Can Hong Kong’s economy survive China’s political crackdown? - Al Jazeera English | Canada News Media
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Can Hong Kong’s economy survive China’s political crackdown? – Al Jazeera English

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Hong Kong, China – Rumours that the Hong Kong dollar will be unpegged from the United States dollar percolate through local brokerages. Thousands of middle-class families have sold their flats and cashed out for a new life abroad. Hong Kong’s powerful developers cringe when Beijing demands that they alleviate the territory’s housing shortage.

Over the past year, Hong Kong’s society has been torn apart by the Beijing-imposed national security law and changes to the electoral process designed to ensure only people deemed “patriots” can hold office in the territory.

Now attention is turning to whether its famously free economy and status as a global financial centre can survive.

Observers are not optimistic.

“Economic freedom without democracy and other freedoms is not stable in the long term,” said Fred McMahon, a resident fellow with the Fraser Institute, an independent non-partisan think-tank in Canada.

Last month, the institute’s annual report on economic freedom still crowned Hong Kong’s the freest economy in the world, but it pointed to the national security law and the city’s “descent into tyranny” as threats to holding on to the title for much longer.

“The key aspect of economic freedom is the rule of law, which doesn’t bow to power but enforces justice and independence of the government,” McMahon told Al Jazeera. However, for the Chinese Communist Party “the law is subservient to politics,” he added.

Experts question whether Hong Kong can remain economically free in the wake of the national security law [File: Jerome Favre/EPA]

Last year, The Heritage Foundation, which for decades toasted the city as the poster child of laissez-faire economics, dumped Hong Kong from its ranking.

Within months of the security law coming into effect, Next Digital, a thriving business that published the popular pro-democracy Apple Daily, was forced to close after owner Jimmy Lai was accused of “colluding with a foreign power”, and the company’s assets were frozen.

While Lai is behind bars awaiting trial and has since been charged with other offences, businesspeople are wondering whether the tycoon’s prosecution under the new law proves to be a singular exception – or the proverbial canary in the coal mine.

“This is a special case that has put the international business community on guard,” said George Cautherley, vice chairman of the International Chamber of Commerce – Hong Kong. “They’re waiting to see if the government will go further than this and how this is going to evolve.”

Hong Kong’s economy still seems to be humming along for now, but Beijing’s recent mainland crackdowns on tech giants, tuition centres and debt-binging real-estate developers have raised suspicion about what might be in store.

Assuming history is any guide, it could be only a matter of time before Beijing extends its interest to Hong Kong’s economic affairs.

A case in point: The national security law was promulgated in mainland China only a few years before it was imposed on Hong Kong, bypassing the territory’s own elected legislature.

More recently, the city’s “big four” developers, faulted for some of the world’s highest home prices and smallest flats, were told to do their bit to solve the territory’s housing problems.

Hong Kong Chief Executive Carrie Lam (left) has made it clear that aligning the territory with China, including over the territory’s punishing COVID-19 quarantine policy, is her priority [File: Jerome Favre/EPA]

For businesspeople, there is also the spectre of the past: when China was a command economy and private ownership outlawed.

“Businesspeople are worried perhaps not so much as their own personal freedom as the value of their assets invested in Hong Kong and China,” said Joseph Lian, former commentator and top editor at the city’s business press who now teaches economics at Yamanashi Gakuin University in Japan. They “would be in for a tough ride”, he said.

Eye on Beijing

But it is not only the well-heeled who worry. Middle-class families convulsed by the crackdowns are also looking to protect their money and investments.

Tens of thousands of Hong Kong people who are planning to emigrate have put up the family flat – often their most valuable asset – for sale. Some – and not only those who are planning to leave – are also opening offshore bank accounts out of concern that the territory may soon be subject to the same kind of capital controls as the mainland.

The world’s longest and most costly quarantine mandate – between 14 and 21 days in a hotel for all residents returning from overseas – has also been weighing on the minds of business and once-regular travellers.

The European Chamber of Commerce warned earlier this month that many of its member companies were considering relocating some of their operations elsewhere – including Singapore – because of the mandate, which the local government has shown little willingness to relax even for the fully vaccinated.

Chief Executive Carrie Lam has hammered home her objective of aligning the city’s pandemic control with the mainland’s zero-COVID goal – whatever the cost.

But the price of an increasingly restricted economy could end up being hefty.

Next Digital CEO Cheung Kim Hung – shown here arriving at the Lai Chi Kok Reception Centre in Hong Kong – has, along with other top executives, been charged with ‘collusion with a foreign power’ and the company has now been wound up [File: Jerome Favre/EPA]

Hong Kong’s separate economic system has long underpinned its status both as China’s most important financial hub and a global one.

