Exclusive: Hong Kong activists discuss ‘parliament-in-exile’ after China crackdown

By Natalie Thomas and Guy Faulconbridge

LONDON (Reuters) – Hong Kong pro-democracy activists are discussing a plan to create an unofficial parliament-in-exile to keep the flame of democracy alive and send a message to China that freedom cannot be crushed, campaigner Simon Cheng told Reuters.

Hong Kong, a former British colony that returned to Chinese rule in 1997, was convulsed by months of often violent pro-democracy, anti-China protests last year against Chinese interference in its promised freedoms, the biggest political crisis for Beijing since the Tiananmen Square protests of 1989.

Hong Kong police fired water cannon and tear gas and arrested more than 300 people on Wednesday as protesters took to the streets again in defiance of new, sweeping security legislation introduced by China to snuff out dissent.

The law pushes China’s freest city and one of the world’s most glittering financial hubs on to a more authoritarian path. China, which denies interfering in Hong Kong, has warned foreign powers not to meddle in its affairs.

Cheng, a Hong Kong citizen, worked for the British consulate in the territory for almost two years until he fled after he said he was beaten and tortured by China’s secret police. Cheng, who has since been granted asylum by Britain, describes himself as pro-democracy campaigner.

“A shadow parliament can send a very clear signal to Beijing and the Hong Kong authorities that democracy need not be at the mercy of Beijing,” he told Reuters in London. “We want to set up non-official civic groups that surely reflect the views of the Hong Kong people.”

He said that while the idea was still at an early stage, such a parliament-in-exile would support the people of Hong Kong and the pro-democracy movement there. He declined to say where the parliament might sit.

“We are developing an alternative way to fight for democracy,” Cheng said. “We need to be clever to deal with the expanding totalitarianism: they are showing more powerful muscle to suppress so we need to be more subtle and agile.”

He said more and more people were “losing hope that it is effective to go out on to the streets or run for election” to Hong Kong’s Legislative Council, or mini-parliament.

“We should stand with the Hong Kong people and support those staying in Hong Kong,” he said.

‘VERY GOOD SIGNAL’

Asked about HSBC’s support for the sweeping national security law, Cheng said the British government should speak to senior British capitalists to make them understand the importance of democracy.

After Prime Minister Boris Johnson offered millions of Hong Kong residents the path to British citizenship following China’s imposition of the law, hundreds of thousands of people would come to the United Kingdom, Cheng said.

“The UK has given a very good signal,” Cheng said. “At least hundreds of thousands of people will come.”

Almost 3 million Hong Kong residents are eligible for the so called British National (Overseas) passport. There were 349,881 holders of the passports as of February, Britain said.

“One day we will be back in Hong Kong,” Cheng said.

Hong Kong returned to China 23 years ago with the guarantee of freedoms not enjoyed on the mainland, including its independent legal system and rights to gather and protest, under a “one country, two systems” formula.

Huge protests calling for democracy, especially on the anniversaries of the June 4, 1989, Tiananmen crackdown, were common and brought major streets to a standstill for 79 days in the Umbrella movement of 2014.

The national security law punishes crimes of secession, subversion, terrorism and collusion with foreign forces with up to life in prison, will see mainland security agencies in Hong Kong for the first time and allows extradition to the mainland for trial.

(Reporting by Natalie Thomas, editing by Guy Faulconbridge and Stephen Addison)

U.S. House bill targets banks amid fears over China law for Hong Kong

By Patricia Zengerle

WASHINGTON (Reuters) – The U.S. House of Representatives passed legislation on Wednesday that would penalize banks doing business with Chinese officials who implement Beijing’s draconian new national security law imposed on the former British colony of Hong Kong.

China responded by saying the United States should stop interfering in Hong Kong affairs and warned that it would “resolutely and forcefully resist”.

Hong Kong returned to Chinese rule in 1997 under a “one country, two systems” formula that protected its freedoms, including an independent legal system, and wide-ranging autonomy. But China on Tuesday introduced sweeping national security legislation for the city, condemned by the United States, Britain and other Western countries.

