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The law was introduced on the mainland with Beijing engaged in a tit-for-tat sanctions battle with Washington Photo: AP

Beijing’s anti-sanctions law for Hong Kong: why is it being postponed? What do we know and don’t know about the delay?

  • Four-day meeting of country’s top legislative body concluded with no mention of how Hong Kong will adopt anti-sanctions law
  • In the days leading up meeting, debate had mounted over how Hong Kong government could use city’s own legislative process to localise national law
All eyes were on Beijing’s top legislative body on Friday, with the National People’s Congress (NPC) Standing Committee expected to announce a far-reaching law that could potentially affect Hong Kong’s reputation as a global financial hub.
But its four-day meeting in the capital concluded with no mention of how the city would adopt China’s anti-sanctions law, an instrument which would give Hong Kong legal teeth to retaliate against foreign action.

In the days leading up to the Beijing meeting, debate had mounted over how the government could use the city’s own legislative process to localise a national law, assuaging concerns from the business and banking sectors.

With the unexpected postponement of the legislation however, the Post explores the lead-up to the decision, what may have caused central authorities to put the brakes on applying the law to Hong Kong, and the road ahead.

The mainland enacted its law in June. Photo: EPA

Why does Beijing want to introduce the anti-sanctions law in Hong Kong?

The mainland version, enacted in June, aims to give Beijing legal grounds to take countermeasures against foreign individuals and entities involved in discriminatory measures that “violate international laws and basic norms”.
The law was introduced with Beijing engaged in a tit-for-tat sanctions battle with Washington, which had slapped rounds of penalties on Chinese and Hong Kong officials in the past year for “serious human rights abuses” in Xinjiang, and what it called an erosion of Hong Kong’s freedoms and autonomy. Washington has sanctioned 41 Hong Kong and state officials.

Wrong to think delay to Hong Kong sanctions law is Beijing U-turn, analysts say

Pro-establishment commentators and politicians have argued the law should be brought to Hong Kong because it would grant protection to the city’s officials and prevent foreign powers from meddling with Beijing’s internal affairs.

Hong Kong leader Carrie Lam Cheng Yuet-ngor, who is among officials being sanctioned by the United States, earlier said the law would give Western governments “a taste of their own medicine”. She had also quipped about how she kept “a pile of cash” at home since she no longer had a bank account.

Local officials said Beijing had full jurisdiction to legislate such a law for Hong Kong because it fell under foreign diplomacy.

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China passes anti-sanctions law to counter punitive action by foreign countries

China passes anti-sanctions law to counter punitive action by foreign countries

What are the concerns?

The impending legislation has sparked fear among businesses and banking institutions, raising concerns that foreign firms could be stuck between a rock and a hard place.

Some legal experts said the law would put financial institutions in “impossible positions”, having to abide by both local legislation and the version back home.

Lam has acknowledged the concerns. Answering a reporter’s question earlier this week, she agreed the law “may have generated other anxiety”.

Hong Kong leader Carrie Lam. Photo: May Tse

Hong Kong is also home to branches of foreign-owned social media giants banned in mainland China, such as Google and Facebook.

Professor Douglas Arner, who specialises in financial and insurance legislation at the University of Hong Kong, said the law’s impact on the city was likely to be greater than that on the mainland “given the much heavier internationalisation of Hong Kong”.

The attention in the past week turned to how the national law could be applied domestically.

China’s anti-sanctions law ‘can target individuals, families, organisations’

Under Article 18 of the Basic Law, Hong Kong’s mini-constitution, national laws do not apply in the city except those listed in Annex III. Once included, they can then take effect locally either by promulgation or through local legislation.

The latter legal option has gained traction in recent weeks for its flexibility.

Tam Yiu-chung, the city’s sole delegate to the NPC Standing Committee, on Tuesday confirmed the law would be applied to Hong Kong through local legislation, with the city’s administration sorting out the details.

What happened on Friday and what do we know?

