China News - 11 November 2020
China ousts pro-democracy Hong Kong lawmakers in new crackdown. China has passed legislation allowing for the immediate disqualification of lawmakers in Hong Kong deemed dangerous to national security, in a move widely seen as heralding the end of legislative opposition in the city. Four pro-democracy lawmakers were unseated shortly afterwards. “We need to have a political body which is composed of patriots,” Hong Kong’s chief executive, Carrie Lam, told reporters.
The measure, passed by China’s highest legislative body on Wednesday, bars anyone who refuses to admit China’s exercise of sovereignty over Hong Kong, or expresses an objection to the implementation of the national security law. The remaining 15 Hong Kong pro-democracy lawmakers are set to resign en masse tomorrow over the Beijing resolution, leaving the Legislative Council with only pro-Beijing lawmakers. The Guardian, NYT, Hong Kong Free Press, SCMP, 11 November
Long-awaited National Security & Investment Bill set to be published today. The UK government’s bill promises sweeping new powers over foreign takeovers that pose a risk to national security. The new bill represents a significant overhaul of the government’s existing powers under the 2002 Enterprise Act, which limited scrutiny to takeovers of firms worth £70m or more. The Times, The Guardian, FT, Gov press release, 11 November.
Key points:
In 17 sensitive industries, it will be mandatory for foreign investors to report attempted takeovers of British companies to a new government unit. Failure to do so risks fines and sanctions.
The government believes there will be up to 1,000 annual notifications of foreign takeovers and investments, of which about 95 will be reviewed.
The Times reports that the regime will apply retrospectively, so the government can intervene in deals up to five years prior.
An investment security unit will be housed within the Department for Business, Energy and Industrial Strategy to “provide a single point of contact for businesses wishing to understand the bill”.
The new government screening process of overseas takeovers of UK assets should be carried out within 30 working days, allowing most deals to be cleared swiftly.
Chinese tensions put Australian businesses under pressure. Canberra has asked Beijing to provide clarity on any new measures, but relations have deteriorated to such an extent that Australia’s trade minister, Simon Birmingham, has admitted that his Chinese counterpart does not return his calls. Iron ore, by far Australia’s most valuable export to China, remains unaffected by trade turmoil. But analysts warn that China’s plans to build greenfield iron ore mines in west Africa could reduce its reliance on Australia. FT, 11 November
US Undersecretary of State Keith Krach set to hold economic talks with Taiwan this month, says Pompeo. Reuters, 10 November
The CRG hosted Taiwan Foreign Minister Joseph Wu yesterday for discussion of Taiwan security environment and UK-Taiwan relations. Read his remarks on our website.
China watch
Today is China’s annual Singles Day shopping event, originally created by Alibaba and now often billed as the world’s largest online retail event. Last year it generated $38.3 billion in sales for Alibaba - preliminary estimates today suggest sales have already exceeded $56bn. BBC, Reuters
President Xi Jinping makes speech at 20th meeting of Shanghai Cooperation Organization Council of Heads of State, with Putin in attendance. “Security and stability are the number one precondition for a country’s development”. Xinhua
Economy & tech
China targets Alibaba, other homegrown tech giants with antimonopoly rules. China’s State Administration for Market Regulation said Tuesday it would seek feedback on rules covering a host of potential anti-monopolistic practices on the country’s digital platforms, including offering different prices to different consumers for the same product. Chinese tech companies lost almost $254bn of market value over two days in the face of renewed regulatory attention. WSJ, FT, 11 November
Exclusive: Huawei to sell budget smartphone unit Honor for $15 billion to a consortium including Shenzhen government and Digital China, Reuters reports. The all-cash deal reflects pressure from US sanctions. Reuters, 10 November
Longer reads & opinion
China’s ‘recolonisation’ of Hong Kong could soon be complete. Jamil Anderlini in FT, 11 November
Japan is key to containing threat from China. A new Japanese-Australian defence agreement highlights potential for joint military action. Roger Boyes in The Times, 10 November
Hong Kong's dying news stands tell a story of change. BBC, 11 November