British Foreign Secretary Dominic Raab reprimanded HSBC and other banks on Wednesday for supporting the new law, saying the rights of Hong Kong should not be sacrificed for bankers’ bonuses.

Senior British and U.S. politicians criticized HSBC and Standard Chartered last month after the banks backed the new law.

The law punishes crimes of secession, subversion, terrorism and collusion with foreign forces with up to life in prison, will see mainland security agencies in Hong Kong for the first time and allows extradition to the mainland for trial.

The House measure passed unanimously, reflecting concern in Washington over the erosion the autonomy that allowed Hong Kong to thrive as China’s freest city and an international financial center.

The U.S. Senate passed similar legislation last week, but under congressional rules the bill must return to the Senate and be passed there before being sent to the White House for President Donald Trump to sign into law or veto.

House Speaker Nancy Pelosi made an unusual appearance at a committee hearing on the situation in Hong Kong to say the security law marked the death of the “one country, two systems” principle.

“The law is a brutal, sweeping crackdown against the people of Hong Kong, intended to destroy the freedoms they were promised,” she told the House Foreign Affairs Committee hearing.

Chinese Foreign Ministry spokesman Zhao Lijian said in Beijing on Thursday the United States “must stop advancing the bill, let alone sign it or implement” it.

“Otherwise China will resolutely and forcefully resist,” he said.

U.S. Secretary of State Mike Pompeo said the security law was an affront to all nations and Washington would continue to implement Trump’s directive to end the territory’s special status.

The United States has already begun eliminating Hong Kong’s special status, halting defense exports and restricting the territory’s access to high-technology products.

(Reporting by Patricia Zengerle; Additional reporting by Huizhong Wu in Beijing; Editing by Sandra Maler, David Gregorio and Nick Macfie)

China orders some American media to give details on staff, after U.S. move

BEIJING (Reuters) – China has asked four U.S. media organizations to submit details about their operations in the country, the foreign ministry said on Wednesday, in what it described as retaliation for U.S. measures against Chinese media outlets.

The Associated Press (AP), UPI, CBS and National Public Radio (NPR) are required to provide information about their staff, financial operations and real estate in China within seven days, ministry spokesman Zhao Lijian told a daily news briefing.

“We urge the U.S. to immediately change course, correct its error, and desist (from) the political suppression and unreasonable restriction of Chinese media,” Zhao said.

The United States and China have been locked in a series of retaliatory actions involving journalists in recent months, amid increasing tensions over issues ranging from the coronavirus pandemic to Hong Kong.

Last month, the United States said it would start treating another four major Chinese state media outlets as foreign embassies, following similar measures taken by Washington earlier in the year.

That designation similarly required the outlets to report their personnel and real estate holdings.

In March, China expelled about a dozen U.S. journalists from the New York Times, the News Corp-owned Wall Street Journal, and the Washington Post. At the time, it also asked those outlets, as well as broadcaster Voice of America and Time magazine, to provide details on their China operations.

That had followed Washington’s move to slash the number of journalists permitted to work in the United States for four major Chinese state-owned media outlets.

“NPR is in communication with the relevant authorities and we are studying the request,” said an NPR spokesperson.

The AP said in a statement that it was “seeking more information about the requirements announced today and will review them carefully”.

CBS and UPI did not immediately respond to requests for comment.

In May, Washington limited visas for Chinese reporters to a 90-day period, with the option for extension. Previously, such visas were typically open-ended.

(Reporting by Yew Lun Tian and Gabriel Crossley; Editing by Clarence Fernandez, Kim Coghill and Mark Heinrich)

Hong Kong police arrest more than 300 in first protest under new security law

By Scott Murdoch and Yanni Chow

HONG KONG (Reuters) – Hong Kong police fired water cannon and tear gas and arrested more than 300 people on Wednesday as protesters took to the streets in defiance of sweeping security legislation introduced by China that critics say is aimed at snuffing out dissent.

