The UK's relations with Hong Kong: 30 years after the Joint Declaration

While we welcome the Minister of State’s assurances that the Chinese and Hong Kong authorities are aware that the UK Government disapproves of their decision to deny us entry to Hong Kong, we remain profoundly disappointed with the FCO’s response to this unprecedented act. Recent actions by the Chinese and Hong Kong governments toward UK MPs have been wholly contrary to the spirit of the Joint Declaration, and fuel concern about Hong Kong’s direction of travel. The Chinese government’s behaviour towards the UK on this issue also raises wider concerns about the state of UK-China relations and has naturally had an impact on how we have conducted this inquiry.

We recommend that the Government state, in its response to this report, whether its policy is to support the expansion of visa-free travel worldwide for BN(O) passport holders resident in Hong Kong. If this is the case, the Government should set out what progress has been made in achieving this goal since 2006.

We welcome reports that economic ties between the UK and Hong Kong remain strong and that UK firms continue to operate in Hong Kong easily and successfully. The UK Government should ensure that its strategy on improving UK-Chinese economic and trade relations continues to recognise the special role of Hong Kong as a partner for the UK. The FCO should also continue to be active and vigilant in monitoring reports of political pressure being applied to UK companies in Hong Kong, and raise any resulting concerns with the Hong Kong government.

We consider that the British Council has an important role to play in maintaining strong social ties between the UK and Hong Kong, and we welcome its work in language teaching, educational exchange and creative engagement with Hong Kong’s artistic and cultural life.

The FCO has repeatedly said that the UK has both a moral responsibility and a legal right to monitor China’s fulfilment of its obligations to Hong Kong under the Joint Declaration. We agree. The FCO should continue making this clear to the Chinese and Hong Kong authorities at every level. The Minister of State told us that President Xi will conduct a state visit to the UK in 2015. The Prime Minister should use that opportunity to emphasise both publicly and privately to President Xi that the UK is 6 The UK’s relations with Hong Kong: 30 years after the Joint Declaration committed to this position, and takes seriously its monitoring of the implementation of the Joint Declaration.

We consider that the six-monthly reports offer comprehensive if somewhat bland narratives of events, but they fall some way short of indicating the UK’s position on developments in Hong Kong. We recommend that the reports be restructured to include less ambiguous conclusions, supported by more in-depth analysis of the political, social and economic implications of the events they describe. We also recommend that the Foreign Secretary express more clearly the UK’s views on developments during the relevant reporting period, in his foreword to each report.

We judge that the White Paper did not breach the letter of the Joint Declaration, but neither was it wholly consistent with the spirit of the treaty. The alarm that the White Paper engendered should not be brushed aside. There is widespread concern in Hong Kong that Beijing is tightening its grip on Hong Kong’s autonomy in ways both overt and subtle, and we consider that the White Paper constitutes further indication of that trend. This should have been more clearly acknowledged by the FCO in its statements on the White Paper and in the six-monthly reports.

We agree with the FCO that the specific details of constitutional reform are for the governments of China and Hong Kong to decide together with the people of Hong Kong, but the UK can and should take a position on the overall pace and degree of democratic reform. We consider that the FCO has stopped some way short of expressing a clear view. Compared with previous selection methods for the Chief Executive, allowing every eligible Hong Kong citizen to cast a vote is an important step forward. We acknowledge that the precise meaning of the term “universal suffrage” is a matter for interpretation, and Article 45 of the Basic Law clearly states that the nominating committee must play a role in selecting candidates for election to the position of Chief Executive. But the people of Hong Kong cannot have confidence in a nominating committee with such a limited and unrepresentative composition, especially when candidates must secure the support of over half its members. We do not consider that the terms of the 31 August SCNPC decision offer “genuine choice” in any meaningful sense of the phrase, nor do we consider the decision consistent with the principle that Hong Kong should enjoy a high degree of autonomy. If the FCO is content with the SCNPC decision, it should make its views plain and avoid misleading language.

The FCO and UK Government had to strike a careful tone in responding to the recent protest movement in Hong Kong, taking into account the potential unintended effects their statements might have had on a volatile situation. On the whole we consider the FCO’s response to have been appropriate and well-balanced, and we especially welcome their support for the right of Hong Kong people to demonstrate peacefully. At the same time, we acknowledge that many of the demonstrators were disappointed by what they perceived as equivocal language and a lack of support from the UK.