But with the territory on an ever-shorter leash from Beijing, Lian expects the investment dollars that propelled it into pre-eminence over the last half-century could soon give way to an influx of speculative funds, known as hot money.

“A mature financial centre has a lower proportion of hot money; Hong Kong may be going in the opposite direction,” said Lian. “It may still make money for a lot of people; casinos do, too, but that’s not what a financial centre is for.”

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Review finds no case for formal probe of Beijing’s activities under elections law

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OTTAWA – The federal agency that investigates election infractions found insufficient evidence to support suggestions Beijing wielded undue influence against the Conservatives in the Vancouver area during the 2021 general election.

The Commissioner of Canada Elections’ recently completed review of the lingering issue was tabled Tuesday at a federal inquiry into foreign interference.

The review focused on the unsuccessful campaign of Conservative candidate Kenny Chiu in the riding of Steveston-Richmond East and the party’s larger efforts in the Vancouver area.

It says the evidence uncovered did not trigger the threshold to initiate a formal investigation under the Canada Elections Act.

Investigators therefore recommended that the review be concluded.

A summary of the review results was shared with the Canadian Security Intelligence Service and the RCMP. The review says both agencies indicated the election commissioner’s findings were consistent with their own understanding of the situation.

During the exercise, the commissioner’s investigators met with Chinese Canadian residents of Chiu’s riding and surrounding ones.

They were told of an extensive network of Chinese Canadian associations, businesses and media organizations that offers the diaspora a lifestyle that mirrors that of China in many ways.

“Further, this diaspora has continuing and extensive commercial, social and familial relations with China,” the review says.

Some interviewees reported that this “has created aspects of a parallel society involving many Chinese Canadians in the Lower Mainland area, which includes concerted support, direction and control by individuals from or involved with China’s Vancouver consulate and the United Front Work Department (UFWD) in China.”

Investigators were also made aware of members of three Chinese Canadian associations, as well as others, who were alleged to have used their positions to influence the choice of Chinese Canadian voters during the 2021 election in a direction favourable to the interests of Beijing, the review says.

These efforts were sparked by elements of the Conservative party’s election platform and by actions and statements by Chiu “that were leveraged to bolster claims that both the platform and Chiu were anti-China and were encouraging anti-Chinese discrimination and racism.”

These messages were amplified through repetition in social media, chat groups and posts, as well as in Chinese in online, print and radio media throughout the Vancouver area.

Upon examination, the messages “were found to not be in contravention” of the Canada Elections Act, says the review, citing the Supreme Court of Canada’s position that the concept of uninhibited speech permeates all truly democratic societies and institutions.

The review says the effectiveness of the anti-Conservative, anti-Chiu campaigns was enhanced by circumstances “unique to the Chinese diaspora and the assertive nature of Chinese government interests.”

It notes the election was prefaced by statements from China’s ambassador to Canada and the Vancouver consul general as well as articles published or broadcast in Beijing-controlled Chinese Canadian media entities.

“According to Chinese Canadian interview subjects, this invoked a widespread fear amongst electors, described as a fear of retributive measures from Chinese authorities should a (Conservative) government be elected.”

This included the possibility that Chinese authorities could interfere with travel to and from China, as well as measures being taken against family members or business interests in China, the review says.

“Several Chinese Canadian interview subjects were of the view that Chinese authorities could exercise such retributive measures, and that this fear was most acute with Chinese Canadian electors from mainland China. One said ‘everybody understands’ the need to only say nice things about China.”

However, no interview subject was willing to name electors who were directly affected by the anti-Tory campaign, nor community leaders who claimed to speak on a voter’s behalf.

Several weeks of public inquiry hearings will focus on the capacity of federal agencies to detect, deter and counter foreign meddling.

In other testimony Tuesday, Conservative MP Garnett Genuis told the inquiry that parliamentarians who were targeted by Chinese hackers could have taken immediate protective steps if they had been informed sooner.

It emerged earlier this year that in 2021 some MPs and senators faced cyberattacks from the hackers because of their involvement with the Inter-Parliamentary Alliance on China, which pushes for accountability from Beijing.

In 2022, U.S. authorities apparently informed the Canadian government of the attacks, and it in turn advised parliamentary IT officials — but not individual MPs.

Genuis, a Canadian co-chair of the inter-parliamentary alliance, told the inquiry Tuesday that it remains mysterious to him why he wasn’t informed about the attacks sooner.

Liberal MP John McKay, also a Canadian co-chair of the alliance, said there should be a clear protocol for advising parliamentarians of cyberthreats.

