idea has sparked protests, the latest on April 28 drawing more than 20,000 people, while opposition lawmakers in the local Legislative Council are working to stop it.

On Saturday, nearly 300 people, many shouting slogans, watched lawmakers engage in heated debate on live video outside the council building.

Ava Sit, a university student, said she fears China will take advantage of any changes and try to limit Hong Kong's freedoms.

"I don't want Hong Kong to lose its democracy under PRC rule," she told CNBC, referring to the country's official name, the People's Republic of China.

'Rights and freedoms'

Hong Kong's government has said its proposed law is not aimed specifically at facilitating extraditions to mainland China. Rather, it says it's seeking to remedy a legal "loophole" so as to be able to send suspected criminals to jurisdictions with which it has no transfer agreement.

"The rule of law and judicial independence are the core values of the (Hong Kong government)," the local government said in a statement Wednesday responding to the U.S.-China Economic and Security Review Commission brief. The government "attaches utmost importance to these values and is determined to fully safeguard them and the safety of all members of the public."

Supporters stress safeguards — such as the exclusion of crimes of a political nature and those subject to the death penalty, as well as veto power over court-ordered extraditions by Hong Kong's top official — mean fears are unfounded.

"If you say you're worried, effectively you're saying you don't trust our own judiciary," Ronny Tong, a lawyer and advisor to Hong Kong Chief Executive Carrie Lam, told reporters at the Foreign Correspondents' Club on May 2 in a debate with legislator Dennis Kwok.

The impetus came after a murder in February last year allegedly by a Hong Kong citizen in Taiwan who later fled home.

It highlighted not only the lack of an extradition mechanism with the self-governed island, but also with other places including China and nearby Macau, which is a semi-autonomous Chinese region like Hong Kong.

Carrie Lam Cheng Yuet-Ngor,(Right) Hong Kong's new Chief Executive and her new cabinet are sworn in by Chinese President Xi Jinping during an inauguration ceremony in Hong Kong
Keith Tsuji | Getty Images

Opponents say there are ad hoc judicial procedures to handle situations such as the Taiwan case and question why the government would be willing to weaken its legal system in relation to China.

"This exception that we have in our laws, that we do not extradite people to other parts of mainland China, was not a mistake, it was not a loophole," Kwok said at the debate. "It was deliberately put there in order to safeguard the rights and freedoms of the Hong Kong people."

Kwok expressed a worry that China, where he said the legal system is not independent and utilizes forced confessions, would abuse any extradition arrangement.

"They could weaponize this system the same way they've weaponized their own system against their own citizens," he said.

China's foreign ministry office in Hong Kong did not respond to a request from CNBC for comment on Kwok's characterization and has appeared to largely stay out of the fray. It said on its website last month that any legal change to allow extraditions "is an internal affair" of the local government.

But Geng Shuang, a spokesman at the foreign ministry in Beijing, criticized the U.S.-China Economic and Security Review Commission brief, saying at a regular press conference on Wednesday that China opposes "any foreign interference in Hong Kong's affairs because they are entirely China's internal affairs," according to a transcript on the ministry website.

The extradition law fight is far from the only issue to raise questions over a perceived unwillingness by Hong Kong's government to defend local freedoms.

In an unprecedented move in October, it expelled a British journalist who hosted a local independence advocate for a speech at the Foreign Correspondents' Club that angered Beijing.

Last month nine people were convicted in relation to 2014 protests for fuller democracy in Hong Kong, with four getting prison terms.

'Rich irony'

One twist this time is that normally apolitical business groups are speaking out.

The Hong Kong General Chamber of Commerce in March called for "extreme caution and care" in pursuing the plan. The American Chamber of Commerce in Hong Kong said the city risks losing its unique appeal.

Such stances surprised some as the business community generally avoids statements even indirectly critical of China and Hong Kong's relationship with the mainland.

"Given that the local business community has always been seen as pro-establishment and friendly towards Beijing, there is a rich irony" in such outspokenness, Tamy Tam, editor-in-chief of the local South China Morning Post — owned by Chinese billionaire Jack Ma's Alibaba Group — wrote in a column last month.

A woman holds a Chinese-language sign saying "withdraw the evil law" at a protest outside the Legislative Council in Hong Kong on Saturday, May 4, 2019, as local lawmakers debated a proposal to allow extraditions to mainland China.
Kelly Olsen | CNBC

The criticisms appear to have had some effect, with the government removing nine mostly white collar crimes from the proposal.

"I think this is an instance where the business community is seeing this as more impacting their bottom line, so they've been willing to speak out," Rob Koepp, who follows China for the Economist Corporate Network in Hong Kong, told CNBC.

An influential legal group, however, stressed that the issue goes beyond business.

"Concerns over the significant differences between the judicial and criminal justice systems practised in Hong Kong and the mainland in terms of protection of fundamental human rights have not been answered by the (Hong Kong) government," the Hong Kong Bar Association said in early April.

Lam told reporters on April 29, the day after the street protest, that the government is "willing to listen to opinions in Hong Kong and see whether we could do more, explain more to allay those concerns and anxieties."

She has rejected calls to alter the legislation.

But in a sign of possible trouble, a pro-government lawmaker, Michael Tien, reportedly wrote to Lam last week asking that the plan be dropped.

Kwok, the legislator, indicated there may be momentum building.

"Opposition is growing by the day," he told CNBC on Saturday, adding of Lam: "Will she cave?"