SinoInsight 1
The CCP recently moved to tighten its grip over Hong Kong by instituting rules to admit only people whom Beijing believes are loyal to Party Central into Hong Kong politics. Meanwhile, Xi Jinping continues to wrestle control over Hong Kong from the Jiang faction.
March 6
Han Zheng, the Politburo Standing Committee member overseeing Hong Kong and Macau affairs, participated in the Chinese People’s Political Consultative Conference delegation meeting for Hong Kong and Macau at the Two Sessions. During the meeting, Han said that the next step for Hong Kong is the improvement of its electoral system and implementation of the “patriots ruling Hong Kong” (愛國者治港) principle. After that, the Hong Kong government should “vigorously resolve” economic and livelihood issues in the territory, and respond to Hong Kong residents’ concerns about income distribution, housing, the development of the territory as a hub of technological innovation, among other issues, according to Han Zheng.
March 11
The Fourth Session of the 13th National People’s Congress passed the “Decision of the National People’s Congress on Improving the Electoral System of the Hong Kong Special Administrative Region” (全國人民代表大會關於完善香港特別行政區選舉制度的決定) with 2,895 votes in favor and one abstention.
The Decision reduces the proportion of directly elected seats in Hong Kong’s legislature, heightens political scrutiny of election candidates, and strengthens Party Central’s control over the election committee (election committee members increased by 300 to 1,500) which picks Hong Kong’s leader.
March 12
Hong Kong’s Independent Commission Against Corruption confirmed in a press statement that it had arrested 24 persons after “an investigation into suspected corruption and fraud in relation to a property development project of small houses in Yuen Long.” The ICAC said that the investigation was carried out in response to complaints that “a developer, certain middlemen and indigenous villagers had conspired to acquire ‘Ding Rights’ from indigenous villagers by corrupt and fraudulent means, and made false claims to the Lands Department when applying to build small houses.”
Hong Kong media revealed that three prominent individuals, Edward Wong (王光榮), his son Nelson Wong (王德信), Yuen Long district councillor Ching Chan-ming were among the 24 arrested. Nicknamed “Small House King,” Edward Wong is the founder of Hong Kong law firm Wong and Poon Solicitors and property developer Hang On Development (恒安發展). Wong’s very profitable property company was involved in over 100 small house development projects in Hong Kong’s New Territories region over the past 30 years, including The Wonderland in Tai Po District and Hillwood in Yuen Long District.
Meanwhile, Wong and Poon Solicitors claims on its website that it is involved in government property transactions, and does legal work for Hong Kong’s Centaline Property Agency, Sun Hung Kai Properties, and 50 banks. Wong and Poon Solicitors also claims that it is closely involved in New Territories affairs, including property and land transactions. In 2020, Wong and Poon Solicitors ranked first in second-hand private residential sales with a market share of 5.2 percent, or 0.3 percent higher than the second place law firm Wong Fung Lawyers. After the arrest of Edward Wong and his son, however, HSBC, Standard Chartered, and several banks in Hong Kong stopped using Wong and Poon Solicitors for legal services, according to Hong Kong media reports.
Nelson Wong, the second son of Edward Wong, is an accountant and general manager of Wong and Poon Solicitors. Wilson Wong, the eldest son of Edward Wong, is a lawyer and former vice chairman of Yuen Long’s district council. Wilson Wong was accused of participating in the July 21 Yuen Long Station incident, where triad members clad in white indiscriminately and violently attacked people in the Yuen Long MTR station and on nearby streets. The Yuen Long Station incident was considered a watershed moment in the Hong Kong anti-extradition bill movement.
“Ding Rights” (丁權) refers to small house development rights enacted in the New Territories in 1972. Those rights allowed male indigenous inhabitants of the New Territories to apply to the government to have a small house built in their ancestral village once they turn 18 and have agricultural land under their name.
In recent years, however, Hong Kong developers and men local to the New Territories have profited massively from the abuse of “Ding Rights” (套丁). Eligible males sign private agreements with developers making them sole beneficiaries of the land that they are entitled to under “Ding Rights,” charging the developers hundreds of thousands of dollars for the exchanges. The developers then handle the construction and sale of the resulting homes.
OUR TAKE
1. The NPC’s passage of the “Decision of the National People’s Congress on Improving the Electoral System of the Hong Kong Special Administrative Region” formalizes the CCP’s long-term plan of capturing the Hong Kong elite (businesspeople, powerful rural committees, senior civil servants, etc.) and other subtle attempts at turning Hong Kong “red” (赤化香港).
To keep up the illusion of “one country, two systems,” the CCP tolerated the existence of pro-democracy groups and politicians, while building up controllable “opposition” and interest groups. With the imposition of the Hong Kong National Security Law and creation of “supra-authority” national security apparatus in the territory, however, the CCP no longer needs to tolerate opposition in Hong Kong, and has need only for “patriots.”