Tam was speaking from Beijing where he joined a four-day NPC Standing Committee meeting to discuss, among other things, how the law would be introduced to the city. He had said on Tuesday that he expected the standing committee to make a decision by Friday.

State media outlet Xinhua also reported that on the first day of talks, delegates had scrutinised various draft resolutions, including one on adding the anti-sanctions legislation into the Basic Law.

Shen Chunyao, head of the committee’s Legislative Affairs Commission, also gave a briefing on the matter.

But there had been no mention of the draft resolution since then.

Tam Yiu-chung is the city’s sole delegate to the NPC Standing Committee. Photo: K. Y. Cheng
Hong Kong Financial Secretary Paul Chan Mo-po had scheduled meetings with lawmakers over the matter this week, the Post had learned.

But those discussions were abruptly called off, with sources saying Hong Kong authorities would also need time to gauge the concerns of the business community. The city’s government was also unlikely to present draft legislation until at least next year.

On Friday, Tam said the standing committee had decided “not to vote for the time being and will continue to study related issues”. He called it “a good move” as it would give Beijing more time to research and address concerns.

Tam refused to be drawn into elaborating, but said Beijing would always have the city’s back and urged investors to remain confident.

What may have caused the change of heart?

Pro-Beijing political commentator Lau Siu-kai, from the semi-official Chinese Association of Hong Kong and Macau Studies, said he believed pressure might have come from both local and foreign businesses. He noted concerns of businesses from within the country. “I can understand why Beijing may think it will require more time to study the issue,” he said.

It is understood that finance secretary Chan has had meetings with the four largest local business bodies, including the 4,000-member Hong Kong General Chamber of Commerce, which aired their concerns over the law.

A leading legal scholar, who spoke on condition of anonymity, said Beijing might see no urgency as the local legislation would take time anyway. Other observers have suggested that with a new ambassador to Washington and the Taliban’s recent takeover of Afghanistan, Beijing is shifting its priorities to deal with other fronts in its ties with the US.

Tian Feilong of Beihang University law school in Beijing. Photo: Jonathan Wong

But mainland scholar Tian Feilong, from Beihang University’s law school, said Beijing’s concern was the reputation of Hong Kong.

“The central government takes Hong Kong-related legislation seriously and scientifically,” he said.

A government source said officials had been meeting banks and business chambers to hear their concerns for the past three weeks. He added that he believed the postponement decision came from Beijing.

What may happen next?

The unanswered questions range from when exactly draft legislation would be presented to whether a more targeted approach will be taken.

Some analysts believe Beijing is likely to draft a more refined and targeted anti-sanctions law for Hong Kong that could list exemptions for selected multinational corporations instead of adopting the blunt approach of just imposing its own broader legislation.

European companies alarmed by China’s anti-sanctions law

Tian, the mainland scholar, said the postponement showed that both the central government and its advisers had realised Hong Kong’s market response must be taken into account.

But Lau, the political commentator, suggested the delay might lead to a completely different approach. “What is unclear is … whether Beijing will still respond to foreign countries which impose sanctions by inserting the anti-sanctions law in Annex III,” he said. “Or will it not insert the legislation but rely on other law and administrative means instead?”

Hong Kong is home to branches of foreign-owned social media giants banned in mainland China. Photo: Sun Yeung

Analysts have also suggested China could make good use of its broadly defined export control law and the Unreliable Entity List regulations, which also allow Beijing to impose restrictive measures on foreign individuals and enterprises endangering national security.

Others have called for a mechanism that would allow the Hong Kong government to exercise discretion.

The NPC Standing Committee meets every two months. But the next agenda has not been set.

Ip Kwok-him, a Hong Kong deputy to the NPC, said the standing committee would only vote on a law when it was mature enough, meaning there could be more rounds of discussion.

Echoing Lau, Ip also said there were uncertainties as to whether the law would be inserted into Annex III of the Basic Law, with the looming potential impact on Hong Kong’s long-standing international reputation.

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