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Police block entry to the Apple Daily's headquarters in Hong Kong on June 17, 2021, during a raid of the offices by Hong Kong's national security police. (Photo by Anthony Kwan/Getty Images)

After months of arrests and raids, the shuttering of Apple Daily — the independent Hong Kong-based newspaper targeted by Beijing under its wide-ranging national security law — sent an unmistakable message. It is now clear to all businesses that their ability to operate in Hong Kong is entirely contingent on their compliance with the Chinese Communist Party's political agenda.

Can Hong Kong remain a global financial center given this assault on the rule of law? This week, Hudson Research Fellow Nate Sibley [[link removed]] spoke with Mark Clifford, the independent non-executive director of the Apple Daily's publisher, Next Digital Ltd.; Bill Browder, the anti-kleptocracy advocate responsible for the Global Magnitsky Act; Carolyn Bartholomew, chairman of the U.S.-China Economic and Security Review Commission for the 2021 report cycle; and Ellen Bork, president of the Committee for Freedom in Hong Kong, about what these recent developments portend for Hong Kong's future.

Read key quotes from the event below, including Mark's firsthand account of how Chinese authorities shut down the Apple Daily and Next Digital. Join us next week for a discussion [[link removed]] with Yahya Cholil Staquf, the general secretary of Indonesia’s Nahdlatul Ulama, and be sure to read Douglas Feith's remembrance [[link removed]] of the late Donald Rumsfeld, former secretary of defense under Presidents Gerald Ford and George W. Bush.

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Key Quotes

Key quotes from Hudson's event, " Can Hong Kong Remain a Global Financial Center? [[link removed]]"

1. Hong Kong's National Security Law is Bad for Business

Carolyn Bartholomew: Businesses have to get over the presumption that what is happening in Hong Kong only happens to other companies, that they're somehow safe from all of it. The implications of Beijing's expansive but ambiguous definition of national security is really something to be thinking about. The powers that the national security law provided or provides, allow for warrantless searches, asset freezes, and obligations to comply. The police already have ordered bankers at City Bank and HSBC not to deal in shares of Apple Daily, or they face prison.

2. The Autocrat's Playbook

Mark Clifford: Because [the Apple Daily's] bank accounts were frozen, we have 600 staff members whom we haven't paid. We haven't been able to pay them their June salaries, let alone their severance payments. We've got the money in the bank. Although we've applied to the secretary for security for permission to pay people, he hasn't granted it, and that's making it impossible for us to pay people.

3. Policy Options for the West

Bill Browder: So what do we do about this in the West? Well, we have the Magnitsky Act, named after Sergei Magnitsky, my lawyer who was arrested, tortured for 358 days in prison and murdered at the age of 37 in Russian police custody. The Magnitsky Act freezes the assets and bans the visas of human rights violators and kleptocrats. And the Magnitsky Act really upsets people who have been sanctioned and it upsets totalitarian regimes. And the reason it does is because it's the one thing that they can't control.

If somebody like Carrie Lam is doing all this terrible stuff in Hong Kong, she can be guaranteed that no legal action is going to be taken against her in Hong Kong. But all of a sudden, she gets added to the U.S. Magnitsky list, and her bank accounts are frozen. Just like they froze Jimmy Lai's bank accounts, Carrie Lam's bank accounts were frozen. Whatever she had at HSBC, she can't access because if HSBC does any transactions for her, HSBC will be fined by the U.S. Treasury's Office of Foreign Assets Control for three times the amount of money that they were doing business with her.

4. Hong Kong Becomes a Potemkin Village

Ellen Bork: Businesses are in jeopardy in Hong Kong. It's not far-fetched to see that a corporate analysis that downgrades a state-owned company, for example, or goes against a powerful political interest on the mainland may find themselves running afoul of the national security apparatus. Rather than meet demands from citizens for freedom and the rule of law, the CCP has done exactly the opposite. They would rather create a Potemkin city with a legislature that has a patriotism litmus test that does what they want. The big question is how co-opted Western business and leaders will become, as China creates Hong Kong as a mascot of Xi Jinping's alternative set of norms.

Quotes have been edited for length and clarity.