Beijing unveiled the details of the much-anticipated law late on Tuesday after weeks of uncertainty, pushing China’s freest city and one of the world’s most glittering financial hubs on to a more authoritarian path.

As thousands of protesters gathered downtown for an annual rally marking the anniversary of the former British colony’s handover to China in 1997, riot police used pepper spray and fired pellets as they made arrests after crowds spilled into the streets chanting “resist till the end” and “Hong Kong independence”.

“I’m scared of going to jail but for justice I have to come out today, I have to stand up,” said one 35-year-old man who gave his name as Seth.

Police said they had made more than 300 arrests for illegal assembly and other offences, with nine involving suspected violations of the new law.

The law punishes crimes of secession, subversion, terrorism and collusion with foreign forces with up to life in prison, will see mainland security agencies in Hong Kong for the first time and allow for extradition to the mainland for trial.

China’s parliament adopted the law in response to protests last year triggered by fears that Beijing was stifling the city’s freedoms, guaranteed by a “one country, two systems” formula agreed when it returned to Chinese rule.

Police cited the law for in confronting protesters.

“You are displaying flags or banners/chanting slogans/or conducting yourselves with an intent such as secession or subversion, which may constitute offences under the … national security law,” police said in a message displayed on a purple banner.

Authorities in Beijing and Hong Kong have repeatedly said the legislation is aimed at a few “troublemakers” and will not affect rights and freedoms, nor investor interests.

But critics fear it is aimed ending the pro-democracy opposition and will crush the freedoms that are seen as key to Hong Kong’s success as a financial center.

The United States and its Asian and Western allies have criticized the legislation. Britain said it would stand by its word and offer all those in Hong Kong with British National Overseas status a “bespoke” immigration route. Britain and Canada also updated their travel advice for Hong Kong, saying there was an increased risk of detention.

British Foreign Secretary Dominic Raab described Wednesday’s protests as heartbreaking and reprimanded HSBC and other banks for supporting the new law, saying the rights of Hong Kong should not be sacrificed for bankers’ bonuses.

Police fired water cannons to try to disperse the protesters. A game of cat-and-mouse reminiscent of last year’s often violent demonstrations followed, with protesters blocking roads before running away from riot police charging with batons, only to re-emerge elsewhere.

Police posted pictures on Twitter of an officer with a bleeding arm saying he was stabbed by “rioters holding sharp objects.” The suspects fled while bystanders offered no help, police said.

On July 1 last year, hundreds of protesters stormed and vandalized the city’s legislature to protest against a bill that would have allowed extraditions to mainland China.

Those protests evolved into anti-China demonstrations and calls for democracy, paralyzing parts of the city and paving the way for Beijing’s new law.

‘BIRTHDAY GIFT’

In Beijing, Zhang Xiaoming, executive deputy director of Beijing’s Hong Kong and Macau Affairs Office, told reporters suspects arrested by a new Beijing-run security office could be tried on the mainland.

He said the new office abided by Chinese law and that Hong Kong’s legal system could not be expected to implement the laws of the mainland. Article 55 of the law states that Beijing’s security office in Hong Kong could exercise jurisdiction over “complex” or “serious” cases.

“The law is a birthday gift to (Hong Kong) and will show its precious value in the future,” Zhang said, adding the law would not be applied retroactively.

Speaking at a flag-raising ceremony to mark the handover, the city’s Beijing-backed leader, Carrie Lam, said the law was the most important development since 1997.

“It is also an inevitable and prompt decision to restore stability,” Lam said at the harbor-front venue where the last colonial governor, Chris Patten, a staunch critic of the security law, tearfully handed back Hong Kong to China.

Some pro-Beijing officials and political commentators say the law is aimed at sealing Hong Kong’s “second return” to the motherland after the first failed to bring residents to heel.

Luo Huining, the head of Beijing’s top representative office in Hong Kong, said at the ceremony the law was a “common aspiration” of Hong Kong citizens.

Some pro-democracy activists gave up membership of their groups just before the law came into force into force at 11 p.m. (1500 GMT) on Tuesday, though they called for the campaign to carry on from abroad.