We were surprised that the Minister of State said the UK was bringing different sides of Hong Kong’s constitutional debate together in the Consulate-General. If this is the case, in its response to this report the FCO should list the groups or individuals who attended these discussions and explain why it considers this to be an advisable role for the UK to play. We broadly agree with the Minister of State’s view that even gradual progress toward more democratic electoral arrangements is preferable to the status quo. Should the current electoral proposals stand, we recommend that the FCO press the authorities in Hong Kong and Beijing to lay out specific proposals and a timetable for further democratic reform after 2017 and 2020.

Freedom of assembly is a fundamental right guaranteed in the Joint Declaration. Although we recognise that the Occupy campaign brought considerable disruption to Hong Kong, the largely peaceful and orderly character of the protests should be commended. We were concerned by reports of police using excessive force, particularly when clearing the protest sites. The FCO should encourage the Hong Kong authorities to investigate and prosecute incidents of alleged police brutality in accordance with the law, and should closely monitor and report on these investigations in the six-monthly reports. It is also important that those who exercised their right to peaceful protest are not subsequently punished or put under undue pressure by the police and authorities. We call on the FCO to be vigilant in monitoring the future treatment of the protest leaders, to raise any concerns that may arise with the Hong Kong government, and to include details of any conversations with the Hong Kong government on this issue in the six-monthly reports.

We recommend that the FCO continue to raise the issue of press freedom privately with the Hong Kong authorities and the Chinese government, making clear that the UK takes press freedom seriously as a right guaranteed by the Joint Declaration. We also recommend that the FCO express its concerns more robustly in the six-monthly reports and in public statements, to support journalists in Hong Kong who may face censorship, losing their jobs and even violent attacks for attempting to exercise their 8 The UK’s relations with Hong Kong: 30 years after the Joint Declaration rights under the Basic Law, and to ensure a climate of impunity does not evolve.

The belief that China is eroding Hong Kong’s autonomy is strongly held by many people in Hong Kong, reflecting an intertwined combination of legal and political developments and questions of changing identity, language and culture. These complex issues are key to understanding the context of developments in Hong Kong, and the FCO’s reporting should reflect these nuances of public opinion more accurately as part of its overall assessment of the functioning of “one country, two systems” in the six-monthly reports.

The demand for greater democracy in Hong Kong is more than an abstract concern: it reflects the understandable desire of Hong Kong’s people to have an accountable government that responds to their needs and interests. The status quo is not sustainable in the long term, and if the current constitutional stalemate continues it could soon threaten the open business climate and stability that underpins Hong Kong’s enviable prosperity and growth. In our view, this tension can only be resolved by meaningful progress toward democracy, guided by a transparent process in line with the Basic Law, in which both the Hong Kong people and the Chinese government can have confidence.

We are concerned that the FCO’s lack of clarity in expressing its views on political and constitutional developments in Hong Kong may be damaging the UK’s reputation there. We welcome, however, the FCO’s emphasis on building a genuine partnership between the UK and China. A strong relationship should enable the UK and China to exchange views on Hong Kong’s political and constitutional development openly and in a spirit of cooperation, even where they may disagree. A democratic, stable and prosperous Hong Kong is good for the people of Hong Kong SAR, good for China, and good for the UK. Britain has an enduring moral responsibility to see that Hong Kong achieves this goal and to ensure that the principles, legal obligations and spirit of the Joint Declaration remain as respected today as they were in 1984 and 1997.

