The protests in Hong Kong have seen a worrying rise in violence, exemplified by combat with the police, vandalism of Mass Transit Railway (“MTR”) stations, disruption of transport routes to the airport, and the widespread use of petrol bombs and other weapons.

Police have responded forcefully, with the extensive use of Internal Security weapons including CS smoke, rubber bullets, water cannon and dye, and, on just a few occasions, the use of live rounds as warnings to the crowd in extreme circumstances. The numbers of arrests are also rising.

No political solution is evident at this time.

A Rise in Violence

A round of freewheeling protests, with relatively modest turnouts compared to previous events and ending in violence, have continued across Hong Kong in recent weeks.

Protests over the weekend of 31 August to 1 September came despite the Hong Kong Police’s denying an application by the Civil Human Rights Front (“CHRF”) to march from Causeway Bay towards the Chinese Central Government Liaison Office. That march took place anyway, and descended into violence.

Of particular note were the extensive use of petrol bombs, and a large fire in the streets of Wan Chai, with barricades that featured prominently in the global media. Police came under criticism for what some perceived as heavy-handed tactics inside the Prince Edward MTR station.

Then, on Sunday 1 September, in violation of court injunctions and Police warnings, protesters sought to choke transport links to Hong Kong’s busy international airport. The protesters blocked roads, forced the suspension of train lines, burned the Chinese flag, and set fire to barricades.

Violence, once again, broke out, most notably around the Tung Chung MTR station near the airport, which demonstrators vandalised (in full view of the media), before escaping on foot. The Police response was slow, and some protesters directed violence towards locals and tourists.

Separately, smaller events have hinted at the rising risk of “tit-for-tat” attacks. Unknown assailants assaulted the leader of the CHRF, Jimmy Sham Tsz-kit, on 29 August in a restaurant.

On 31 August, three men stabbed an off-duty police officer in Kwai Fong MTR station. The spiral of violence continues.

The Hong Kong Government

This worsening environment is an indictment of the Hong Kong government’s failure to respond in the wake of peaceful protests on the weekend of 24 to 25 August, which had offered a window of opportunity. By doing nothing, the administration of Chief Executive Carrie Lam Cheng Yuet-ngor missed (or deliberately ignored) an opportunity to open real dialogue.

Rather, on 29 August 2019, in a pre-emptive effort, the Hong Kong Police arrested two pro-democracy leaders associated with the 2014 Occupy Central movement, Joshua Wong Chi-fung and Agnes Chow Ting, a move that not only inflamed matters, but also suggested that the authorities did not have solid intelligence on the current movement’s leaders, nor on their locations. Wong has not played a major role in these protests to date; he was in prison when the protests started.

The government, shielded by a much-strained Hong Kong Police, may believe that public opinion will turn against the protesters, especially if fatalities or serious injuries occur, and as the movement’s manpower, drawn from students and school children who must return to their studies, diminishes.

Certainly, many ordinary people decry violence, vandalism or disruption, regardless of their strong views about the extradition law. Their voices are not much heard in the mainstream media, though.

Others, though, including some politicians in the pro-democratic camp, and most especially the young, see violent protest as a necessary response to government intransigence. Many have openly stated that peaceful demonstrations alone will end in failure, as did the 2014 Occupy Central movement.

The fall in protesters’ numbers, is thus encouraging militant protesters to step up violence, so as to sustain the movement’s momentum, and perhaps acting with support and advice from shadowy external forces.

Possible Use of Emergency Powers

The government has voiced a willingness to consider the use of emergency powers, perhaps so as to ensure stability ahead of the 70^th anniversary of the foundation of the People’s Republic of China (“PRC”) on 1 October 2019, a date of critical importance to the Chinese Communist Party (“CCP”) leadership.

Such powers are sweeping in nature and, somewhat ironically, have not been used since Communist-inspired riots in Hong Kong in 1967. The powers would allow for widespread arrests, curfews, the seizure of property, the closure of media outlets, and the passage of ancillary legislation. The adoption of a law banning the use of face masks at rallies may be the minimum expected.

Much now depends on the CCP’s tolerance for Hong Kong’s rebelliousness, and its fears that foreign forces are stoking a “colour revolution” that could spread to the mainland – justified or otherwise.

The Police

This situation is putting huge strain on the Hong Kong Police, which, in seeking to hold the line, has committed to a firmer response (after a leadership change at Deputy Commissioner level).

Its doing so has had severe consequences. Police tactical actions have engendered hatred amongst protesters, who have attacked officers, their residences, and even their families.

So far, and barring a few notable exceptions, police discipline has remained solid thanks in part to the separate Chinese Central Government’s backing. After all, many junior officers fear that the current Hong Kong Chief Executive would discard them if she considered it politically expedient to do so. She is deeply unpopular with her most critical department.

