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Politics Watch: The Hong Kong Extradition Law and the CCP Factional Struggle

◎ Xi’s political rivals are “weaponizing” Party orthodoxy against the Xi camp in Hong Kong affairs.

Over the weekend, hundreds of thousands in Hong Kong protested a controversial proposed extradition law that would put people in the city at risk of being sent to China on trial. The U.S. Secretary of State, other foreign diplomats, and multinational business groups are also opposed to the law. In the climate of the trade war, there is a very real chance that the Trump administration could extend tariffs to Hong Kong to caution the Chinese communist regime against strengthening its influence and control over Hong Kong.

Despite massive opposition to the extradition law and the very real trade war risks associated with it, the pro-Beijing Hong Kong government—and by extension, the Chinese Communist Party—is still pressing ahead with its plan to enact the law. We believe that Party survival instincts and the CCP factional struggle are why the Chinese regime is dead set on seeing the extradition law passed in the face of mounting political and geopolitical risks.

The backdrop:
In February, the Hong Kong authorities proposed making changes to the city’s extradition law to allow wanted persons to be sent to Taiwan, Macau, and mainland China for trial.

Many Hong Kong people—businessmen, scholars, lawyers, judges, students, and human rights groups—opposed the proposed extradition law because it put people in Hong Kong, including those who were just stopping over in the city, at risk of being arrested and extradited to the mainland at the whim of the Chinese regime. On June 9, an estimated 1.03 million people took to the streets of Hong Kong to protest the extradition law. Hong Kong residents living abroad also held demonstrations outside Chinese diplomatic missions and in public areas. Meanwhile, over 100 Hong Kong businesses and other opponents of the extradition law are planning to go on strike on June 12, the day where a second reading of the bill in the legislature has been scheduled. Organizers of the June 9 protest March are also planning to hold a sit-in outside the legislature from June 12 to June 20.

Foreign business groups and diplomats also opposed the proposed extradition law, which they believe threatens Hong Kong’s rule of law and the city’s status as an international financial center. They also argue that the Chinese regime would gain even tighter control over Hong Kong and further erode the city’s autonomy. U.S. Secretary of State Mike Pompeo and several of his counterparts in other countries have criticized the extradition law. A spokesperson for the U.S. Department of State also noted that America is “closely monitoring and concerned by the Hong Kong government’s proposed amendments to the law.” On June 10, State Department spokeswoman Morgan Ortagus said that the law could “damage Hong Kong’s business environment and subject American citizens residing in or visiting Hong Kong to China’s capricious judicial system.” In a statement on June 11, House Speaker Nancy Pelosi said that if the law passes, “Congress has no choice but to reassess whether Hong Kong is ‘sufficiently autonomous’ under the ‘one country, two systems’ framework.'”

The Hong Kong government, however, has remained indifferent to the immense pressure from locals and foreigners who oppose the proposed extradition law. “Hong Kong has to move on, there are severe deficiencies and gaps in our existing system to deal with cross-border crimes and transnational crimes. We were doing it and we are still doing it out of our clear conscience and our commitment to Hong Kong,” said Hong Kong leader Carrie Lam. On June 11, Andrew Leung, president of the Hong Kong legislature, scheduled extra sessions for lawmakers to debate the bill so that a vote can be held on June 20.

Our take:
Mounting domestic and foreign factors are currently endangering the Chinese regime. And in the context of the trade war escalation, the regime can ill-afford to increase its exposure to political and geopolitical risks lest it triggers political Black Swan events.

Yet the Chinese regime is ignoring popular sentiment in Hong Kong, fierce criticism abroad, the probability of U.S. tariffs being extended to Hong Kong, and the prospect of Hong Kong losing its status as an international trading hub by continuing to back the passage of the proposed extradition law. Serious problems for Hong Kong would ultimately translate into serious problems for China. Observers may find it hard to fathom why the typically highly pragmatic CCP would want more trouble at a time when it is already drowning under a perfect storm of troubles.

We believe that the CCP’s irrational behavior is the product of the Party’s survival instincts kicking in and the CCP factional struggle. Below we give a brief overview of the historical and contemporary factors that are shaping events in Hong Kong today.

Party survival
1. Per the CCP’s “survival-domination” dynamic, it has to eventually turn Hong Kong and Taiwan “red” and incorporate the two Chinese territories into communist China. Otherwise, a fully democratic Taiwan and a semi-democratic Hong Kong would forever serve as a rebuke to the CCP system and challenge the Party propaganda line that the Chinese people are ill-suited for democracy.

2. Due to historical reasons, the CCP did not move to take over Hong Kong by military force in the early decades after the founding of the People’s Republic of China. The People’s Liberation Army was tied up in the Korean War from 1950 to 1953, and the PRC later faced a United Nations trade embargo until the 1970s. Over time, Hong Kong and Macao became important smuggling hubs for the PRC.