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A Firsthand Account of Apple Daily's Downfall

The dismantling of Apple Daily by Chinese security forces offers a case study of how the CCP can shut down a business and deny its employees any semblance of due process. During the Hudson event, Mark Clifford shared his firsthand account of the harassment experienced by Apple Daily employees, including the high-profile arrest and imprisonment of Next Digital founder Jimmy Lai:

I was going to meet [Jimmy Lai for] breakfast a year and a half ago. I get an email when I'm on the way to breakfast: "I'm being arrested." [Hong Kong authorities] were pretty nice to him that time. They released him within 48 hours.

But the arrests kept coming, [along with] newsroom searches since the beginning of the national security law. Last August we had 200 armed uniformed policemen come into the Apple Daily's newsroom. First, they took away Jimmy at home. Then they took away the editor-in-chief and a couple other people. They were released within 48 hours. But these steps just kept escalating.

Last month, we had [an additional] 500 armed police come into the newsroom, take away the new editor-in-chief. Jimmy was already in jail, but they took away several other people. Some have been released, some haven't. Our CEO is in jail. Our editor-in-chief is in jail. Three people who are out are not feeling very good about their prospects for staying out of jail. And even if they were, the legal expense, just the hassle of being tied up. Just being enmeshed in a legal system is unbelievable.

[Hong Kong authorities] froze assets. First Jimmy's assets were frozen. He controlled 72% of a publicly traded company. The Secretary for Security John Lee just writes a letter: "We think you're guilty of national security law violation. So we're making it impossible for you to get any dividends from your shares, to vote your shares." The effect, is that the 28% of the company that's outstanding is all that matters anymore. So somebody could get a very small share and do whatever they want with it...

Then they came after the company. They decided that the company is a criminal enterprise, so they freeze assets, freeze bank accounts in three different companies, and say that if we use other accounts to try to pay anything, that contaminates those accounts and they're automatically frozen. So we had no choice but to shut down. Oh, and did I mention that the 100 journalists whose hard drives were taken weren't really feeling too good about working for this newspaper anymore either? So in fact, we shut down two days earlier than the board wanted to because people were terrified.

But I have to give it to the staff of Apple Daily. I mean, some didn't stay. There was an arrest during a board meeting of one of our editors. That tends to focus the mind. People literally were running away from the building on rumors that the police were coming. This is the impact that this completely lawless environment run by the state has on people. And again, these are well-educated, prosperous, hardworking people just trying to do their job and exercise the right to free press. It's enshrined in Hong Kong's mini-constitution promulgated by the Chinese government.

So people are running away, but we still managed to get an edition out. We printed a million copies, more than 10 times our normal press run. Sold out in a matter of hours. People, hundreds, thousands of people in fact I saw in live streams, lining up at 3:00 in the morning to get those copies, thousands around the Apple Daily headquarters, cheering the staff on.

Stay tuned. We're going to see some show trials. They've broken some people. They're putting them in psychiatric institutions. Some will, I expect, be testifying against Jimmy Lai. This isn't just a tough regime. This is a totalitarian regime that is bending and breaking people, using every instrument to try to appear legal, to try to appear as if people love them when people in Hong Kong hate them.

Quotes have been edited for length and clarity.

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Hong Kong Will Test Biden’s China Strategy and Democracy Promotion [[link removed]]

The Biden administration’s handling of Beijing’s crackdown on Hong Kong’s autonomy is a bellwether of the incoming administration’s China policy, writes Patrick Cronin [[link removed]] in the National Interest [[link removed]]. The administration should pursue steps including offering Hong Kongers safe refuge, and should respond to the silencing of pro-democracy lawmakers in Hong Kong by stepping up democracy promotion.

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China’s Takedown of Hong Kong Is Part of a Strategy of Totalitarian Rule [[link removed]]

In one stunning blow, Hong Kong's national security law stripped away the rights and freedoms that China had promised to Hong Kong for 50 years following the handover from British control, writes Claudia Rosett [[link removed]] in the Dallas Morning News [[link removed]]. The law marks the first full takedown by a communist tyranny of a thriving and mature free society, now reduced to an enclave of repression, censorship and political prisoners.

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Relocate the Olympics or Condone China's Behavior [[link removed]]

The three values of Olympism are excellence, friendship, and respect. These principles couldn’t be more antithetical to the brutality of the CCP, writes Nury Turkel [[link removed]] in Foreign Policy [[link removed]]. Despite this fact, China remains slated to host the Olympic and Paralympic Games. The destruction of civil liberties in Hong Kong and China's escalating human rights abuses across the mainland will continue to be normalized if the international community allows the 2022 Winter Olympics to take place in China.

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