On Friday, the owner of Hong Kong’s biggest pro-democracy newspaper had his assets, amounting to HKD$500 million, frozen.
Mr Lai was already facing trumped up charges under the National Security Law, but this step is the biggest blow to date for press freedoms and puts the long-run viability of his newspaper, Apple Daily, into question. It ushers in a new era: one where previously inviolable property rights are up for grabs. While arrests naturally garner headlines, it is government decisions like this one which are most likely to catalyse capital flight and spark migration.
Beijing’s strategy to suffocate press freedom in the city has always been to stem the money flows instead of imposing outright bans. A recent report on Red Capital in Hong Kong underlined the strength of economic pressure as the primary lever of control over the media in the city.
Apple Daily has faced advertising boycotts, initiated by mainland firms at the behest of Beijing and then joined by firms like HSBC. As a result, the firm relies on sporadic loans from Mr Lai.
The competitors to the pro-democracy paper have been bought up by loyal clients of the state. Mainland stakeholders own nearly 40 per cent of the major media outlets, and the vast majority of the remainder of outlets are owned by Hong Kongers whose business interests in China ensure they will never step out of line.
For example, Yu Pun-hoi, the owner of HK01 media, owns a chain of cinemas in mainland China. He professes admiration for Xi Jinping, holds senior positions in Tsinghua and Peking Universities, and holds a PhD from Peking University in Marxism.
The Taiwanese Ministry of Economic Affairs has warned both Mr Yu and his firm, Nan Hai Corporation, are so closely tied to mainland China, he “could easily be influence by mainland policies”. Elsewhere in the media landscape, one of the key investors in Initium Media previously worked at the Supreme People’s Court in Beijing, and has close ties with President Xi.
Beijing deploys a two-pronged strategy of ensuring the bulk of the media is owned by its allies and ramping up the cost of opposition. Hong Kong has thrived as a city because of its geographical proximity to the Asian markets, but political ties with Western democracies such as Britain. It is not just the freedom of press which is tarnished by the disdain shown by Beijing towards Mr Lai’s finances.
The decision to target Mr Lai and to freeze assets on this scale, the first time the National Security Law has been used for this purpose, will doubtless send ripples among the city’s elites. Whether you are a dissident democrat or a corrupt Communist party official, Hong Kong has been a haven from the long arm of Beijing for the super-rich and for businesses seeking a springboard into the mainland. Those days are done.
Last week, the American Chamber of Commerce in Hong Kong published a survey which showed that over 40 per cent of the business leaders who responded are considering their future in the city.
“Previously, I never had a worry about what I said or wrote when I was in Hong Kong,” said an anonymous respondent to the Amcham survey. “With the National Security Law, that has changed. The red lines are vague and seem to be arbitrary.”
The process by which Mr Lai’s assets have been frozen will reinforce the sense of arbitrariness. The media mogul is facing an array of national security charges but has not yet been found guilty of any of them. The presumption of innocence undergirds Hong Kong’s legal system. The decision to take the assets of a man who has yet to be tried is a blow to the city’s rule of law.
As the free press, property rights and the rule of law teeter on the brink, businesses will be asking themselves what the future is for Hong Kong as a financial hub. Hong Kongers that have BNO status will be asking themselves what the future holds. Britain must stand ready to welcome those who decide to move.