The challenge, then, will be for the Force to act impartially in this noxious climate, ensuring sound policing of the protests, the parallel suppression of Triad activity, and the delivery of day-to-day services. Triad activity is rising, as instability grants the gangs space to operate, and the risk of an inflammatory error of judgment by a junior officer is real.

Much now rides on the Police’s success yet they are being vilified by the local and international media.

Mainland Intervention?

Should the Police falter, the Chinese government could deploy units of the People's Armed Police (“PAP”), a gendarmerie trained for crowd control, or the People's liberation Army (“PLA”).

The Chinese government could act on the invitation of the Hong Kong government (a soft intervention in legal terms), or after suspending Hong Kong’s autonomy (a hard intervention).

For now, though, a direct intervention remains unlikely, even if unexpected events could yet force Beijing's hand, and if the risk has risen somewhat in the past two weeks.

After all, any emphasis on direct deployments ignores the reality that (recently rotated) Chinese forces already operate in Hong Kong, and that many existing powers can facilitate the Hong Kong authorities’ efforts to suppress the protests.

Emergency rules and tougher policing may yet forestall a direct intervention, particularly if such actions come in support of united front campaigns and efforts by local and Central Government intelligence services to weaken and disrupt the protest movement.

The Economic and Political Damage

Hong Kong’s economy is suffering; the tourist trade is slowing, which is affecting hotels, trade shows, and restaurants; fears of capital flight are growing; the property market has become jittery; and local uncertainty only adds to a broader malaise deriving from Sino-American trade frictions.

Moreover, the much more worrying, and longer term, political implications of doing business in China have become apparent.

On 9 August, HSBC announced the departure of its Greater China CEO. That resignation came amidst press reports of Beijing’s ire at HSBC’s handing information related to Huawei over to US regulators, although the bank has denied these claims.

Then, angered by displays of support for protesters by staff, the mainland government in mid-August threatened to exclude Cathay Pacific flight crew involved in the demonstrations from overflying China, and demanded the resignation of the airline’s CEO; he stepped down on 16 August.

The company has since terminated a number of staff as a consequence. Checks on crew members’ mobile phones and social media accounts in the Mainland are now commonplace.

On 19 August 2019, the “big four” accounting firms in turn came under pressure to distance themselves from an advertisement in support of the protest movement. On 20 August the Chinese authorities then announced the arrest on 8 August of a local staff member of the British Consulate (a Hong Kong national), and his sentencing to a 15-day administrative penalty for consorting with prostitutes.

Such political pressure on business is unparalleled in Hong Kong’s recent history. Moreover, many of those under attack were British in origin, or had long-term British connections, although the British government has done little or nothing to defend its interests overtly, perhaps distracted by Brexit, or for fear of angering Beijing.

The targeting of these businesses makes clear that “neutrality” poses considerable risk. Stating that employees may do what they wish in their own time is currently not enough for the CCP, which demands loyalty from all businesses operating in Hong Kong, and has made clear that the costs of lèse-majesté will be high.

Brand businesses and professional services firms must adapt to the current situation. International law firms that provided pro bono services to arrested protestors may face future difficulties in obtaining mainland business, or find that certain staff or partners encounter travel difficulties.

All told, this situation underlines how the rules of doing business in Hong Kong have changed as a consequence of demonstrations. Adaptation may not require complete obeisance, rather entailing “bending like a bamboo in a storm”, but it has become a necessity.

What to Do?

As protests continue, SVA recommends that companies evaluate and monitor their risk profiles closely – especially those located around pre-announced demonstration areas.

Planners should focus on:

• Safety of staff, and their families;
• Protection of plant and property;
• Possible denial of access to business premises, owing to demonstrations or arson;
• Business disruption – reaction and key priorities;
• A concern for retailers is that malls often sit above, or adjacent to, the railway stations used by demonstrators to attend rallies;
• Evaluation of security at business events, shows and meetings, especially those around malls, major government buildings, and exhibition centres;
• Large scale transport disruption, including preparations for a lengthy airport closure;
• Preparation of plans for offsite operations for key assets;
• Contingency planning in the event of PRC overt intervention, with attention to business continuity, and communications;
• Development of first aid capabilities – such as capabilities for dealing with CS smoke affecting staff, or its introduction into building air-conditioned systems; and
• Establishment of a roll call capability for all staff in the event of unforeseen events.

Businesses must also take account of rising political tensions. Companies should take care to display a neutral stance, manage their social media and advertising accounts tightly, and encourage staff not to conduct political activities in the workplace.

In the, currently unlikely, event of a full-fledged mainland crackdown, foreign governments, including the US would likely sanction Hong Kong or Chinese officials and entities, and could threaten Hong Kong’s independent trading status.

Retaining Crisis Response Services

SVA has a dedicated crisis management team which, for our retained clients, stands ready to assist companies during crisis situations. Retained clients pay an annual fee for a 24 hour response capability.

SVA is based in Hong Kong and is the only firm with the local and senior expertise drawn from Intelligence, Operations and research functions of the former Royal Hong Police Force.