Hong Kong is governed by the Chief Executive, who is ultimately accountable to both the Chinese Central People’s Government (CPG) and Hong Kong SAR in accordance with the Basic Law. The Chief Executive is supported by the Executive Council, all members of which he or she appoints. The Executive Council is, in turn, supported by a Government Secretariat (civil service), covering all policy areas over which Hong Kong’s government has autonomy. The legislature, LegCo, today has 70 members. In the last LegCo election, which took place in 2012, 35 legislators were elected directly in geographical constituencies under a system of party-list proportional representation (in which votes are cast for a list of candidates selected by each party, rather than for individuals).23 30 legislators were elected by so-called “functional constituencies”—representing different professional and sectoral groups—while the final five were selected by regional councils and elected by those who were not represented in the functional constituencies. Although there are 16 political parties and several Independents currently represented in LegCo, Hong Kong’s legislators are generally divided into two broad groups: the “pan-democrats”, who advocate constitutional reform to make Hong Kong SAR’s government and legislature more democratic, and the “pro-Beijing” groups generally seen to support the political status quo. In the five LegCo elections since 1998, the “pan-democrats” have held between 33% and 41% of seats, with the rest held by “pro-Beijing” legislators. The proportion of “pan- democrats” returned in geographical constituencies is considerably higher than the overall total, suggesting that they would be likely to hold a majority if all legislators were directly elected. The most recent LegCo elections returned 27 “pan-democrats”, versus 43 in the “pro-Beijing” camp. 19 Credit Suisse Research Institute, Global Wealth Report 2014, Switzerland, October 2014, pp 30, 33; Josh Noble, “Economic inequality underpins Hong Kong’s great political divide”, Financial Times, 21 October 2014 20 Q261 21 Gabriel Wildau, “Hong Kong’s value to China goes beyond numbers”, Financial Times, 2 October 2014 22 Clare Baldwin, Yimou Lee and Clare Jim, “Special Report – the mainland’s colonisation of the Hong Kong economy”, Reuters UK, 31 December 2014 23 Electoral Affairs Commission of the Hong Kong Special Administrative Region, “Guidelines on election-related activities in respect of the Legislative Council Election, 2012”, Chapter 2: Geographical Constituencies, para 2.23 16 The UK’s relations with Hong Kong: 30 years after the Joint Declaration 3 The UK and Hong Kong as partners UK representation in Hong Kong

The UK Consulate-General in Hong Kong (also responsible for Macao) was opened on 1 July 1997, the day China assumed sovereignty over Hong Kong. It is one of the largest UK Consulates-General in the world, currently employing 95 staff with an operational budget of almost £1.5 million in 2014–2015.24 It is also one of the busiest posts for consular assistance, with a quarter of a million British citizens living and working in Hong Kong.25 The FCO told us that the Consul-General in Hong Kong reports directly to the head of the China Department at the FCO in London, rather than to the UK Ambassador in Beijing as would typically be the case for a regional consulate.26 We consider this unusual arrangement to be indicative of Hong Kong SAR’s special status and close ties with the UK. British Nationals (Overseas)

According to the FCO, there are approximately 3.4 million holders of British National (Overseas) passports in Hong Kong.27 BN(O) status was created by the Hong Kong Act 1985, to allow people who held British Dependent Territories Citizen status before the handover to retain a connection with the UK after the transfer of sovereignty to China. Those who wanted BN(O) status were required to register between 1987 and 1997, after which point it was no longer made available. The status is non-hereditary and does not confer right of abode in either the UK or Hong Kong, nor are British nationals (overseas) considered UK nationals by the EU. British nationals (overseas) are entitled to UK consular assistance and protection, and if legally resident in the UK they enjoy all rights granted to Commonwealth citizens.28 However, since this category of nationality was in effect invented specifically for natives of Hong Kong, the vast majority of British nationals (overseas) are of Chinese ethnicity. China therefore considers them to be Chinese nationals only, as China does not recognise dual nationality. This means that the UK cannot offer consular assistance to British nationals (overseas) within the territory of China, including Hong Kong SAR.29 The last FCO six-monthly report to include a paragraph on the status of BN(O) passport holders, covering January to June 2009, said that the FCO remains “fully committed to providing the highest standard of consular and passport services to BN(O) passport holders” outside of China, Hong Kong and Macao.30 24 Foreign and Commonwealth Office (HNG 0748) para 39 25 Foreign and Commonwealth Office (HNG 0748) para 40 26 Q342 27 Foreign and Commonwealth Office (HNG 0748) para 41 28 GOV.uk, Types of British nationality, accessed 3 February 2015 29 Foreign and Commonwealth Office, Support for British nationals abroad: A guide, 2014, p 5 30 Foreign and Commonwealth Office, The Six-monthly Report on Hong Kong: 1 January to 30 June 2009, July 2009, p 11 The UK’s relations with Hong Kong: 30 years after the Joint Declaration 17

We received some written submissions from British nationals (overseas) arguing for easier pathways to UK citizenship for BN(O) passport holders.31 A submission by the organisation BritishHongKong also asked the FCO to lobby several countries to treat BN(O) passport holders like UK citizens for visa and immigration purposes.32 Our predecessor Committee recommended that the UK Government ensure that the European Council agreed a draft Regulation, still under consideration at that time, to allow BN(O) passport holders to travel visa-free in the Schengen area.33 This welcome development took place in December 2006.34