2. Hong Kong property developers, businesspeople, and rural committee members in the New Territories region were allowed to become a very powerful force in the city with the connivance of the CCP. The aforementioned interest groups benefited immensely from property development as a result of official-developer-triad-rural committee collusions. Key social problems in Hong Kong today—widening rich-poor divide, sky high and rising property prices, and growing social contradictions—are directly or indirectly the byproduct of interest group collusions.
The CCP’s influence over the New Territories and “black/white” groups (black = triads, underworld elements, etc.; white = police, government, etc.) in the region is particularly strong owing to historical factors. During the Second Sino-Japanese War, the CCP’s East River Column operated in the Dongjiang and Zhujiang Pearl River deltas, and established bases in Kowloon and the New Territories. The East River Column grew to 6,000 troops at peak strength, and was the predecessor to the CCP’s underground party in Hong Kong after the PRC was established. Triads in the New Territories are loyal to the CCP, and have resorted to gangster methods to interfere in Hong Kong’s elections. For example, former Hong Kong leader Leung Chun-ying was widely accused of colluding with underworld elements from the New Territories to attack his political enemies prior to the elections for chief executive in 2012.
Sometimes, the CCP plays a more direct role in leveraging shady forces in the New Territories to do its bidding. Before the Yuen Long Station incident, Li Jiyi, the head of the Hong Kong Liaison Office’s New Territories Department, told a gathering of the Heung Yee Kuk that he wanted “rural committee forces” to drive away pro-democracy activists from Yuen Long. Subsequently, the shocking Yuen Long Station incident broke out, and social conflicts in Hong Kong sharply intensified.
Given the CCP’s control over New Territories interest groups and their loyalty to Beijing, the investigation and arrest of Edward Wong, his son, and the local district councillor is a very unusual development under normal circumstances. When considered from the perspective of the Xi-Jiang factional struggle in Hong Kong (see here and here), however, the high profile shakeup of interest groups in the New Territories appears to be part of Xi Jinping’s effort to deny the Jiang faction any opportunities to transform Hong Kong into a “counter-revolutionary” and “anti-Xi” base. Through exporting the anti-corruption campaign to Hong Kong, Xi is simultaneously purging Hong Kong of entrenched interest groups that might be loyal or sympathetic to the Jiang faction, while signaling to those who have been spared that they should quickly bend the knee and show loyalty to him—or else.
3. The CCP’s anti-corruption efforts in Hong Kong and talk of “vigorously resolving” the city’s economic and livelihood issues are aimed at menacing the local elite, winning over the Hong Kong populace, and restoring “stability” to the territory through the reduction of social contradictions.
After the anti-extradition bill protests inspired millions of people to take to the streets, the CCP moved to ditch the bill in September 2019 via Hong Kong leader Carrie Lam while blaming social contradictions in the city for the protests. Through commentary pieces in state and Party media, the CCP blamed the Hong Kong elite for causing social problems, and in doing so, designated a new “class enemy” for the Hong Kong people to “struggle” against instead of Beijing. Factional struggle factors aside, the recent purge of Edward Wong and other New Territories elites is Beijing’s way of resolving social contradictions—intimidated elites will be more obedient and be less inclined to “challenge” the regime like Li Ka-shing and others did during the anti-extradition bill protests, while greater numbers of Hong Kong people may come to believe that Beijing is genuine about looking out for their interests.
4. Xi Jinping’s effort to strengthen his control over Hong Kong and purge factional rivals will almost certainly meet with pushback from his domestic and foreign enemies. Speaking up about the CCP’s erosion of Hong Kong’s autonomy is one of the Biden-Harris administration’s priorities, while Western establishment elites are pushing Washington to implement an “anti-Xi, not anti-CCP” China strategy. Moreover, the Jiang faction is aware that it has limited time between now and the 20th Party Congress to block Xi from securing a norm-breaking third term in office; failure to stop Xi from staying in power would mean their effective demise as a political force in the regime.
Black Swans are on the horizon as the Xi-Jiang faction struggle approaches a showdown. Businesses, investors, and governments must closely track developments in CCP elite politics to sidestep risks and seize opportunities.
SinoInsight 1
March 8
1. Xinjiang government media Tianshannet reported that some companies and individuals are suing Victims of Communism Memorial Foundation researcher Adrian Zenz for “spreading rumors about Xinjiang” like allegations of forced labor in the region. The Tianshannet report claimed that those suing Zenz are seeking compensation and apologies.
In 2018, Zenz’s research was the first to show that the PRC had detained more than 1 million Uyghurs. In December 2020, he released a report claiming that large numbers of Uyghurs and other ethnic minorities were involved in systemic forced labor of cotton production in Xinjiang, which produces over 85 percent of cotton in China and 20 percent of the world’s cotton.
2. The U.S.-based think tank Newlines Institute for Strategy and Policy released a 25,000 page report that assessed that the PRC breached all five articles of the United Nations genocide convention in its persecution of Uyghurs in Xinjiang.
According to the report, “The intent to destroy the Uyghurs as a group is derived from objective proof, consisting of comprehensive state policy and practice, which President Xi Jinping, the highest authority in China, set in motion.”
