He was arrested on July 1, 2020, and accused of driving his motorcycle bearing a protest flag, colliding into three police officers and injuring them, the South China Morning Post reported. The flag called for the city’s liberation from China, the Post reported.
Tong could get life in prison when he is sentenced, according to The Times.
China introduced the tough new law last June, and critics said at the time it would end Hong Kong’s semi-autonomous status.
It allows China to set up new national-security agencies and a secret police presence in Hong Kong.
The law increases the risks for protesters and anyone else who speaks out against the Chinese government.
More than 60 people, including dozens of pro-democracy activists, have been arrested under the security law and are awaiting trial, The Times reported.
Investment banks are scrambling to divert Chinese IPOs away from the US market and into Hong Kong as the government’s crackdown on foreign listings spreads, according to a Financial Times report.
Regulators’ harsh response to China’s last major foreign IPO, that of Didi Chuxing, has forced the 20 or so Chinese companies that had plans to go public in New York to re-evaluate.
Bankers who spoke with the FT said clients are exploring moving listings to Hong Kong but are also wary of the hurdles. Hong Kong-specific regulatory requirements and the inherent uncertainty of going first were among the leading concerns.
“We’re speaking to everyone about it,” one Hong Kong-based investment banker told the FT. “If you want to do a deal this year, at best you’ll be delayed until 2022 and at worst you won’t be able to do it.”
The move toward Hong Kong is an abrupt shift for corporate China. 34 Chinese firms raised $12.4 billion in New York capital markets in the first half of this year, according to Dealogic data previously reported by the FT.
In the wake of Didi’s NYSE debut, China’s cybersecurity ministry alleged the company had violated privacy laws and launched an investigation into its data practices. The action took Didi’s stock price down sharply the day of the announcement.
Data-oriented companies have been most eager to plan for Hong Kong listings, in large part because the mainland government’s crackdown has centered around data privacy. Moving to Hong Kong could abate some of that scrutiny, two bankers told the FT.
At a White House press briefing on Thursday, President Joe Biden said the situation in Hong Kong is “deteriorating” and said the administration is set to issue a business advisory – expected Friday – “as to what may happen” in Hong Kong.
“Let me talk about the business advisory,” Biden said. “The situation in Hong Kong is deteriorating. And the Chinese government is not keeping its commitment that it made, how it would deal with Hong Kong.”
“It’s as simple as that and as complicated as that,” Biden said at the press conference alongside German Chancellor Angela Merkel.
According to The Wall Street Journal, the advisory is expected to be aimed at US businesses, not sanctions against China.
The statement comes as China’s grip on Hong Kong tightens. In May 2020, China passed national security legislation under which the country is allowed to set up a police presence in Hong Kong. The legislation limits the freedoms Hong Kong has had since 1997.
In March, 47 pro-democracy protesters in Hong Kong were charged with “conspiracy to commit subversion.” Days later, China announced that it plans to overhaul Hong Kong’s electoral system and install in leadership positions “patriots” loyal to Beijing.
The White House did not immediately reply to Insider’s request for comment.
Hong Kong customs authorities have arrested four people in connection with a suspected $155 million money laundering scheme using the cryptocurrency Tether.
According to reports in Bloomberg and local media, four men aged between 24 and 33 were arrested in an operation called “Coin Breaker.”
Hong Kong customs officials told the media that the men had opened various bank accounts and then made transactions in Tether – the biggest stablecoin – through a crypto exchange, outlets reported. The transactions involved HK$1.2 billion of cryptocurrency, worth roughly $155 million.
The officials said it was the first time they had detected a suspected money laundering scheme that used digital currency. They did not name the crypto trading platform involved. Insider has contacted the Hong Kong customs office.
Cryptocurrencies have long been used in crime, thanks to the fact that they can be used anonymously and are hard to trace.
On Friday, the US District Court in Seattle said a 33-year old identity thief who used bitcoin to avoid detection was sentenced to three years in prison.
And on Tuesday, London’s Metropolitan Police said it had seized $249 million worth of cryptocurrency in a suspected money laundering case.
Top lawmakers have repeatedly raised concerns about crypto crime. US Treasury Secretary Janet Yellen in January suggested “curtailing” cryptocurrencies saying: “Many are used – at least in a transaction sense – mainly for illicit financing.”
In Hong Kong, as in the UK, crypto companies have to register with the financial watchdog for anti-money laundering purposes.