We recommend that the Government state, in its response to this report, whether its policy is to support the expansion of visa-free travel worldwide for BN(O) passport holders resident in Hong Kong. If this is the case, the Government should set out what progress has been made in achieving this goal since 2006. Economic and trade relations

The UK and Hong Kong retain strong economic ties. According to the FCO, Hong Kong was the UK’s 13th-largest export market for goods in 2013, and its second-largest export market in Asia-Pacific (after mainland China).35 Bilateral trade between Hong Kong and the UK in both goods and services totalled some £16.6bn last year.36 The Hong Kong Association, an organisation supporting UK-Hong Kong business and trade ties, also told us that at the end of 2012 British investment in Hong Kong comprised 40% of all UK investment in Asia, adding that this figure probably underestimates the total given how much UK investment is routed through offshore localities like Bermuda.37 According to the Association, as of 2013 there were 126 British companies using Hong Kong as their regional headquarters, and another 209 companies with offices there.38 Investment also flows in the other direction. Hong Kong is the 12th-largest investor into the UK, and the single largest foreign company investing in the UK is Hong Kong-based Hutchinson Whampoa.39 Hong Kong’s role in China

In 2006, our predecessor Committee reported that many UK firms used Hong Kong as a “springboard” to mainland China.40 We were told that although this was still the case for 31 BritishHongKong (HNG 0345) para 18; Medium Raw Productions (HNG 0721) para 10; Deryck Y K Chan (HNG 0473) paras 16-18 32 BritishHongKong (HNG 0345) para 20 33 Foreign Affairs Committee, Seventh Report of Session 2005-06, East Asia, HC 860-I, para 418 34 Council Regulation (EC) No 1932/2006 35 Foreign and Commonwealth Office (HNG 0748) para 43 36 Foreign and Commonwealth Office (HNG 0748) para 43 37 Hong Kong Association (HNG 0738) para 2 38 Hong Kong Association (HNG 0738) para 2 39 Foreign and Commonwealth Office (HNG 0748) para 45 40 Foreign Affairs Committee, Seventh Report of Session 2005-06, East Asia, HC 860-I, para 409 18 The UK’s relations with Hong Kong: 30 years after the Joint Declaration some companies, it was no longer true on the same scale due to mainland China’s economic growth and market liberalisation.41 We heard, for example, that while 50% of China’s goods trade was routed through Hong Kong in 1997, today that figure has dropped to approximately 13%.42 It is now easier than ever for UK firms to operate directly on the Chinese mainland, and cities like Shanghai, which launched its own free-trade zone in 2013, are increasingly competing to attract business and investment.

We heard from many witnesses, however, that Hong Kong retains a number of advantages as a platform for British companies seeking to trade or invest in China, in terms of its legal and political structures as well as its reputation. The Hong Kong Association said these factors included “low and simple taxation, rule of law based on the common law, an independent judiciary, freedoms of speech and movement and a competent and non- corrupt civil service.”43 Jonathan Fenby, former editor of the South China Morning Post, cited the rule of law as particularly important in maintaining Hong Kong’s competitive advantage.44 Speaking to us on behalf of UKTI, the UK’s Consul-General in Hong Kong, Caroline Wilson, said that these qualities would ensure that Hong Kong retained an important role in China for the foreseeable future: The advantages that Hong Kong has are not ones that are replicated overnight or could be easily replicated by other centres. As you know, it takes quite some time to build up the rule of law, an independent judiciary and the kind of regulatory structures that we have here in Hong Kong, so I think those will certainly be enduring.45 Similarly, Duncan Innes-Ker, an analyst at the Economist Intelligence Unit, told us that Hong Kong has an international culture that cities on the Chinese mainland will take a long time to match.46 We expect Hong Kong to remain a vital hub for UK business and investment in China, especially in light of the recent launch of the Shanghai-Hong Kong Stock Connect which allows investors in Hong Kong to trade directly in shares listed on the Shanghai stock market via Hong Kong-based brokers. RMB internationalisation