For the PRC, “allowing” Hong Kong to remain as a smuggling hub was a double-edged sword. On the one hand, the regime was able to obtain funding, food, material, and information from the British colony. On the other hand, global anti-communist forces were able to establish a base in Hong Kong.

3. Having anti-communist elements in Hong Kong was not too much trouble for the Chinese regime before it implemented the “reform and opening up” policy. Things changed post-“reform” and when the British “handed-over” Hong Kong in 1997. Now the CCP had to worry about “foreign influence,” especially with more and more mainland Chinese passing through Hong Kong and accessing information which exposes the evils of the communist regime, including its murderous revolutionary campaigns, the Tiananmen massacre, and its many human rights abuses in the modern era. Such information became more prominently available in Hong Kong after July 1999 when Falun Gong adherents in the city started exposing the Jiang Zemin leadership’s brutal crackdown of the spiritual discipline on the mainland and the communist regime itself. In response, Beijing pressured the Hong Kong authorities to enact a national security law (Article 23) which would allow the PRC to target Falun Gong practitioners and other dissident groups in the city. The Hong Kong authorities later dropped the plans to pass Article 23 after a protest by 500,000 Hong Kong people and widespread international condemnation. However, discussion of eventually enacting Article 23 has never abated in public discussion.

4. Starting in 2012, Hong Kong suddenly saw a spike in the number of communist front groups (see the next section for context). The new front groups, such as the Hong Kong Youth Care Association, carried out classic Party influence operations (inciting the masses to struggle against each other) to attack anti-CCP groups and fracture Hong Kong society. Hong Kong’s freedoms and democracy suffered as a result of communist front group provocations.

The eroding of freedoms in Hong Kong and fracturing of Hong Kong society make it easier for the Chinese regime to interfere in local affairs and exert greater control over the city.

5. The election of Donald Trump as U.S. president in 2016 and his subsequent China policies represent a direct and existential threat to the Chinese regime. Under the Trump administration, U.S. policy on China has shifted from engagement to competition, U.S.-Taiwan relations have been strengthened, and America is calling greater attention to human rights abuses in China.

With stronger U.S. support for Hong Kong being a real possibility, the CCP would instinctively move to further blur the “one country, two systems” model and get a tighter grip on Hong Kong. The proposed extradition law is the latest and most obvious example of the CCP’s attempt to ensure that it can more effectively interfere in Hong Kong affairs as the geopolitical climate grows harsher for the PRC.

6. Historically, there has been resistance in the Party towards gripping Hong Kong too tightly or turning it “red” too soon. For one, Hong Kong is still useful to the PRC as an international trading hub, and too much authoritarian control would erode foreign investor and business confidence in the city. Also, the PRC has always sought to annex Taiwan under the “one country, two systems” model and needs to show that the model has been successfully implemented in Hong Kong.

However, growing U.S. pressure and rapidly improving U.S.-Taiwan ties have heightened the CCP’s sense of crisis and made the above reasons somewhat less relevant for Party survival. Instead, survival has shifted in the direction of consolidating what the CCP has already “got” and stemming “foreign influence” from using Hong Kong as a base to undermine the regime.

Factional struggle
1. The “you die, I live” struggle between the Jiang faction and the Xi camp has been at the heart of the political crisis in the Chinese regime since 2012. The Xi-Jiang struggle is the driving impetus behind Xi’s move to marginalize the “collective leadership” and highly centralize power in his person, moves required to overcome the problem of “policies not making it out of Zhongnanhai” (政令出不了中南海). The struggle is also a reason for several key policy “reversals” (no follow-through on the 2013 Third Plenum reform proposals, etc.) and the increased incidence of odd events (contradictory government reaction to the 2015 stock market crash, etc.) in China over the past six years. And the factional struggle has been particularly fierce and messy in Hong Kong, which has seen more controversy since 2012 than in the first 14 years after the handover.

A brief history of CCP operations and factional networks in Hong Kong is required to understand how the proposed extradition law could be connected to the factional struggle.

2. The CCP is capable of swaying affairs in Hong Kong because it has long infiltrated all levels of Hong Kong society. Since the 1920s, the CCP has operated in Hong Kong through an “underground front.” Using the underground front, the Party challenged “Western imperialism” in Hong Kong, most notably by instigating the 1967 leftist riots against the British colonial government. After the PRC’s “reform and opening up” and before the 1997 handover, many local and central government spy networks moved into the city and established themselves in various sectors (business, media, etc.) to facilitate a “smooth” transition to the “one country, two systems” model. Today, the Hong Kong Liaison Office unofficially performs the role of a local “Party committee” in the city.

3. Since the handover of Hong Kong in 1997, the Jiang faction has been the Party faction with the most influence over the underground front, the complex intelligence networks in the city, and the Liaison Office.