It was only a matter of time before Beijing’s heightened nationalism came to Wall Street.
This week, Chinese authorities punished Didi, a ride sharing company, for its June 30 public debut on the New York Stock Exchange. Shortly after the Didi crackdown, Beijing announced new measures that could restrict Chinese companies going public abroad.
What all this is telling us is that Beijing is no longer going to tolerate its tech stars making foreigners rich on foreign exchanges. And it is further evidence that China is closing its society and economy to the West.
Bring it all back home
In order to more freely list on foreign stock exchanges, Chinese companies create something called a “variable interest entity.” In such an arrangement, a Chinese company creates another company in a tax haven like the Cayman Islands where foreigners can invest. The Chinese company then signs an agreement that gives control and profits to the Cayman entity, from which money is distributed to shareholders and the company back in China. For years, Beijing generally looked the other way when it came to VIEs.
Now, according to Bloomberg, Beijing’s new regulations are designed to limit the ability of Chinese companies to set up these entities. The proposed rules would govern what data can and can’t be shared abroad, target “illegal securities activities,” and set up extra-national laws Chinese companies would have to follow regardless of where they are listed.
Didi shares are down around 20% since it’s IPO, in part because Beijing announced these measures, and in part because it has become a target for authorities at home. On July 2, the Cyberspace Administration of China announced it was investigating Didi. Two days later China’s app stores were ordered to stop allowing users to download Didi. The CAC claims that Didi was illegally collecting user data.
And perhaps that’s true. But it’s also likely that this is a signal that “wolf warrior” aggression – a kind of Chinese diplomacy named after a hyper-nationalistic film- has come to financial markets. Two other Chinese tech companies listed in the US – Kanzhun and Full Truck Alliance – also had their downloads halted by Chinese regulators. The almost 250 Chinese companies worth $2 trillion in market cap listed on major US exchanges should all be watching their backs.
China is closing
There are two main reasons for this seemingly sudden crackdown – one is China’s increasing antagonism with the West, and the other is the Chinese Communist Party’s own desire for power and self-preservation. Together they amount to the reality that China is once again closing its doors to the world, reversing the opening that began in the 1970s.
As part of a larger crackdown on civil society, the Chinese Communist Party has been tightening its control over any sources of power that might challenge it at home. That includes tech billionaires like Alibaba founder Jack Ma, who has recently been publicly brought to heel by Beijing. And it includes tech companies, like Tencent and Pinduoduo, another e-commerce giant.
Targeting tech companies that list abroad also puts pressure on Chinese companies to consider an IPO to list in Shanghai or Hong Kong instead. It is no secret that China’s encroachment into Hong Kong prompted an exodus of financial firms from the city. Making it the new landing place for Chinese tech companies to go public could help it maintain its status as a global financial center.
It is also no secret that the US and China are at risk of what some call “decoupling”– essentially breaking ties and creating a world with separate US or China-centric technologies and financial centers. In some ways, because the two powers have become so antagonistic, this is already happening. Domestically, Beijing has been investing in technological advancements with the hopes making the country a techno-superpower by 2025. Now it’s calling its companies home.
What’s doubly important is that none of the above is primarily about making China rich. It’s all about hoarding power for the CCP. Under President Xi Jiinping that has become Beijing’s motivation above all else, and we should all expect it to act accordingly – even when it means hurting its own domestic companies.
A chilling effect
Last year Congress passed the Holding Foreign Companies Accountable Act, which requires foreign companies listed on US stock exchanges to be audited by the Public Company Accounting Oversight Board’s. If they refuse for three years in a row they can be delisted. Last month, the Senate passed a law that would shorten the time frame to two years in a row.
The problem with this is that so far, Chinese regulators will have absolutely none of it.
This is a stare down. If Chinese companies listed here in the US do not comply they will be delisted. If they do comply Beijing could come down hard on these companies at home. In the meantime recriminations are flying. GOP Sen. Marco Rubio of Florida called the Didi IPO “reckless and irresponsible” weeks before Beijing clamped down on the company, arguing that Didi is a black box.
Rubio and Democratic Sen. Senator Bob Casey of Pennsylvania introduced a bill in May that would prohibit companies from going public on US exchanges if they do not comply with US regulators and submit to an audit from the Public Company Accounting Oversight Board.
All of this pressure from Beijing and Washington will, without a doubt, have a chilling effect on Chinese companies listing here in the United States. So yes, this is another form of decoupling – and it’s coming from both sides of the Pacific.