One reason for Hong Kong’s continuing importance as a financial centre in China is its position as the platform for the internationalisation of the renminbi (RMB), China’s currency. In mainland China the RMB is not freely convertible, but since 2004 Hong Kong banks have been able to offer RMB banking services including currency exchange. This was followed in 2007 with the launch of so-called “dim sum” bonds (RMB-denominated bonds 41 Qq82, 282 42 Q261 43 Hong Kong Association (HNG 0738) para 6 44 Q82 45 Q51 46 Q260 The UK’s relations with Hong Kong: 30 years after the Joint Declaration 19 issued in Hong Kong). Hong Kong is today the largest hub for RMB trading outside mainland China, with a 65% share of the global RMB market.47

RMB internationalisation was cited by the FCO as a key policy area on which the UK and Hong Kong governments have cooperated in recent years. This cooperation largely takes place in the format of the London-Hong Kong RMB Forum, which brings together the City of London’s RMB initiative, the Hong Kong Monetary Authority and HM Treasury.48 The forum met in London in 2014, and will meet in Hong Kong in 2015.49 According to the FCO this high level of cooperation has helped London to become the second-largest offshore centre for RMB trading after Hong Kong.50 The business climate for UK firms in Hong Kong

Consul-General Wilson said that there were “few hurdles” for British businesses operating in Hong Kong. She told us that UK businesses got on “extremely well” there, adding: This is an open, transparent and competitive market; it is largely English speaking; the rule of law is very familiar to British businesses; and the Hong Kong people are very efficient. The culture of Hong Kong is business, so it is fair to say that if you can’t do business in Hong Kong, you’re probably not going to be able to do business very well anywhere.51 This was also the view of Lord Powell of Bayswater, representing the Hong Kong Association, who told us he could not think of an easier or better place in the world to do business than Hong Kong.52 Asked for specific examples of obstacles that UK companies face in Hong Kong, both Ms Wilson and Lord Powell said there were very few.53

We heard, however, some concerning reports that UK firms had recently come under pressure from the Hong Kong authorities to state publicly their opposition to the Occupy Central protest movement that has dominated Hong Kong’s political scene since September 2014.54 We were reassured to be told by the Hong Kong Association that none of their members had mentioned being put under this type of pressure.55 Freedom from political pressure is one of Hong Kong’s greatest strengths as a place to do business, especially relative to the Chinese mainland. If this freedom were compromised, it could do 47 Q341 48 Foreign and Commonwealth Office (HNG 0748) para 21 49 Foreign and Commonwealth Office, Remarks by Consul-General Caroline Wilson at “UK – the Western RMB Hub” event, 26 January 2015 50 Q341 51 Q52 52 Q281 53 Qq53, 281 54 Q61 55 Q288 20 The UK’s relations with Hong Kong: 30 years after the Joint Declaration great damage to Hong Kong’s reputation and ability to attract international business and investment.

We welcome reports that economic ties between the UK and Hong Kong remain strong and that UK firms continue to operate in Hong Kong easily and successfully. The UK Government should ensure that its strategy on improving UK-Chinese economic and trade relations continues to recognise the special role of Hong Kong as a partner for the UK. The FCO should also continue to be active and vigilant in monitoring reports of political pressure being applied to UK companies in Hong Kong, and raise any resulting concerns with the Hong Kong government. The work of the British Council

The British Council office in Hong Kong is one of the oldest and largest in the world, with a staff of over 200.56 The main aspects of its work are English language teaching and conducting examinations, and it is also involved in facilitating educational exchange, the arts and creative industries and social entrepreneurship. The British Council in Hong Kong told us that it has excellent relationships with the Hong Kong government, particularly the Education Bureau and the Leisure, Culture and Sports Department.57 It also said that the UK remains the market leader in receiving Hong Kong students, with 56% of students who choose to go abroad enrolling in UK schools and universities.58

As time passes since the end of British colonial rule and Hong Kong becomes a more international city, the British Council told us that employers report a decline in English language proficiency.59 The British Council therefore has an important role to play in ensuring that Hong Kong’s young people continue to have a high standard of English proficiency, which benefits jobseekers in an international market and strengthens cultural ties between the UK and Hong Kong. Language teaching, however, is not enough to bolster social and cultural relations between Hong Kong and the UK. The British Council’s participation in projects like the West Kowloon Cultural District—a £1.73bn scheme involving the construction of a new cultural and artistic hub with 18 museums, theatres and other cultural facilities on the Hong Kong waterfront—offer key opportunities for raising the profile of the UK in Hong Kong’s cultural scene, and for creating new contacts between Hong Kong and the UK.60 We consider that the British Council has an important role to play in maintaining strong social ties between the UK and Hong Kong, and we welcome its work in language teaching, educational exchange and creative engagement with Hong Kong’s artistic and cultural life. 56 British Council (HNG 0503) para 2.1 57 British Council (HNG 0503) para 2.2 58 British Council (HNG 0503) para 5.2 59 British Council (HNG 0503) para 4.2 60 British Council (HNG 0503) para 6.2 The UK’s relations with Hong Kong: 30 years after the Joint Declaration 21 4 FCO monitoring of the Joint Declaration The UK’s ongoing obligations under the Joint Declaration