“I saw this morning there are celebrations for Hong Kong’s handover, but to me it is a funeral, a funeral for ‘one country two systems’,” said pro-democracy lawmaker Kwok Ka-ki.

(Reporting by Yanni Chow, Twinnie Siu, Pak Yiu, Scott Murdoch, Joyce Zhou, Clare Jim, Jessie Pang, Tyrone Siu and James Pomfret in Hong Kong, Yew Lun Tian in Beijing, William James and Guy Faulconbridge in London and Denny Thomas in Toronto; Writing by Anne Marie Roantree and Marius Zaharia; Editing by Michael Perry, Robert Birsel and Nick Macfie)

China passes national security law in turning point for Hong Kong

By Clare Jim and Yew Lun Tian

HONG KONG/BEIJING (Reuters) – China’s parliament passed national security legislation for Hong Kong on Tuesday, setting the stage for the most radical changes to the former British colony’s way of life since it returned to Chinese rule 23 years ago.

Details of the law – which comes in response to last year’s often-violent pro-democracy protests in the city and aims to tackle subversion, terrorism, separatism and collusion with foreign forces – were yet to be released.

Hong Kong leader Carrie Lam nevertheless welcomed the law’s passage and said it would come into effect later on Tuesday, giving the city’s 7.5 million people little time to digest what is expected to be highly complex legislation.

Amid fears the law will crush the global financial hub’s freedoms, and reports that the heaviest penalty under it would be life imprisonment, pro-democracy activist Joshua Wong’s Demosisto group said it would dissolve.

“It marks the end of Hong Kong that the world knew before,” Wong said on Twitter.

The legislation pushes Beijing further along a collision course with the United States, Britain and other Western governments, which have said it erodes the high degree of autonomy the city was granted at its July 1, 1997, handover.

The United States, already in dispute with China over trade, the South China Sea and the coronavirus, began eliminating Hong Kong’s special status under U.S. law on Monday, halting defense exports and restricting technology access.

China said it would retaliate.

Lam, in a video message to the United Nations Human Rights Council in Geneva, urged the international community to “respect our country’s right to safeguard national security”.

She said the law would not undermine the city’s autonomy or its independent judiciary.

Authorities in Beijing and Hong Kong have repeatedly said the legislation is aimed at a few “troublemakers” and will not affect rights and freedoms, nor investor interests.

The editor-in-chief of the Global Times, a tabloid published by the People’s Daily, the official newspaper of China’s ruling Communist Party, said on Twitter the heaviest penalty under the law was life imprisonment.

As the law was passed in Beijing, the Chinese People’s Liberation Army garrison in Hong Kong held a drill which included exercises to stop suspicious vessels and arrest fugitives, according to the Weibo social media account of state-run CCTV’s military channel.

‘OVERPOWERING’

The legislation may get an early test with activists and pro-democracy politicians saying they would defy a police ban, amid coronavirus restrictions, on a rally on the anniversary of the July 1 handover.

At last year’s demonstration, which came amid a series of pro-democracy protests, a crowd stormed and vandalized the city’s legislature.

“We will never accept the passing of the law, even though it is so overpowering,” said Democratic Party chairman Wu Chi-wai.

It is unclear if attending the unauthorized rally would constitute a national security crime.

A majority in Hong Kong opposes the legislation, a poll conducted for Reuters this month showed, but support for the protests has fallen to only a slim majority.

Police dispersed a handful of activists protesting against the law at a shopping mall.

Dozens of supporters of Beijing popped champagne corks and waved Chinese flags in celebration in front of government headquarters.

“I’m very happy,” said one elderly man, surnamed Lee.

“This will leave anti-China spies and people who brought chaos to Hong Kong with nowhere to go.”

This month, China’s official Xinhua news agency unveiled some of the law’s provisions, including that it would supersede existing Hong Kong legislation and that interpretation powers belong to China’s parliament top committee.

Beijing is expected to set up a national security office in Hong Kong for the first time and could also exercise jurisdiction on certain cases.

