Oriental Despotism

China's terrifying moves on Hong Kong

By Michael Bociurkiw

When the last British governor of Hong Kong sailed out of Victoria Harbor on July 1,1997, many expected the Chinese government to honor pledges to maintain the colony's basic freedoms, enshrined in the so-called Basic Law -- in effect, the territory's mini-Constitution.
After all, the thinking went, Beijing would have nothing to gain by tinkering with the rule of law in one of the world's premier trade and business hubs. 

It wouldn't dare pluck the feathers of what had traditionally been known as the goose that lays China's golden eggs -- a freewheeling, capitalist enclave that served as China's gateway to the world for trade and investment. 

And freedom of the press would be tolerated on the assumption that the Chinese understood the need for business to have unfettered access to information.
Moreover, the British had installed a world class legal and physical infrastructure that was expected to endure far into the future. 

That included such institutional safeguards as the powerful and feared Independent Commission Against Corruption (ICAC), designed to keep the noses of the civil service squeaky clean.
But almost half way into the mandate of the "one country, two systems" experiment, Beijing appears to be accelerating Hong Kong's absorption into China at a pace no British foreign office official might have expected in the heady run-up to the handover.
That includes a hard crackdown on dissent, especially on anyone who advocates independence of Hong Kong from the mainland. 

The situation was brought into focus Monday when three of the territory's most high-profile pro-democracy protesters appeared in court on charges of fomenting unrest during 2014 street protests that brought the central business district to a standstill for almost three months. (They have pleaded not guilty but face up to seven years in prison if convicted.)
Local pro-democracy protesters are not the only ones to feel the clampdown on freedom of expression. 

Last month, the Asia editor of the Financial Times, Victor Mallet, was declared persona non grata in Hong Kong after chairing a talk at the Foreign Correspondents Club (FCC) with Hong Kong independence advocate Andy Chan. 

A few weeks ago, Mallet, who was also the correspondents club's vice president, was denied entry into Hong Kong as a tourist -- a move of such severity it would have been unthinkable just a few years ago.
While Hong Kong's Beijing-appointed chief executive, Carrie Lam, has refused to comment on the reasoning behind the expulsion, it is widely seen to be a signal to others of a red line that should not be crossed. 

It may also foreshadow more troubles ahead for the FCC: in 2023, its lease comes up for renewal by the Hong Kong government. 

And, with a three-month cancellation clause, which allows the government to terminate the lease even sooner, more missteps could shutter an institution that has traditionally served as not only a venue for free speech, but as a haven, exhibit space and workplace for foreign journalists and diplomats.
Even before the exclusion of Mallet, there has been creeping self-censorship in Hong Kong. 

The territory's major English language newspaper, the South China Morning Post, owned since 2015 by Alibaba's Jack Ma, tends to give Chinese authorities velvet glove treatment. 

The Chinese-language media in the territory has long-since fallen into line and stays clear of criticism of Beijing.
Some, such as the FT's Hong Kong correspondent, Ben Bland, say that those who speak out face a hard knock because Lam and her administration have to be seen delivering on the hardline policies of Chinese dictator Xi Jinping. 

Xi warned during a visit to Hong Kong last year that any challenge to the regime is "absolutely impermissible" and not to cross the "red line" of undermining Chinese sovereignty. 

As China aggressively widens its military and economic footprint in the region, Hong Kong officials find themselves under even more pressure to be delivering positive returns for Xi.
Francis Moriarty, a former senior political correspondent for Radio Television Hong Kong (RTHK), tells me that the harsh actions against Mallet, pro-democracy leaders and others indicate that "the legal protection of free press and free speech, guaranteed under the Basic Law, are being steadily eroded by pressures from Beijing and its Hong Kong acolytes, who are becoming emboldened."
While local business tycoons are not kicking up a public fuss on the erosion of freedoms in Hong Kong, representatives of foreign businesses, many with regional bases in the territory, are. 

In a stunning blow to Hong Kong, the US-China Economic and Security Review Committee, which advises the US Congress, said this month that Beijing's "encroachment" on the territory's freedoms could tarnish its status as a global business hub. 