3. During a regular State Department press briefing, spokesman Ned Price said that Secretary of State Antony Blinken “has made clear that in his judgment, genocide was committed against the Uyghurs in Xinjiang.” Price was later criticized for describing genocide in Xinjiang in the past tense.
March 9
1. State Department spokesman Ned Price said in a press briefing that “both Secretary Pompeo and his successor Secretary Blinken have arrived at the judgment that genocide has taken place in Xinjiang.” When asked about his previous use of the past tense to describe genocide in Xinjiang, Price said, “we have seen nothing that would change our assessment.”
March 16
1. During a joint press briefing with U.S. defense secretary Llyod Austin and their Japanese counterparts in Tokyo, Secretary Blinken said, “China uses coercion and aggression to systematically erode autonomy in Hong Kong, undercut democracy in Taiwan, abuse human rights in Xinjiang and Tibet, and assert maritime claims in the South China Sea that violate international law.”
March 17
1. In an update about the Hong Kong Autonomy Act, Secretary Blinken identified 24 PRC and Hong Kong officials “whose actions have reduced Hong Kong’s high degree of autonomy.”
Blinken added that “foreign financial institutions that knowingly conduct significant transactions with the individuals listed in today’s report are now subject to sanctions,” effectively placing those 24 individuals on the same sanctions regime as the 10 PRC and Hong Kong officials that were identified by the Trump administration on Oct. 14, 2020.
2. According to Reuters and other Western news outlets, European Union ambassadors approved sanctions against four PRC individuals and one entity over human rights abuses against Uyghur Muslims in Xinjiang. The sanctions include travel bans and asset freezes, and the names of those sanctions will be made public pending approval by EU foreign ministers on March 22.
The sanctions will be the first by the EU against the PRC since an arms embargo in 1989 in response to the Tiananmen Square Massacre.
In February, the Dutch and Canadian parliaments labeled the PRC’s persecution of Uyghurs in Xinjiang as genocide.
March 18
Xu Guixiang, deputy director of the Xinjiang Propaganda Department, condemned the EU sanctions against the PRC over its human rights abuses in Xinjiang.
Xu also attacked Adrian Zenz, asserting that the latter is “not a scholar, let alone an expert on China issues,” but is a “far-right element” with the Victims of Communism Memorial Foundation. Xu added a string of unsubstantiated and defamatory claims, including insisting that Zenz is the “backbone of ‘research institutions’ set up by American intelligence organizations,” a “hired thug” for “anti-China forces in the West,” and is an “accomplice” of the “terrorist” dissident East Turkestan Liberation Organization.
OUR TAKE
1. There are two main reasons why the CCP is reacting strongly to international condemnation of its persecution campaign against Uyghurs and other ethnic minorities in Xinjiang.
First, the CCP always endeavors to squash all criticism of its domestic human rights abuses abroad. Focused international attention will weaken its ability to do “stability maintenance” work at home, open the PRC to foreign sanctions, and ultimately imperil regime security.
Second, persecution in Xinjiang has become a negative political legacy for Xi Jinping even though any Party boss would have done the same in a similar situation given communist regime’s “survival-dominance” dynamic and its brutal “stability maintenance” measures. The CCP has long suppressed the Uyghurs since the founding of the PRC; the existence of the paramilitary Xinjiang Production and Construction Corps is a legacy of the CCP’s earliest efforts to control the region. The recent persecution campaign has its roots in the Party’s efforts to combat “domestic terrorism” in 2009, and picked up steam in 2014 partly due to Xi’s drive to deny factional rivals the opportunity to create problems in the territory and undermine his rule. Regardless of complications in PRC elite politics, Xi now “owns” the atrocities committed in Xinjiang in recent years, similar to how Jiang Zemin “owns” the persecution campaign against Falun Gong that has become his negative political legacy.
2. The Biden-Harris administration’s focus on Xinjiang and “new” Hong Kong sanctions are in line with its softer, targeted approach to China. For instance, the sanctioning of foreign financial institutions for conducting “significant transactions” with blacklisted PRC and Hong Kong officials was a process that was set in place during the Trump administration and would have came into effect after a 60 day period, and was not something original that the Biden-Harris administration came up with. A March 17 Wall Street Journal report also noted that the “new” sanctions “aren’t expected to significantly affect the targeted officials,” given that earlier sanctions imposed by the Trump administration “have already complicated their travel and financing outside China.”
The Biden-Harris administration has noticeably scaled back the range of human rights issues that it is willing to confront Beijing over. Under the Trump administration, Washington condemned the CCP for persecuting the Uyghurs and ethnic minorities in Xinjiang, Tibetan Buddhists, house Christians, and Falun Gong. The last two persecuted groups appear to have been dropped entirely in reviewing official statements made by the Biden-Harris administration on the PRC’s human rights abuses. Washington is also no longer talking about international religious freedom or forced organ harvesting in China, two topics that the Trump administration gave attention.
The Biden-Harris administration’s softer, targeted approach to human rights in China, including its focus on issues considered to be Xi Jinping’s negative political legacy like Xinjiang and Hong Kong, are in line with an “anti-Xi, not anti-CCP” China strategy promoted by Western establishment elites.