Judges for security cases are expected to be appointed by the city’s chief executive. Senior judges now allocate rosters up through Hong Kong’s independent judicial system.

It is not known which specific activities are to be made illegal, how precisely they are defined or what punishment they carry.

Britain, the European Union, Japan, Taiwan and others have also criticized the legislation.

China has hit back at the outcry, denouncing “interference” in its internal affairs.

(Additional reporting by Yanni Chow, Carol Mang, Joyce Zhou, Tyrone Siu, Jessie Pang and James Pomfret in Hong Kong; Writing by Marius Zaharia; Editing by Michael Perry, Robert Birsel)

Protesters gather to mark ‘million-people’ march anniversary in Hong Kong

By Jessie Pang and Yoyo Chow

HONG KONG (Reuters) – Hundreds of protesters gathered in central Hong Kong on Tuesday to mark a year of sustained pro-democracy rallies as fears over looming national security legislation have reignited unrest in the global financial hub.

The crowd defied a government ban on gatherings of more than eight people due to the coronavirus, as well as a heavy riot police presence on the streets, with officers repeatedly seen conducting searches on those passing through the area.

Earlier on Tuesday, protesters gathered in several shopping malls to chant pro-democracy slogans, dispersing peacefully after an hour.

Some held placards reading “We can’t breathe! Free HK” and “Young lives matter”, nods to U.S. protests against police brutality sparked by the death of black American George Floyd.

“I am scared but I need to protest against national security laws. It’s important to continue to fight for freedom,” said 25-year-old Tai, who declined to give his full name.

Last year on June 9, an estimated more than one million protesters took to the streets against proposed legislation to allow extraditions to mainland China, where the courts are controlled by the Communist Party.

The government later withdrew the bill but widespread concern lingered that Beijing was stifling freedoms in the former British colony, sparking months of often-violent unrest.

Hong Kong leader Carrie Lam warned on Tuesday that the city, which has enjoyed a high degree of autonomy since returning to Chinese rule in 1997, cannot afford further “chaos.”

“All of us can see the difficulty we have been through in the past year, and due to such serious situations we have more problems to deal with,” Lam told a weekly news conference.

“We need to learn from mistakes, I wish all lawmakers can learn from mistakes – that Hong Kong cannot bear such chaos.”

Almost 9,000 people, aged between 11 and 84, were arrested in protests over the past year, police said late on Monday. More than 600 were charged with rioting.

Activists, as well as many diplomats and business leaders fear national security laws targeting subversion, secession, treason and foreign interference will further undermine Hong Kong freedoms, including its independent legal system. The laws could also see mainland intelligence agencies set up shop.

“The crackdown is getting more and more severe,” said gym trainer Lee, 32.

More protests are planned in the coming days and union leaders have said they intend to hold a referendum among their members on Sunday on whether to launch a city-wide strike.

Authorities have insisted the laws will focus on small numbers of “troublemakers” who pose a threat to national security and will not curb freedoms or hurt investors. Lam cautioned against the strike plans.

Prominent pro-democracy activist Joshua Wong said the world had witnessed “the deteriorating situation in Hong Kong, with Beijing tightening its grip over the city’s liberties”.

“I have strong confidence in Hongkongers that we will have ways to resist and defy,” Wong posted on Twitter. “Moreover, I hope the world can stand with Hong Kong and protect the city from falling.”

Washington has said it would remove Hong Kong’s special treatment in U.S. laws as it deemed the city to no longer be sufficiently autonomous. The European Union, Britain and others have expressed concerns about the proposed legislation, while Beijing hit back against foreign meddling in its affairs.

(Reporting by Jessie Pang, Carol Mang, Yanni Chow, Donny Kwok, Clare Jim and Noah Sin; Writing by Anne Marie Roantree and Marius Zaharia; Editing by Tom Hogue, Jane Wardell and Nick Macfie)

Factbox: China’s numerous diplomatic disputes

BEIJING (Reuters) – China is engaged in diplomatic disputes on numerous fronts, from acrimony with the United States to a backlash over its clampdown on Hong Kong, a border dispute with India and criticism over its handling of the novel coronavirus.

