Black Sheep In Hong Kong

Meanwhile, in Hong Kong.

Stand News, a pro-democracy holdout, became the latest casualty of Xi’s crackdown on dissent in the city. The media outlet shut itself down Wednesday, laid off all employees and said its online presence, including social media pages, would be removed within 24 hours after police raided the site’s headquarters. At least seven people were arrested, including singer Denise Ho and acting editor in chief Patrick Lam, who was hauled away from his home in handcuffs. All were accused of conspiring to publish seditious content.

Stand joins Apple Daily in the graveyard marked “Free Press.” Jimmy Lai, the Daily‘s famous founder, was hit with new sedition charges this week. He and a half-dozen former employees are stuck in a Kafka novel. “Prosecutors on Tuesday added the fresh count to the seven defendants’ indictment as they returned to West Kowloon Court for another pretrial hearing before their case is transferred to the higher Court of First Instance to be heard,” The South China Morning Post said, on the way to detailing the new charges. Lai and members of his paper “conspired to print, publish, sell, offer for sale, distribute, display or reproduce seditious publications” over a period spanning two years and ending on June 24, when the Daily‘s final edition was published.

On Wednesday, John Lee, Carrie Lam’s No. 2, issued a warning following the Stand arrests. The news, he said, shouldn’t be used “as a guise” and journalism isn’t a “tool to commit illegal acts.” Anyone who disagrees is a “black sheep of journalism.” “Real, professional journalists,” Lee warned, should “keep their distance.”

Speaking of black sheep and Hong Kong, investors continue to “keep their distance” from the perpetually beleaguered Hang Seng Tech Index, which slumped on Wednesday to a fresh “since-inception” low (figure below).

As Bloomberg dryly noted, recent losses suggest “investor sentiment toward the battered sector remains weak.”

This scarcely needs restating, but the losses illustrated so poignantly in the figure (above) are also a function of Xi’s heavy-handed crackdown.

To the extent unchecked wealth accumulation is inconsistent with “common prosperity,” you might even suggest mega-cap Chinese tech was, like pro-democracy media outlets in Hong Kong, indicted for sedition starting around 14 months ago (figure below).

The penalty for tech companies wasn’t jail. Instead, it was a ~$1.5 trillion fine, imposed via the roughly 50% decline on the Hong Kong tech benchmark from its highs in February. And that’s to say nothing of the actual fines Beijing levied on a handful of homegrown tech behemoths.

The fate of US-listed Chinese shares remains uncertain, as both Washington and Beijing have an interest in delistings. On one hand, China is drawing up new rules aimed at closing the VIE route, a loophole of sorts that Chinese firms use to list on foreign exchanges. On the other hand, the SEC will soon require foreign companies to submit to transparent audits if they want to list on US exchanges. That latter effort isn’t new, although you’d be inclined to think it is given how much press coverage it’s received. The PCAOB spat dates back years. Donald Trump’s multi-sided economic war with China just brought it back to the fore.

Read more: ‘I Quit. No, You’re Fired.’

Hong Kong’s move to shutter Stand was no surprise. “Hong Kong’s security secretary, Chris Tang, this month accused the site of ‘biased, smearing and demonizing’ reports about conditions at a prison,” The New York Times wrote, adding that Lau Siu-Kai, an adviser to Beijing, told Chinese state media that “Stand News will come [to] an end.”

And it did. On Wednesday. Some $8 million of the outfit’s assets were frozen in conjunction with the raid and accompanying arrests.

The same linked article in the Times noted that just three months ago, a pro-Beijing lawmaker cited Stand as proof that “freedom of expression is still alive and well” in Hong Kong. “Stand News [is] still carrying on as usual,” Regina Ip declared, while speaking to the Foreign Correspondents Club of Hong Kong.

She defended Wednesday’s raid in a series of social media posts. “Police arrest of six tied to the Stand News will no doubt be portrayed by western media as another assault on press freedom in Hong Kong,” she wrote, in a hapless effort to save face. “While the national security law enacted by Beijing has no retroactive effect, the HKSARG is free to lay charges against those indictable for sedition, irrespective of whether they are singer, barrister or media editor.”

In an October 2020 Op-Ed published by the Times, Ip wrote that,

What’s more, Beijing isn’t actually encroaching on Hong Kong’s semi-autonomy by taking measures to proscribe subversive activities in the city. Bear in mind that back in the late 1970s, China’s leader, Deng Xiaoping, put forward the “one country, two systems” formula with a view to bringing Hong Kong, Macau and eventually Taiwan back into the fold. National unity has always been the ultimate objective. Like it or not, Hong Kong is part of China. And given the two’s vast disparity in size and Hong Kong’s growing economic dependence on the mainland, the city’s progressive integration with China is unavoidable. Foreign governments should not benchmark what happens in Hong Kong against standards that prevail in Western countries; those are governed by a political system entirely different from China’s. Instead, they should benchmark Hong Kong against the rest of China.

On Wednesday, Stand said its editorial policy “was to be independent and committed to safeguarding Hong Kong’s core values of democracy, human rights, freedom, the rule of law and justice.”

“Was.” That’s past tense.