Both the apartment and the year-long Shangri-La credit are among the many perks vaccinated Hong Kong residents can enter to win, the South China Morning Post reported. Also on the list? A Tesla, thousands of free airline tickets, a $16,000 prepaid credit card, and a “private party” on a Cathay Pacific-operated Airbus A321neo.
Per the Post, the total value of the available rewards exceeds $14 million. The eligibility terms differ depending on the perk but are exclusively available to vaccinated individuals.
The rewards have been donated by various Hong Kong-based companies, business people, and business chambers, per the Post. For example, the philanthropic arm of property developer Sino Group is donating the $1.4 million apartment, while Goodman Hong Kong is donating the Tesla Model 3, which is valued at $64,000. The Hong Kong Air Authority is behind the 50,000 free airline tickets, and the Shangri-La Group – which operates more than 100 locations globally with nightly rates starting around $300 – is providing the year’s worth of hotel stays.
As Katie Warren previously reported for Insider, the perk rollout comes as the Hong Kong government turns to businesses to entice residents to get the COVID-19 vaccine – and as public interest in getting the vaccine remains low.
More than 2.6 million vaccine doses have been distributed in the city to date, with 1.1 million people – about 15% of the total population – fully vaccinated, according to data from the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University. For comparison, 42% of people in the US and the UK respectively are now fully vaccinated.
Because reception to the vaccine in Hong Kong has been slower than expected, the city is sitting on a surplus of 840,000 BioNtech vaccines that are set to expire in August, Bloomberg reported in late May. Affecting the slow rollout, per Bloomberg, is a lack of trust in the government and a fear of vaccine side effects.
Hong Kong blocked demonstrators from entering a park on Friday where thousands of people annually gather to commemorate China’s 1989 Tiananmen crackdown.
The gathering in Victoria Park has been held annually since 1990 to remember the 1989 crackdown in Beijing’s Tiananmen Square, where pro-democracy protesters were killed by Chinese troops.
Last year’s demonstration was canceled due to the COVID-19 pandemic, but photos show a stark difference between Friday’s empty park and 2019’s vigil.
This year’s vigil was the first to be held since Beijing enacted a contentious national security law for Hong Kong that has been used to censor pro-democracy activity. Hong Kong police have arrested pro-democracy activists and are targeting peaceful protests, according to The New York Times.
Hong Kong’s youth want out, according to a new poll by a local university. Polling showed around 60% of young people aged 15 to 30 want to leave the city if they can.
The South China Morning Post reported the results of the survey, which were released by the Chinese University of Hong Kong’s Institute of Asia-Pacific Studies on Thursday. Some 57.5% of those polled said they would opt to emigrate if they could – a significant uptick from 2019’s poll numbers. Then, 42.3% of people polled said they’d like to leave.
The research also found that Hong Kong’s youth have become more pessimistic about the city’s future in the last three years – giving their optimism about the city’s future an average score of 2.95 out of 10. This was a decrease from 4.37 out of 10 when a similar question was asked in the 2019 poll conducted by the university.
Academics told the SCMP they believed that this “pessimism” about Hong Kong’s future notwithstanding, some young emigrants will eventually find their way back to the city.
Stephen Chiu, professor of sociology at the Education University of Hong Kong, said that he did not think these numbers posed a “big problem” as Hong Kong has seen mass migrations out of the city in the past.
“Hong Kong has been a city of immigrants, while mass migrations have occurred multiple times before,” he told the SCMP. “Even when (young people) moved elsewhere, they might still keep some kind of connections with the city.”
These new poll numbers come just one month after the SCMP reported in March the results of a city-wide survey of 1,135 people aged 34 and below with a graduate or postgraduate education.
The survey in March, titled “Tackling Hong Kong’s Brain Drain,” saw some 16% of those polled saying they wanted to leave the city for work and never return. Another 12.6% said they would consider returning – only after they secure citizenship in another country, citing the UK, Australia, and New Zealand as top destinations to emigrate to (The 2019 survey favored Taiwan, Canada, and Australia).
The top push factors cited for wanting to leave Hong Kong included a search for a better work-life balance, wanting to give living abroad a try, and a desire for social and political stability.
Hong Kong residents who have the means to leave do have an option. In January, Britain launched a pathway to British citizenship. The BBC reported that around 5.4 million Hong Kong residents are eligible for the scheme, as those with a British National Overseas passport can apply for leave to remain in the UK permanently after five years.
