- The Hong Kong government expelled pro-democracy lawmakers from the Legislative Council, triggering the rest of the opposition faction to resign in protest.
- A new decision by the mainland legislature grants Hong Kong’s pro-Beijing administration broad powers to disqualify candidates or to expel elected lawmakers without judicial review.
- The expulsions do not directly affect the foreign business community, but they could add to political pressure in the US to impose sanctions on Chinese financial institutions.
The entire pro-democracy opposition faction in Hong Kong’s Legislative Council resigned in protest on 11 November, following the government’s expulsion of four opposition lawmakers from the legislature. A new ruling by the mainland legislature grants the Hong Kong government broad authority to expel lawmakers without legal review, further cementing Beijing’s control over the territory.
The National People’s Congress Standing Committee (NPCSC) issued a formal decision prohibiting anyone from serving in the legislature who advocates Hong Kong independence; denies China’s sovereignty over Hong Kong; seeks interference in Hong Kong’s affairs by foreigners; engages in “other behavior that threatens national security”; or does not “meet the qualifications” for pledging loyalty to Hong Kong. Decisions by the National People’s Congress (NPC) carry force of law in Hong Kong, and an earlier NPCSC decision laid the legal groundwork for the NPC to enact the National Security Law that took effect in July.
The four expelled lawmakers and eight who subsequently resigned had already been barred from seeking new terms in legislative elections that were scheduled for September but were postponed for a year, ostensibly due to Covid-19. Two of the four, Alvin Yeung and Dennis Kwok, signed a joint letter calling for the US to impose sanctions on Hong Kong and mainland officials, while a third, Kenneth Leung, reportedly advocated US sanctions informally. Kwok Ka-ki, reportedly “intended” to make a similar appeal to foreign powers, though the precise allegation against him remains unclear. The decision in September to bar the 12 lawmakers from re-election required a ruling by a local court, along with a legal review by Beijing, but the new NPCSC decision streamlines the process.
Beyond the specific justifications for the expulsions, pro-establishment lawmakers had grown frustrated with the opposition camp’s use of filibustering tactics that blocked progress on various legislation, including fiscal stimulus and measures to address Covid-19. Police arrested eight opposition lawmakers earlier this month over a chaotic dispute in May that escalated into a physical confrontation, as rival factions battled for control of a legislative committee. Chief Executive Carrie Lam welcomed the expulsions and resignations, saying they would ease passage of important legislation.
Looking ahead, the NPCSC decision further increases Beijing’s control over the Legislative Council, enabling the Hong Kong government and the legislature’s pro-Beijing camp to steamroll opposition. The developments mark another incremental strengthening of Beijing’s control over Hong Kong and further erodes the city’s autonomy. From the perspective of the business community, however, the moves will not affect day-to-day operations and do not alter our previous analysis that a mass exodus of foreign business and investment from Hong Kong is unlikely. Prior to the expulsions, Hong Kong’s financial regulator had privately told financial institutions that abiding by US sanctions against Hong Kong and mainland officials would not be considered a violation of the National Security Law, removing a source of uncertainty that had worried bankers in the city.
Governments including the US, the UK, Canada, Germany, and Australia condemned the expulsions, but there is little sign that they intend to take concrete actions in response. Still, the expulsions could add to political pressure in the US to impose sanctions on Chinese financial institutions under the Hong Kong Autonomy Act, a US law enacted in June. The act requires the Treasury Department to sanction financial institutions that engage in “significant transactions” with sanctioned individuals. The law requires Treasury to issue a decision about financial sanctions sometime between 13 November and 13 December.
Though financial sanctions on a major Chinese bank would be highly disruptive to global trade and investment, US President Donald Trump may now be less concerned about such disruption, given that handling the consequences would largely fall to President-Elect Joe Biden. On 9 November, Washington announced sanctions on four additional Hong Kong and mainland officials deemed responsible for the National Security Law, following earlier sanctions in August.