The Jiang faction “provided” three of the four heads of the Central Coordination Group for Hong Kong and Macau Affairs (Zeng Qinghong, Zhang Dejiang, Han Zheng), the top CCP group overseeing Beijing’s policy for Hong Kong and Macau. Also, all Hong Kong Liaison Office directors and Hong Kong chief executives are either Jiang faction members or associates.

While Xi Jinping once served as head of the Central Coordination Group for Hong Kong and Macau Affairs (October 2007 to November 2012), he never truly had much influence over Hong Kong affairs. Xi, a compromise candidate between Jiang Zemin and Hu Jintao, belonged to no Party faction and was not strong enough politically to shape matters in Hong Kong to his liking. More importantly, control over the CCP’s intelligence apparatus (including the intelligence networks in Hong Kong) was in the hands of Jiang faction number two Zeng Qinghong.

4. With the Jiang faction in control of crucial influence and intelligence networks in Hong Kong, it can easily stir up trouble in the city to embarrass and undermine the Xi leadership. CCP factional struggles are cutthroat in nature and elite cadres are not beyond outrageous Machiavellian schemes.

It does not seem to be a coincidence that Hong Kong has seen one controversy after another break out from 2012, the year where the factional struggle between the Jiang faction and the Xi camp kicked off. Noteworthy incidents include:

  • Hong Kong activists participating in anti-Japanese demonstrations concerning the Senkaku Islands dispute;
  • Escalation of provocations against Falun Gong adherents in Hong Kong by communist front groups;
  • Proposal of a pro-Beijing “patriotic education” syllabus in Hong Kong schools;
  • The “vanishing” of several Hong Kong businessmen from the city or Southeast Asian countries to the mainland for investigations;
  • The mass pro-democracy sit-in street protests in 2014;
  • The rise of the fringe “Hong Kong independence” movement;
  • The National People’s Congress interprets Hong Kong’s mini-constitution over an oath-taking saga;
  • Gu Zhuoheng, whose Hong Kong newspaper Sing Pao Daily previously attacked the Jiang faction, suddenly switched tune in 2019 by threatening on social media to expose corruption in the Xi clan;
  • Proposal for changes to the city’s extradition law.

(For additional analysis on specific incidents and the factional struggle, contact us.)

5. We believe that the Jiang faction is “weaponizing” Party orthodoxy against the Xi camp in Hong Kong affairs to further undermine Xi Jinping’s authority and tip the factional struggle in their favor.

Per Party orthodoxy, Xi has to resort to leftism to consolidate power in the Chinese regime. While we believe that Xi is merely “signaling left to turn right” as opposed to being a “true believer” in Maoism/communism, his reform-minded intentions and the factional struggle are not obvious to the bulk of Party cadres (factional politics are implicit rather than explicit). To stay “politically correct” for self-preservation, most cadres would tend to err on the side of Party orthodoxy (i.e. when in doubt, leftism is right) and take Xi’s overt “leftism” at face value when formulating or implementing policy. Meanwhile, cadres with ulterior motives (like Xi’s political enemies) would strive to interpret his policy directions in the most “politically correct”/“Maoist”/“leftist” manner and disregard other pragmatic considerations. Thus, “political correctness” and the factional struggle have brought out the CCP’s authoritarian and leftist tendencies to the fore on all issues and has caused the PRC to behave rigidly on policy.

Here is how “political correctness” and the faction struggle could be shaping PRC policy on Hong Kong. Party cadres who handle Hong Kong affairs (such as Jiang faction member Han Zheng) could interpret Xi’s statement that the “Party rules everything” to mean literally that the PRC should step up ways to tighten its control over Hong Kong. The cadres would then find ways to allow the PRC more leeway to interfere in Hong Kong’s affairs as they strive to make the “Party rule everything”; the proposed extradition law is one method of enhancing the PRC’s control over the city. Xi might personally disapprove of the timing or methods used to tighten control over Hong Kong, but he would not be able to veto it because it is aligned with his own vision and with Party orthodoxy. In fact, Xi would undermine his own authority by moving for a veto. Should the PRC’s methods to tighten control over Hong Kong ultimately jeopardize the city and the Chinese regime, Xi would bear full blame because he is the Party boss. With Xi taking the fall, his political rivals would gain an opening to pressure him to give up some authority or even force him out of office.

6. The Jiang faction’s “weaponization” of Party orthodoxy is very effective because there is virtually no way for Xi to counter this tactic if he continues to work within the CCP framework. The “weaponization” of Party orthodoxy also strengthens the popular international view that Xi is another Mao Zedong who should be dealt with and exponentially raises the levels of political and geopolitical risk which Xi and the Chinese regime face.

Xi’s most viable solution for the “weaponization” problem would be to crush the Jiang faction instead of finding compromise and contemplate plans for a post-communist China. While drastic, we believe that Xi could be forced by the perfect storm of pressures facing him and the regime to take the aforementioned actions. In this scenario, the Hong Kong government’s effort to push ahead with the proposed extradition law could be a trigger for political Black Swan events in China.

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