The Sino-British Joint Declaration is an international treaty, registered in 1985 with the United Nations. When it was signed, both the UK and China undertook to implement its provisions. The UK’s specific obligation was to administer Hong Kong until the handover “with the object of maintaining and preserving its economic prosperity and social stability.”61 According to the FCO, this obligation was fulfilled when sovereignty over Hong Kong was transferred from Britain to China.62 The majority of the treaty focuses on China’s policies toward Hong Kong SAR, which may not be changed for 50 years following the handover of sovereignty. The FCO’s position is that the UK retains a locus standi in ensuring that China, as a counter-signatory, continues to fulfil its obligation to maintain Hong Kong’s “high degree of autonomy”.63 Thus although the Declaration did not confer any specific legal obligations on the UK toward Hong Kong after 1 July 1997, the FCO has consistently held that the UK has a “moral responsibility and a legal right” to monitor the ongoing implementation of the treaty.64

We were therefore concerned to hear comments made in December 2014 by Raymond Tam, Hong Kong’s Secretary for Mainland and Constitutional Affairs, in response to a question in LegCo on the Joint Declaration. He said: The provisions of the Joint Declaration have been fully implemented, and its purpose and objectives have also been fully fulfilled. […] The United Kingdom has no sovereignty, jurisdiction or right of supervision over Hong Kong, and there is no such thing as "moral obligation”.65

We put these comments to the FCO Minister of State, Hugo Swire, and were reassured to hear that the UK Government did not agree with them.66 We note that Mr Swire raised this issue with the Chinese Foreign Minister and with the head of the Hong Kong and Macao Affairs Office in May 2014. In his foreword to the six-monthly report on Hong Kong covering July to December 2014, the Foreign Secretary wrote: Let me be unequivocal, as we have been, consistently, at all levels of Government: the Joint Declaration remains as valid today as when it was signed in good faith by Margaret Thatcher and Zhao Ziyang, and the UK’s 61 Joint Declaration of the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People's Republic of China on the Question of Hong Kong, para 4 62 Q334 63 Q334 64 Q333 65 Hong Kong Government News, “LCQ5: The Joint Declaration on the Question of Hong Kong”, Press Release, 17 December 2014 66 Qq335-337 22 The UK’s relations with Hong Kong: 30 years after the Joint Declaration commitment to it is as strong as ever. It is a legally binding treaty, registered with the UN and as a co-signatory, we have a clear right to monitor and comment on its implementation, and we will continue to do so.67

The FCO has repeatedly said that the UK has both a moral responsibility and a legal right to monitor China’s fulfilment of its obligations to Hong Kong under the Joint Declaration. We agree. The FCO should continue making this clear to the Chinese and Hong Kong authorities at every level. The Minister of State told us that President Xi will conduct a state visit to the UK in 2015. The Prime Minister should use that opportunity to emphasise both publicly and privately to President Xi that the UK is committed to this position, and takes seriously its monitoring of the implementation of the Joint Declaration. The six-monthly reports

Since the handover of sovereignty in 1997, the FCO has monitored the implementation of the Joint Declaration primarily via its six-monthly reports on Hong Kong. In a Westminster Hall debate on 22 October 2014, the Minister of State said that the six- monthly reports are widely read by decision-makers in Hong Kong and Beijing.68 The evidence we received supports this contention. Many of the witnesses to whom we spoke in Hong Kong, as well as a large number of the written submissions, showed detailed knowledge of the content and tone of the reports. The President of the Foreign Correspondents Club in Hong Kong also told us that UK statements on Hong Kong were widely reported there. He said: What I can say is that any time the UK Government issues any kind of language on Hong Kong, it gets reported everywhere—in all the print and broadcast media. People here are listening and looking for cues from London to see what the view is, and that gets reported extensively—and it will get spun extensively, depending on the media group involved and what their position is on these issues of pro-China, pro-democracy or whatever the rival camps are. Fundamentally, you are guaranteed a wider audience.69 The impact that the UK’s statements can have in Hong Kong has also been made apparent to us by the extensive coverage of our inquiry in the Hong Kong media. It is therefore of utmost importance for the FCO to get the six-monthly reports right.