Insider spoke to several Hong Kong residents under 35, who said that if given the option, they would “gladly” leave Hong Kong.
“The lucky ones would have made plans to leave already. Some might already be gone. I do think there are better opportunities for young people in Taiwan, or even the UK, but it’s not that easy to just move there. You need the funds and a concrete plan for where you are going to work and live,” said Yuk-ching Fung, 29, who works in the Kowloon area as an advertising executive.
“But if I suddenly had hundreds of thousands of dollars appear in my bank account, I would book a plane ticket for my family tomorrow,” Fung said.
Meanwhile, Daniel Kwong, 27, who is currently between jobs, told Insider that he saw “no future” for “people like him,” that he said were “trapped” in Hong Kong with savings too meager to move abroad, and barely enough income to get by.
“People like me don’t have enough savings to buy property. We will likely never own homes of our own, and the pandemic has hit us really hard,” Kwong said, adding that he lost his job as a photographer during the COVID outbreak. He is currently making food deliveries and doing odd jobs to get by.
“A lot of us have given up hope of a so-called better future,” he said. “We will just try our best to be satisfied with what we have.”
Others told Insider that they were more sentimental and unwilling to uproot and move abroad in the near future.
“I do have enough savings to move right now, but I’ve chosen to stay put for the time being,” said Wing-ho Chan, 31, who works in accounting. “Some people say it’s a blessing to be able to leave. But for me, it’s more than just a city – I grew up here, and everyone I know and love lives here.”
“Wherever I go, and however much Hong Kong changes over the next decades, it will still be home,” Chan added.
When it comes to the price of luxury real estate, Hong Kong is still on top.
The city retains its title as the world’s most expensive city to rent a luxury apartment, per a report from global property consultancy Knight Frank. The report examines the cost of a three-bedroom apartment in a central location across eight different cities.
The news of the city’s rental prices comes amidst political turmoil in the city and against the backdrop of the pandemic.
“Over the past couple of years, Hong Kong has not only had the global pandemic to tend with, but also the protests and unrest in the city which many thought could destabilize appetite for the property market,” Victoria Garrett, head of APAC residential for Knight Frank, said in a press release.
According to the report, prime rents in Hong Kong stood at $6.70 per square foot at the end of 2020, and a monthly budget of $10,000 would get a renter less than 1,500 square feet of space. In New York City, which ranked No. 2, the same budget would get a renter 2,249 square feet of space.
Singapore, London, and Sydney respectively follow behind Hong Kong and New York City when it comes to the cost of renting a luxury apartment.
Hong Kong has managed to maintain its rental prices amid a wave of protests that erupted in June 2019 and lasted for months over a proposed extradition bill under which Hong Kong residents would be brought to mainland China to be tried. The city is now facing a business exodus, and one projection sees as many as one million people leaving the city in the next five years, per a Bloomberg report.
To date, Hong Kong has recorded more than 11,700 coronavirus cases and 209 deaths, according to data from the Johns Hopkins University Center for Systems Science and Engineering (JHU CSSE). The city kept borders mostly closed to foreigners for several months in 2020 and has strict quarantining measures in place for anyone arriving in the city.
A year of records
Hong Kong has clocked various property records in recent months.
In February, a penthouse in The Peak, a famously upscale neighborhood home to billionaires and CEOs, sold for $59 million, becoming the most expensive apartment per square foot ever sold in Asia. The five-bedroom penthouse went for an astounding $17,542 per square foot.
Earlier that month, a 1.25-acre plot in the city sold for $935 million, marking the highest price ever for a government-owned residential property in Hong Kong.
The Knight Frank report only examines apartments, but landed properties in Hong Kong are also known to sell for sky-high prices. In March, news broke that a home in The Peak was being rented out for a city record of $2 million a year. The home stretches across four floors and has a 2,000-square-foot yard.
But even as some parts of the city notch record real-estate highs, other parts of the city are experiencing extreme housing shortages.
The 2021 Demographia International Housing Affordability report from the Urban Reform Institute and the Frontier Centre for Public Policy found that Hong Kong is the world’s least affordable city. The report examines the mean multiple – the median house price divided by the gross median household income – in 92 housing markets globally. A mean multiple of 5.1 is considered “severely unaffordable”; Hong Kong’s mean multiple far exceeds the benchmark at 20.7.