"The ongoing decline in rule of law and freedom of expression is a troubling trend," the report said.
The American Chamber of Commerce in Hong Kong said reining in press freedom could damage the territory's competitiveness as a leading financial and trading center and termed Mallet's visa denial "a worrying signal." 

After initially playing down Mallet's visa woes, AmCham President Tara Joseph, a former Reuters journalist and FCC president, said: "Without a free press, capital markets cannot properly function, and business and trade cannot be reliably conducted."
Whether pro-democracy advocates like it or not, China's embrace of Hong Kong is proceeding apace, and in more ways than one. 

In recent months, the territory has become much more physically integrated, with multi-billion-dollar bridge and high-speed rail links.
When people say there really is no place like Hong Kong, they aren't exaggerating. 

With a world-class infrastructure, enviable geographic location and an educated and entrepreneurial population, British officials might now be expressing regret at handing it back to China on such liberal terms. 

It's just too bad they didn't do more to shield this golden goose from China's poison arrows.

How President Trump’s Trade War Is Driving China Nuts

Chinese dictator Xi Jinping reacted to American pressure with desperation

By WILLIAM PESEK

TOKYO—Five years ago, China’s Xi Jinping rocked the Communist Party establishment by pledging to let markets play a “decisive role” in decision making. 

Reformists rejoiced as Xi signaled a revival of Deng Xiaoping’s pro-capitalism revolution.
Things haven’t gone as planned. 

First, Xi slow-walked steps to reduce China’s reliance on runaway credit, debt and an antiquated state sector. 

He prioritized short-term growth over long-term upgrades. 

And then President Donald Trump came along to imperil both objectives.
Initially, Xi’s government figured the president was bluffing. 

Beijing’s calculation was that, sure, President Trump might slap some tariffs on Chinese goods, but it’s a mere negotiating tactic – his “Art of the Deal” writ large. 

After all, past American presidents had often attacked China on the campaign trail—only to make nice while in office. 

Xi’s men held it together as President Trump slapped taxes of 25 percent on steel and 10 percent on aluminum. 

They figured President Trump’s initial attack on $50 billion of Chinese imports in June would satisfy Professor Peter Navarro and other anti-China voices in the White House.

Hardly, as Xi’s team is realizing. 

If the extra $200 billion of levies President Trump tossed Beijing’s way in September weren’t reality-check enough, Vice President Mike Pence’s Oct. 4 “we-will-not-stand-down” speech suggests 2019 could get even worse for Beijing.

Mr. Pence accused Beijing of trying to malign President Trump’s credibility, of reckless harassment and of working to engineer a different American president.

On both economic and military issues, Mr. Pence declared: “We will not be intimidated; we will not stand down.”
The vice president seemed to confirm that President Trump’s trade war is more about tackling China than creating U.S. jobs. 

Worse, perhaps, taxing Beijing is shaping up to be a 2020 re-election strategy. 

Forget Russia, Vice President Pence suggested: China is the real election meddler. 

It “clearly laid down an official marker for a much more competitive and contentious New Era of U.S.-China relations,” says China analyst Bill Bishop.

All this is throwing Xi’s domestic strategies into disarray – perhaps permanently.
Six months ago, Beijing was throttling ahead with “Made in China 2025,” a multi-trillion-dollar effort to dominate the future of self-driving vehicles, renewable energy, robots and artificial intelligence. 

Party bigwigs were also planning festivities to commemorate the 40th anniversary of Deng’s reforms -– and Xi’s steps to accelerate them.
Now, Xi’s undivided attention is on making this year’s growth numbers. 

President Trump’s trade-policy grenades are sending a few too many market forces Beijing’s way for comfort. 

China’s currency is down 6.4 percent this year. 

Shanghai stocks are down 22.3 percent this year as JPMorgan Chase and other investment banks turn cautious despite China’s 6.7 percent growth.
The headwinds heading China’s way are unmistakable, particularly with President Trump threatening to up the tariff ante to $505 billion. 

