THE vast majority of nearly 200 Hong Kong companies which have links with the Chinese defence and aerospace industries or the People's Liberation Army are engaged in legitimate, non-military related business. Some may be involved in more sensitive activities. But if any are engaged in illegal activities, such as arms dealing or acquisition of sensitive Western technology, they have not been identified.
Nevertheless, the fact that so many military-linked enterprises are now revealed to be in operation in Hong Kong inevitably raises questions in the West about the security of exports to the SAR. Already last summer, in the run-up to the change of sovereignty, the US General Accounting Office, a watchdog body, suggested that there were risks in continuing to allow Hong Kong to import technology denied to China. That policy had been in force since the Cold War.
Although some Western nations have since taken a more cautious approach, neither Britain nor the United States has downgraded Hong Kong's security status. Both countries continue to credit the SAR with maintaining its licensing and security regime for re-exports to mainland China and elsewhere. That status remains vital. Without it, indispensable technology could be denied to Hong Kong companies as well as to mainland firms. But, unless the SAR monitors the activities of local business and maintains a strict licensing regime for re-exports, and also makes a point of showing what it is doing, that status may be at risk.
An investigation by the Sunday Morning Post into the scale of the military-industrial presence in Hong Kong is published today. Our reporting followed the decision earlier this year to grant an explosives licence to Throne Star International and to allow it to operate from the offices and depot of Rex International just months after Rex International was forced to shut over an alleged shipment of weapons parts to Iran. Rex was closely linked to China's arms manufacturer, Norinco.
The establishment of a Norinco office in the SAR and allegations that an executive of the Hong Kong headquarters of China Aerospace International Holdings sought to buy influence over US satellite launch policies add to the importance of the issue.
Hong Kong must remain vigilant, and must not be used as a staging post for arms companies. This is an area where, for both local and international reasons, it is vital that the existing system is maintained.