Following are some of the main points of contention between China and other countries:

UNITED STATES

From disputes over trade and technology, to U.S. criticism over the coronavirus outbreak and China’s accusation of U.S. backing for protests in Hong Kong, ties between the world’s two biggest economies are at their lowest point in decades.

HONG KONG

China’s plan to impose national security legislation on Hong Kong provoked U.S. retaliation and disapproval from other Western capitals. The city’s former colonial ruler Britain said it would offer extended visa rights to British national overseas (BNO) passport holders from Hong Kong.

CORONAVIRUS

Several countries, including the United States and Australia, have called for China to be held to account for its early handling of the coronavirus, which emerged late last year in the city of Wuhan. China has also faced criticism for what some have characterized as heavy-handed “virus diplomacy”.

TAIWAN

China has stepped up diplomatic and military pressure on Chinese-claimed but democratically ruled Taiwan, trying to coax it into accepting Chinese rule. Taiwan President Tsai Ing-wen, re-elected by a landslide in January, has rejected that, saying only Taiwan’s people can decide its future.

INDIA

China and India are engaged in the most serious military standoff on their disputed border since 2017, with soldiers in the remote Ladakh region accusing each other of encroachment.

XINJIANG

China has been criticized in Washington and elsewhere over its treatment of ethnic Uighur Muslims in its western Xinjiang region. Last month, the U.S. House of Representatives overwhelmingly approved legislation calling for sanctions on officials responsible for the oppression of Uighurs.

HUAWEI

The United States has raised security concerns over equipment provided by Chinese telecoms gear giant Huawei, warning that allies that use it in their networks risked being cut off from valuable intelligence-sharing feeds. Last month, the United States moved to block global chip supplies to Huawei, which denies that its equipment poses a security risk.

CANADA

Ties have been strained since Canada arrested Huawei executive Meng Wanzhou, daughter of the firm’s founder, in late 2018. Soon after, China detained two Canadians and blocked imports of some canola seed. Meng lost a court ruling last month in her fight against extradition to the United States.

EUROPEAN UNION

EU foreign ministers agreed last week to toughen their strategy on China to counter its increasingly assertive diplomacy against a backdrop of concern about Hong Kong. The bloc has been frustrated over market access for its companies in China, which has sought to block an EU report alleging that China was spreading disinformation about the coronavirus outbreak, according to diplomatic sources.

AUSTRALIA

China last month imposed tariffs on barley imports from Australia, the latest escalation between them. Relations soured in 2018 when Australia banned Huawei from its 5G broadband network, and China has been angered by Australia’s call for an independent inquiry into the coronavirus.

SOUTH CHINA SEA

China has overlapping claims in the energy-rich South China Sea, which is also an important trade route, with the Philippines, Brunei, Vietnam, Malaysia and Taiwan. The United States has accused China of taking advantage of the distraction of the coronavirus to advance its presence in the waters.

(Writing by Tony Munroe; Editing by Robert Birsel)

China tells state firms to halt purchases of major U.S. farm products: sources

By Hallie Gu, Keith Zhai and Jing Xu

BEIJING/SINGAPORE (Reuters) – China has told state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special treatment for Hong Kong to punish Beijing.

Large volume state purchases of U.S. corn and cotton have also been put on hold, one of the sources said.

China could expand the order to include additional U.S. farm goods if Washington took further action, the people said.

“China has asked main state firms to suspend large scale purchases of major U.S. farm products like soybeans and pork, in response to U.S. reaction to Hong Kong,” the source said.

“Now we will watch and see what the U.S. does next.”

U.S. President Donald Trump said on Friday he was directing his administration to begin the process of eliminating special treatment for Hong Kong, ranging from extradition treatment to export controls, in response to China’s plans to impose new security legislation in the territory.

China is ready to halt imports of more agriculture products from the United States if Washington takes more action on Hong Kong, the sources said.