In August, export growth weakened to just under 10 percent from the previous month -- crisis levels for a trade-reliant developing nation. 

Fixed-asset investment has stalled, falling to a record low in August. 

And the latest purchasing managers’ data from the government and Caixin at right at the 50-point mark -- just a small step from contraction.
That’s unleashed a frantic push to keep China’s growth engine from crawling to a stop. 

Almost daily, Xi’s team rolls out new plans to cut taxes, boost business lending and ramp up infrastructure spending. 

Regulators are easing up on credit curbs and limits on property speculation. 

On Oct. 7, the central bank slashed the amount of cash lenders must set aside as reserves for the fourth time this year. 

It is as clear an admission as any that China’s 6.5 percent growth target is in trouble.
So are Xi’s designs of raising Deng’s upgrades to 11. 

In 1978, Deng set the most populous nation on a journey from impoverished backwater to surpassing Japan’s GDP on the way to America’s. 

Deng replaced Maoist egalitarianism with meritocratic forces. 

He loosened price controls, decollectivized agriculture, allowed entrepreneurs to start businesses, welcomed foreign investment and morphed China into a global manufacturing juggernaut.
Xi’s Made in China 2025 gambit aimed to push the economy upmarket – making it more about tech companies like Alibaba and Tencent than sweatshops. 

Yet now Xi is engaged in all-hands-on-deck battle against President Trump’s ploy to turn back the clock on China’s rising influence.
A key element of moving China beyond boom-and-bust cycles and making growth more productive is tackling dueling bubbles in credit, debt and property prices. 

That means increasing transparency, policing an out-of-control $20 trillion shadow-banking sector and dropping support for state-owned enterprises to create a vibrant private sector. 

Such upgrades will necessitate slower growth -- 5 percent or below.
Yet they are now largely on hold. 

Xi reverting to the stimulus-at-all-costs playbook that got China into financial hot water is a worrisome bookend for the Deng revolution. 

Xi is ensuring that when China’s debt-excess reckoning comes, what economists call a “Minsky moment,” it will be bigger, more spectacular and more globally impactful. 

If you thought the “Lehman shock” of 2008 was scary, wait until the No. 2 economy with $14 trillion of annual output goes off the rails.
Beijing is well aware of its plight – and the air of panic and paranoia is manifesting itself in bizarre ways.
The disappearance of a beloved actress, the detention of an Interpol bigwig and the visa troubles of a Western journalist wouldn’t normally be big concerns for economists. 

But there’s nothing typical about the lengths to which China is going to fend off President Trump’s escalating trade war.
The first narrative involves “X-Men” star Fan BingBing, who resurfaced last week after vanishing from public view. 

She was detained for alleged tax evasion and ordered to cough up $129 million. 

Yet her case was a stark reminder about something else: President Xi’s paranoia about capital outflows as wealthy mainlanders spirit their fortunes abroad.
The second concerns Meng Hongwei, the Chinese head of Interpol who went missing last month. Meng is being investigated for bribery. 

Yet Xi’s heavy-handed tactics highlight the lengths to which the Communist Party will go to maintain absolute control over its subjects, even those on the world stage. 

Couldn’t Interpol deal with any credible allegations in-house? 

It hardly helps that Xi’s anti-graft drive often seems more about sidelining rivals than cleansing the system.
The third narrative relates to Hong Kong-based Financial Times editor Victor Mallet, whose visa renewal was just rejected. 

Mallet is vice president of the Foreign Correspondents’ Club, which in August enraged Xi by hosting a pro-Hong Kong independence speaker. 

It may be the latest sign of Chinafication in a city that once stood as a financial green zone for investors tapping the mainland market.
Taken together, these plotlines make a mockery of Xi’s market-forces pledge. 

Rather than creating a predictable rule of law on which trusted economies thrive, Xi’s China is regressing in ways sure to chill foreign investment. 

This imperils his efforts in the President Trump era to portray China as a credible power ready to fill the global leadership void. 

Xi is engaged in his own Trumpian battle against the media –- even outside the mainland –- and going after high-profile rivals.
President Trump doesn’t get all the blame. 