According to the FCO, the purpose of the reports is “to keep Parliament informed of major developments in Hong Kong, in particular regarding the implementation of the Sino-British Joint Declaration and the operation of the ‘one country, two systems’ model.”70 They told us that the reports aim to provide a “narrative” of developments 67 Foreign and Commonwealth Office, The Six-monthly Report on Hong Kong: 1 July to 31 December 2014, February 2015, p 2 68 HC Deb, 22 October 2014, col 294WH 69 Q154 70 Foreign and Commonwealth Office (HNG 0748) para 8 The UK’s relations with Hong Kong: 30 years after the Joint Declaration 23 during the reporting period, and to establish the UK position on any significant issues of interest or concern.71 The reports are drafted by FCO officials in the Consulate-General in Hong Kong and revised together with the China Department in London.72 The Foreign Secretary then writes a short foreword, typically no longer than two pages, before presenting the report to Parliament.

The six-monthly reports have never identified a breach of the Joint Declaration. The reports have consistently concluded that “one country, two systems” continues to work well, although the most recent report acknowledged that it had been “put to perhaps the most serious test since the handover” during the period from July to December 2014.73 The reports typically cover topics including the independence of the judiciary, the rule of law, basic rights and freedoms such as freedom of the press and of assembly. They also detail political, economic and constitutional developments during the reporting period. The reports have been used to express concern about various issues and developments, most strongly in 2002 and 2003 in relation to proposed national security legislation under Article 23 of the Basic Law, which, if passed, could have significantly restricted freedom of speech and the press.74 The Foreign Secretary’s foreword is intended to provide “the main political opinion” expressed in the report.75 The foreword, however, is often identical in content and phrasing to the conclusions stated throughout the main body of the report, and usually offers little extra insight into the UK Government’s position.

On the whole, the assessment of our witnesses was that the reports could do better, particularly in relation to establishing the UK position on events of interest or concern. This was not a unanimous view—the Hong Kong Association called the reports a “useful compendium of developments”76—but a significant majority of the evidence we received ranged from mildly to strongly critical. Some witnesses, particularly academics and analysts, thought that the reports were broadly accurate in their description of events in Hong Kong, but that they lacked analysis and opinion. Duncan Innes-Ker, an analyst at the Economist Intelligence Unit, said he thought the six-monthly reports gave “broad” and “deep” coverage, but that they did not always reflect accurately “a full sense of the feelings on the ground.”77 He described the reports as “a repetition of fact, rather than an expression of opinion.”78 Similarly, Dr Malte Kaeding, Lecturer in International Politics at the University of Surrey and an expert on Hong Kong, said the reports provided a good overview of events, but lacked context and did not make linkages between the individual issues and events described in the narrative.79 Atypically among the interlocutors in Hong 71 Foreign and Commonwealth Office (HNG 0748) para 9 72 Q346 73 Foreign and Commonwealth Office, The Six-monthly Report on Hong Kong: 1 July to 31 December 2014, February 2015, p 28 74 The legislation was withdrawn in 2003 after mass protests, and has not been re-introduced to date. 75 Q347 76 Hong Kong Association (HNG 0738) para 4 77 Q258 78 Q259 79 Q29 24 The UK’s relations with Hong Kong: 30 years after the Joint Declaration Kong to whom we spoke via video-link, the Chairman of the Hong Kong Democratic Foundation expressed admiration for the depth of China-related knowledge displayed by FCO officials working on the reports, even though he did not always agree with their view. He said: We know—we have links with your consulate general in Hong Kong—almost everyone who wrote the six-monthly report and we know that both former and current officials working in the Foreign and Commonwealth Office are sinologists. They have deep knowledge of China [...] Because of their deep knowledge, of course their judgment could be slightly different from Hong Kong and from people who are not sinologists […] I know that they have Hong Kong’s best interests at heart. There are people who have a different opinion—that is normal in a democratic society—but personally, I trust their judgment, because they can tell me things I don’t know. The Foreign Affairs Committee might blame them or say, “They are not doing their job,” but in our opinion they are doing the best they can to preserve not just you but us, and they are trying to best serve China’s interests too.80 This was, however, an unusually sympathetic evaluation of both the content of the six- monthly reports and of the FCO’s judgment in responding to developments in Hong Kong.