(GRAPHIC: Value of U.S. agriculture exports to China – https://fingfx.thomsonreuters.com/gfx/ce/yzdvxdxdzvx/USAGExportstoChinaMar2020.png)

Chinese importers have canceled 10,000 to 20,000 tonnes of American pork shipments – equivalent to roughly one week’s orders in recent months – following Trump’s comments on Friday, the source said.

State purchases of bulk volumes of U.S. corn and cotton have also been suspended but the details were not clear.

In a worst-case scenario, if Trump continues to target China, Beijing will have to scrap the Phase 1 trade deal, a second source familiar with the government plan said.

“There’s no way Beijing can buy goods from the U.S. when receiving constant attacks from Trump,” the person said.

China pledged to buy an additional $32 billion worth of U.S. agriculture products over two years above a baseline based on 2017 figures, under the initial trade deal the two countries signed in January.

China has bought soybeans, corn, wheat and soyoil from the United States this year, to fulfill its commitment under the trade deal. Beijing also stepped up purchases of U.S. pork, after the deadly African swine fever decimated its pig herd.

The U.S. Department of Agriculture reported that China bought $1.028 billion worth of soybeans and $691 million of pork in the first quarter of 2020.

Private importers haven’t received a government order to suspend buying of U.S. farm produce, according to a third source with a major trading house, but commercial buyers are very cautious at the moment, the person added.

“A certain scale of trade will be halted,” given rising tensions between China and the U.S. in other areas, but it is not a full stop, said a fourth source familiar with the government plan.

However, China would be able to find other sellers easily (of the farm products), he added.

The sources all declined to be named due to the sensitivity of the matter.

(Reporting by Hallie Gu, Jing Xu in Beijing and Keith Zhai in Singapore; Additional reporting by Dominique Patton, and Gavin Maguire; Editing by Edmund Blair and Susan Fenton)

China warns U.S. it will retaliate on moves over Hong Kong

BEIJING (Reuters) – China said on Monday U.S. attempts to harm Chinese interests will be met with firm countermeasures, criticizing a U.S. decision to begin ending special treatment for Hong Kong as well as actions against Chinese students and companies.

China’s parliament last week voted to move forward with imposing national security legislation on Hong Kong, which U.S. President Donald Trump said on Friday was a tragedy for the people of the city, and which violated China’s promise to protect its autonomy.

Trump ordered his administration to begin the process of eliminating special U.S. treatment for Hong Kong to punish China, ranging from extradition treatment to export controls.

But he stopped short of calling an immediate end to privileges that have helped the former British colony remain a global financial center.

Chinese foreign ministry spokesman Zhao Lijian said China firmly opposed the U.S. steps.

“The announced measures severely interfere with China’s internal affairs, damage U.S.-China relations, and will harm both sides. China is firmly opposed to this,” Zhao told reporters during a regular briefing.

“Any words or actions by the U.S. that harm China’s interests will meet with China’s firm counterattack,” he said.

But Hong Kong shares surged more than 3% on Monday as investors took comfort that Trump did not immediately end the special U.S. privileges.

At the close of trade, the Hang Seng index was up 3.36%, its biggest one-day percentage gain since March 25.

“Chinese policymakers would likely want to see precisely what the US implements before responding with further policy adjustments or retaliation of their own,” Goldman Sachs wrote in a note on Sunday.

In making his Friday announcement, Trump used some of his toughest rhetoric yet against China, saying it had broken its word over Hong Kong’s autonomy by moving to impose the new national security legislation and the territory no longer warranted U.S. economic privileges.

Trump said China’s “malfeasance” was responsible for massive suffering and economic damage worldwide.

He said the United States would also impose sanctions on individuals seen as responsible for “smothering – absolutely smothering – Hong Kong’s freedom” but he did not name any of the potential sanctions targets.

Trump gave no time frame for the action, suggesting he may be trying to buy time before deciding whether to implement the most drastic measures, which have drawn strong resistance from U.S. companies operating in Hong Kong.

Earlier, Hong Kong’s Beijing-backed government told the United States to keep out of the national security debate and warned that withdrawal of the financial hub’s special status could backfire on the U.S. economy.

