China is poised to impose a new national security law on Hong Kong after months of anti-government protests in the territory. The move has sparked concerns the law will give Beijing more control over Hong Kong and incite further pro-democracy protests.
The draft legislation was announced as China's National People's Congress (NPC) — the country's parliament — held its annual session, which was delayed for months due to the coronavirus outbreak. The event kicked off on Friday.
The legislation is expected to strengthen Beijing's hold over Hong Kong, a former British colony that returned to Chinese rule in 1997. The Asian financial hub is governed under the "one country, two systems" principle which is meant to guarantee a high degree of autonomy for the special administrative region of China.
The NPC said it was "exercising the power (of) the constitution to establish and improve at the state level a legal framework and an enforcement mechanism for safeguarding national security in Hong Kong," according to Zhang Yesui, spokesperson for the third session of the 13th National People's Congress, via official English translation at press conference on Thursday evening. "This is highly necessary."
China has been "firmly implementing the principles of 'one country, two systems,' 'the people of Hong Kong governing Hong Kong,' and a high degree of autonomy" since the return of city to Beijing, state-owned news agency Xinhua reported. The news media was citing an explanatory document from Wang Chen, vice chairman of the Standing Committee of the NPC.
"The practice of 'one country, two systems' has achieved unprecedented success in Hong Kong," Xinhua added, citing the document.
However, "the increasingly notable national security risks" in Hong Kong have become a "prominent problem" and "activities that have seriously challenged the bottom line of the 'one country, two systems' principle, harmed the rule of law, and threatened national sovereignty, security and development interests," Xinhua added.
Politically, Hong Kong has its own legislature, but the chief executive is not directly elected and only candidates acceptable to the central government in Beijing are eligible for the role.
But the mainland government is likely taking things into its own hands now as the anti-government protests in Hong Kong drag on, testing Beijing's patience.
"Beijing has finally come to the end of its rope in watching the Hong Kong government not really be able to manage effectively the democracy activists," said Elizabeth Economy, C.V. Starr senior fellow and director for Asia Studies at the Council on Foreign Relations.
"And I think it's hard. They look and they see this Hong Kong with millions of residents demonstrating in the streets for democracy; what kind of message does that send to the 1.3 billion other Chinese on the mainland?" she told CNBC on Friday.
A previous attempt to introduce a national security legislation in Hong Kong in 2003 was shelved after mass protests.
"This is the end of 'One Country Two Systems,' make no mistake about it," said Dennis Kwok, a democratic lawmaker in Hong Kong.
"Beijing, the Central People's Government, has completely breached its promise to the Hong Kong people, a promise that was enshrined in the Sino-British Joint Declaration and the Basic Law. They are now completely walking back on their obligations owed to the Hong Kong people," he told reporters.
Hong Kong's Chief Executive Carrie Lam said in a statement Friday that "legislation on national security is undoubtedly within the purview" of Beijing.
The law will not amend Hong Kong's Basic Law or repeal an article in it that stipulates that Hong Kong has constitutional responsibilities and legal obligations to enact laws on its own to stop acts that endanger national security, Lam said.
She said the new law would only target acts of secession, subverting state power and organizing and carrying out terrorist activities, as well interference by foreign or external forces.
The proposed legislation was to "safeguard national security and the prosperity and stability of Hong Kong, thereby better protecting the legitimate rights and freedoms of all members of the public in Hong Kong," said Lam.
U.S. President Donald Trump told reporters on Thursday "nobody knows yet" the details of China's plan, Reuters reported. "If it happens we'll address that issue very strongly," he said.
The "Hong Kong Human Rights and Democracy Act" approved by Trump in 2019 requires the State Department to certify at least once a year that Hong Kong maintains enough autonomy to justify favorable U.S. trading terms. If this status is revoked, it would impact Hong Kong's status as a trade and financial hub and hit many international firms operating there.
China's foreign ministry said on Friday it opposed foreign interference in Hong Kong and that no country would allow separatists, Reuters reported, citing ministry spokesman Zhao Lijian who was responding to U.S. criticisms about Beijing's approach toward Hong Kong.
The South China Morning Post reports the legislation this time would ban all "seditious activities" aimed at toppling the central government.
Now is an "auspicious time" for Beijing to introduce the national security legislation "as all the rest of the world is preoccupied," said Orville Schell, Arthur Ross director at the Center on U.S.-China Relations at the Asia Society.
"If the National People's Congress passes legislation setting the terms of the game for Hong Kong, it is a very serious violation of the whole notion of 'One Country, Two Systems' because in fact it should be the Legislative Council of Hong Kong that does this but they refuse to do that and every time they try, they've been protested against, so Xi Jinping is fed up and he's going to move in," Schell told CNBC's "Squawk Box" on Friday.
— CNBC's Evelyn Cheng contributed to this report.