A large proportion of those to whom we spoke had more negative views on the reports, criticising them for failing to convey an accurate sense of public opinion in Hong Kong, and also for their neutral tone. Asked for his opinion on the reports, former Governor of Hong Kong Lord Patten said: Well, words like “bland” and “anodyne” come to mind, but they probably overdo the excitement and aggressiveness of the reports. On the day that the sans-culottes stormed the Bastille, Louis XVI wrote in his diary, “Rien”,81 and you get a slight feeling of that when you read these six-monthly reports, which must have been written thousands of miles away from Hong Kong.82 The “pan-democrat” legislators to whom we spoke were highly critical of the reports, saying that they failed to convey the extent to which people in Hong Kong are worried about the perceived erosion of Hong Kong’s autonomy. Emily Lau, leader of the Democratic Party, said that the reports were “very weak” and “not really stating things as they are”.83 Alan Leong, leader of the Civic Party, told us that the six-monthly reports “should reflect more accurately on what happened during the past six months and give a clearer and unequivocal view of what you had observed, instead of dodging the issue and beating about the bush.”84 Democratic activist Avery Ng called the reports “weak” and 80 Q167 81 Meaning “nothing”, in French 82 Q11 83 Q209 84 Q219 The UK’s relations with Hong Kong: 30 years after the Joint Declaration 25 disappointing.85 Student protesters added a slightly different perspective, saying the reports were inaccurate because they described only the opinions of legislators and ignored the views of young people without political affiliation.86 Anson Chan’s Hong Kong 2020 organisation also accused the reports of “over reliance on bland rehearsal of public pronouncements by Hong Kong and Chinese Government officials” and of failing to include authoritative public opinion surveys.87

Dr Tim Summers, an analyst with Chatham House and former FCO official, also said that the reports did not always express the UK position clearly enough on issues relating to the Joint Declaration.88 Unlike the many pro-democratic witnesses who accused the FCO of taking a timid approach in order to avoid angering Beijing, Dr Summers suggested that the relative blandness of the reports reflected the FCO’s desire to avoid angering Hong Kong’s pro-democratic activists. Speaking about a controversial White Paper published in June 2014 by the Chinese State Council, which in his judgement contains no cause for concern, he said: The six-monthly report for the first half of [2014] really sat on the fence on the White Paper and I don’t think they needed to sit on the fence on that. The Government could and should have come to a view […] I guess the politics are the issue, and the concern not to speak out in a way that might be criticised by pro-democracy protestors, hence the fence-sitting.89

According to the FCO, the purpose of the six-monthly reports is twofold: to provide a narrative of events, and to serve as the main platform for the UK Government to express its views on developments in Hong Kong. People in Hong Kong, China and elsewhere look to the reports to ascertain the UK Government’s position on important and controversial issues. The reports thus speak to several different audiences at once and we acknowledge that they must tread a narrow path. However, we consider the reports unsatisfying, even within these constraints.

We consider that the six-monthly reports offer comprehensive if somewhat bland narratives of events, but they fall some way short of indicating the UK’s position on developments in Hong Kong. We recommend that the reports be restructured to include less ambiguous conclusions, supported by more in-depth analysis of the political, social and economic implications of the events they describe. We also recommend that the Foreign Secretary express more clearly the UK’s views on developments during the relevant reporting period, in his foreword to each report. 85 Q240 86 Q123 87 Hong Kong 2020 (HNG 0490) para 1.1 88 Q236 89 Q237 26 The UK’s relations with Hong Kong: 30 years after the Joint Declaration 5 Political and constitutional reform Evolution of election procedures for the Chief Executive

The Sino-British Joint Declaration did not specify the precise procedures for electing Hong Kong’s government after the handover of sovereignty, stipulating only that the Chief Executive would be “appointed by the Central People’s Government on the basis of the results of elections or consultations to be held locally.”90 These procedures, including the goal of introducing universal suffrage, were subsequently established in Article 45 of the Basic Law, which states: The method for selecting the Chief Executive shall be specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordance with the principle of gradual and orderly progress. The ultimate aim is the selection of the Chief Executive by universal suffrage upon nomination by a broadly representative nominating committee in accordance with democratic procedures.91