This report by The Canadian Press was first published Sept. 17, 2024.

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NDP beat Conservatives in federal byelection in Winnipeg

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WINNIPEG – The federal New Democrats have kept a longtime stronghold in the Elmwood-Transcona riding in Winnipeg.

The NDP’s Leila Dance won a close battle over Conservative candidate Colin Reynolds, and says the community has spoken in favour of priorities such as health care and the cost of living.

Elmwood-Transcona has elected a New Democrat in every election except one since the riding was formed in 1988.

The seat became open after three-term member of Parliament Daniel Blaikie resigned in March to take a job with the Manitoba government.

A political analyst the NDP is likely relieved to have kept the seat in what has been one of their strongest urban areas.

Christopher Adams, an adjunct professor of political studies at the University of Manitoba, says NDP Leader Jagmeet Singh worked hard to keep the seat in a tight race.

“He made a number of visits to Winnipeg, so if they had lost this riding it would have been disastrous for the NDP,” Adams said.

The strong Conservative showing should put wind in that party’s sails, Adams added, as their percentage of the popular vote in Elmwood-Transcona jumped sharply from the 2021 election.

“Even though the Conservatives lost this (byelection), they should walk away from it feeling pretty good.”

Dance told reporters Monday night she wants to focus on issues such as the cost of living while working in Ottawa.

“We used to be able to buy a cart of groceries for a hundred dollars and now it’s two small bags. That is something that will affect everyone in this riding,” Dance said.

Liberal candidate Ian MacIntyre placed a distant third,

This report by The Canadian Press was first published Sept. 16, 2024

The Canadian Press. All rights reserved.

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Trudeau says ‘all sorts of reflections’ for Liberals after loss of second stronghold

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OTTAWA – Prime Minister Justin Trudeau say the Liberals have “all sorts of reflections” to make after losing a second stronghold in a byelection in Montreal Monday night.

His comments come as the Liberal cabinet gathers for its first regularly scheduled meeting of the fall sitting of Parliament, which began Monday.

Trudeau’s Liberals were hopeful they could retain the Montreal riding of LaSalle—Émard—Verdun, but those hopes were dashed after the Bloc Québécois won it in an extremely tight three-way race with the NDP.

Louis-Philippe Sauvé, an administrator at the Institute for Research in Contemporary Economics, beat Liberal candidate Laura Palestini by less than 250 votes. The NDP finished about 600 votes back of the winner.

It is the second time in three months that Trudeau’s party lost a stronghold in a byelection. In June, the Conservatives defeated the Liberals narrowly in Toronto-St. Paul’s.

The Liberals won every seat in Toronto and almost every seat on the Island of Montreal in the last election, and losing a seat in both places has laid bare just how low the party has fallen in the polls.

“Obviously, it would have been nicer to be able to win and hold (the Montreal riding), but there’s more work to do and we’re going to stay focused on doing it,” Trudeau told reporters ahead of this morning’s cabinet meeting.

When asked what went wrong for his party, Trudeau responded “I think there’s all sorts of reflections to take on that.”

In French, he would not say if this result puts his leadership in question, instead saying his team has lots of work to do.

Bloc leader Yves-François Blanchet will hold a press conference this morning, but has already said the results are significant for his party.

“The victory is historic and all of Quebec will speak with a stronger voice in Ottawa,” Blanchet wrote on X, shortly after the winner was declared.

NDP Leader Jagmeet Singh and his party had hoped to ride to a win in Montreal on the popularity of their candidate, city councillor Craig Sauvé, and use it to further their goal of replacing the Liberals as the chief alternative to the Conservatives.

The NDP did hold on to a seat in Winnipeg in a tight race with the Conservatives, but the results in Elmwood-Transcona Monday were far tighter than in the last several elections. NDP candidate Leila Dance defeated Conservative Colin Reynolds by about 1,200 votes.

Singh called it a “big victory.”

“Our movement is growing — and we’re going to keep working for Canadians and building that movement to stop Conservative cuts before they start,” he said on social media.

“Big corporations have had their governments. It’s the people’s time.”

New Democrats recently pulled out of their political pact with the government in a bid to distance themselves from the Liberals, making the prospects of a snap election far more likely.

Trudeau attempted to calm his caucus at their fall retreat in Nanaimo, B.C, last week, and brought former Bank of Canada governor Mark Carney on as an economic adviser in a bid to shore up some credibility with voters.

The latest byelection loss will put more pressure on him as leader, with many polls suggesting voter anger is more directed at Trudeau himself than at Liberal policies.

This report by The Canadian Press was first published Sept. 17, 2024.

The Canadian Press. All rights reserved.

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