(Reporting by Gabriel Crossley; writing by Se Young Lee and Tony Munroe; Editing by Robert Birsel)

Factbox: What China’s tougher national security regime could mean for Hong Kong

By Greg Torode and James Pomfret

HONG KONG (Reuters) – China’s parliament has approved a decision to go forward with national security legislation on Hong Kong to tackle secession, subversion, terrorism and foreign interference in a city roiled by anti-government protests.

The move is seen as a turning point, as leaders of the ruling Communist Party tighten control over China’s freest international city, undermining its reputation as a financial hub with substantial autonomy and an independent legal system.

U.S. reaction was swift, with Secretary of State Mike Pompeo telling Congress that Hong Kong no longer qualified for special status under U.S. law, potentially dealing a crushing blow to its status as a global financial center.

WHAT DOES CHINA WANT?

Greater control and a sense of security. For several years, Chinese officials have expressed increasing frustration and anger over what they see as a weak national security regime in the city.

Last year’s large and sometimes violent anti-government protests have sharpened that frustration, with China determined to thwart what it calls threats of terrorism, independence, subversion of state power, and interference by foreign forces.

SO WHAT WILL HAPPEN?

Having been approved by parliament, the legislation will be grafted into Hong Kong’s mini-constitution without any local legislative scrutiny, as has been past practice.

Details of the law are expected to be drawn up in coming weeks. It is expected to be enacted before September.

China says Hong Kong has failed to implement national security laws on its own as stipulated in the city’s mini-constitution under the terms of its 1997 handover from Britain.

WHAT REMAINS UNCLEAR?

Hong Kong lawyers are puzzled over how the imposed provisions will work in practice.

Questions include whether all protections already in the Basic Law apply and whether locally based mainland agents have enforcement power.

Another issue is whether the standing committee of the National People’s Congress has extra powers to ultimately interpret Hong Kong court rulings on national security.

“There are suddenly a lot more questions than answers and it is not even clear whether anyone in the Hong Kong government is standing up internally against these changes,” one legal scholar said.

China also said its intelligence agencies would have the right to set up offices in Hong Kong to “safeguard national security”. It is not clear, however, whether they will carry out enforcement activities, a critical concern.

WHY IS THIS HAPPENING NOW?

The issue sits at the heart of the “one country, two systems” formula under which China agreed to protect Hong Kong’s extensive freedoms, its high degree of autonomy and its independent legal system until 2047.

Those freedoms are protected by the Basic Law, which guides the relationship between Hong Kong and Beijing.

But Article 23 of the document also says Hong Kong must “on its own” enact laws against treason, secession, sedition, subversion and the theft of state secrets. It also seeks to outlaw ties between local and foreign political groups.

The Hong Kong government proposed such local legislation in 2003 but encountered vast opposition, with more than 500,000 people marching peacefully against it.

However, the Basic Law also gives Beijing the power to annex national laws into the document – which the Hong Kong government must then legislate for or effectively impose by executive fiat.

Hong Kong lawyers and politicians sometimes call this the “nuclear option”, but some scholars have questioned whether this power of promulgation applies to Article 23.

DO ANY SUCH LAWS ALREADY EXIST?

Yes. Britain left behind a raft of old laws covering most of the elements of Article 23, aside from subversion and secession – the act of formally withdrawing from a state.

Most are decades old and lawyers say they would be hard to deploy, given more recent protections on freedoms of speech, assembly and association written into the city’s Bill of Rights and the Basic Law itself.

IS IT CONTROVERSIAL?

Highly. Given Hong Kong’s protest movements and polarised politics, a fresh push even for local legislation would be tough.

Many fear that new national security legislation would prove a “dead hand” on the city’s large and pugnacious press and rich artistic traditions, while curbing its broad political debates.

Any step by Beijing to impose its own version via promulgation risks panic and chaos, many observers believe, potentially sparking a flight of people and capital and denting Hong Kong’s international financial role.

(Editing by Stephen Coates)