If Xi had worked with Deng-like determination to recalibrate growth engines and wean China off exports, the economy would be less vulnerable to President Trump’s attacks. 

By certain metrics, meantime, Xi, is dragging China backward. 

Its press-freedom ranking from Reporters Without Borders worsened to 176th, three notches below 2013.
Irony abounds, of course. 

Earlier this year, Xi convinced the party to effectively make him president for life rather than the traditional 10 years. 

Past U.S. presidents would’ve condemned the power grab; Trump was all compliments. 

Yet the stronger Xi becomes, the more he clamps down on the media and dissenting voices needed to police the government and corporate titans.
Nor has Xi addressed a central paradox: how China increases innovation while walling off innovators from Google, Facebook and the big debates of the day. 

Those market forces Xi pledged to heed are coming from Silicon Valley, too. 

While Trump complains about fake news, Xi’s China has a “fake reform” problem, says Wang Yiming, deputy director of the State Council Development Research Center.
A propensity for own-goals, too. 

Case in point: China’s government inserted tiny spying chips into smartphones and other devices. 

Might that troll President Trump to retaliate further? 

“Conflict with China over trade, investment, technology and geopolitical dominance will only escalate,” says analyst Arthur Kroeber of Gavekal Research in Beijing.
That’s likely to further reduce China’s appetite for risk. 

Since Xi’s legitimacy is predicated on rapid growth, he’s likely to punt Deng 2.0 forward. 

It follows that the faster China grows over the next 12 months, the less reforming Xi’s men are doing behind the scenes.

China’s Authoritarian Export

Beijing forces the expulsion of a reporter from Hong Kong.
Wall Street Journal

Financial Times Asia Editor Victor Mallet speaks at the Foreign Correspondents' Club luncheon in Hong Kong, Aug. 14. 

Hong Kong last week refused to renew the work visa of Financial Times Asia Editor Victor Mallet and gave him seven days to leave the territory. 

The unprecedented expulsion is the latest attack on civil liberties and the rule of law in the former British colony, which was returned to Chinese rule in 1997 but with autonomy for 50 years.
The government won’t say why it expelled Mr. Mallet, but it appears to be part of a crackdown on young politicians who espouse independence or self-determination. 

On July 17 the government proposed using an anti-organized crime law to ban the Hong Kong National Party, a tiny group calling for independence from China. 

The Hong Kong Foreign Correspondents’ Club, with Mr. Mallet as acting president, invited the party’s founder to speak.
That touched off a tantrum. 

Chinese Foreign Ministry officials demanded the club cancel the event, and the Hong Kong government issued a statement that “providing a public platform for a speaker to openly advocate independence completely disregards Hong Kong’s constitutional duty to uphold national sovereignty. It is totally unacceptable and deeply regrettable.”
The FCC went ahead with the speech, which was legal, and Mr. Mallet introduced the speaker. Newspapers owned by Beijing poured vitriol on the club, and former Hong Kong Chief Executive Leung Chun-ying called for the FCC to be evicted from its rented premises in a government-owned building. 

The government then banned the National Party as a threat to national security.
Meanwhile, pro-Beijing figures in Hong Kong are calling for new laws against subversion. 

The government last tried to pass such laws in 2003, when more than half a million protesters took to the streets. 

Local officials seem reluctant to refight that battle. 

But in January an electoral official disqualified a legislative candidate from Demosisto, a large opposition party that calls for self-determination but not independence.
Mr. Mallet’s expulsion is also an attack on Hong Kong’s tradition as a free-press redoubt in Asia. Journalists have used Hong Kong for decades as a base to report on China, confident that they could do so freely. 

Now China is barring a journalist for no more than providing a public forum for a dissenter.
The case shows that hardline Chinese officials who staff Beijing’s Liaison Office are calling the shots in Hong Kong. 

Xi Jinping’s authoritarian crackdown is spreading from the mainland to wherever China can dominate or exert influence. 

The trend is one reason world opinion is building against China as a threat to democracy and freedom.