Yuan strengthens as Chinese stocks continue robust rally
Executive councilor says the security law was a response to growing chaos in the city
Global investors are continually buying into the rally in China’s equity market, which has taken the renminbi to its highest level in several months and reinforced hopes that the country’s earlier economic recovery would sustain the bullish market sentiment, analysts said.
Chinese stocks extended their rally on Tuesday, with the CSI 300 index of shares listed in Shanghai and Shenzhen gaining 2 percent in early trading, although the rise slowed to 0.6 percent at the close. On Monday, the index surged 5.67 percent, its biggest daily gain in five years.
The People’s Bank of China, the central bank, set the central parity of the RMB exchange rate against the US dollar, or the daily trading reference, at 7.0310 on Tuesday, up 353 points from Monday, the largest daily appreciation since April 9. The offshore yuan strengthened past 7 per dollar for the first time since March.
The huge influx of “northbound capital”, which flowed from overseas to the mainland through stock connect programs linking onshore and offshore capital markets, indicated that global investors are buying Chinese stocks. The rally resulted in large demand for the renminbi and strengthened its value, Guan Tao, chief global economist at BOC International (China) Co Ltd, told China Daily.
Executive Councilor Wong Kwok-kin said fear of an end to their once-uncontrolled spying and intelligence activities in Hong Kong makes Western countries fret over the National Security Law.
Wong, in a one-on-one interview with China Daily, said that’s why the Western countries, led by the US, come up with nonsense excuses to oppose the law, accusing the legislation of breaching the “one country, two systems” principle and the Sino-British Joint Declaration.
“This is their ‘bandit logic’: You often caused trouble in my house, which was unguarded, but now you curse me for installing an iron gate to protect myself and shut you out,” Wong said.
“I guess the plan for national security legislation in Hong Kong was well-perceived and well-planned perhaps as early as 2014, while the central authorities were also prepared to pay a certain price, including sanctions by foreign countries. The reaction of the US is within expectations and is what I call a ‘minimum charge,’ ” Wong said.
In Wong’s opinion, the legislation is a response to a growing trend of chaos instigated by anti-China forces in the city through collusion with the foreign and external forces over the years.
There were protests to Basic Law Article 23 legislation in 2003 and national education in 2012, the illegal “Occupy Central” movement in 2014, the Mong Kok riot in 2016, and last year’s antiextradition-law protests, Wong said.
In the eyes of the veteran lawmaker, the much-awaited law, which went into effect on June 30, has already proved effective in some ways.
The fact that fewer people than before were defying the law on July 1 is a living embodiment of the law’s deterrence, he said.
Many who took to the street on July 1 were youngsters — students who were easily incited by the ringleaders, he observed.
“Some did not take part because they wanted to watch and test the bottom line of law enforcement and find out if there are gray areas. They wait and see if the arrested people are prosecuted, if they are prosecuted for national security offenses, and whether the sentences by court are lenient or severe.”
Some key figures from the opposition camp have either announced their plans to “retire” or have left the city.
“Many people from the opposition camp, including the violent, radical ones, were not there because some were frightened, arrested or have ‘retired’ or fled Hong Kong already,” he said.
Moments before the law was passed by the Standing Committee of the National People’s Congress, the nation’s top legislature, some known separatist groups in the city announced they would disband their parties.
On June 30, Joshua Wong Chi-fung, a high-profile separatism advocate, quit and dissolved the party he co-founded. Wong’s fellow co-founder, Nathan Law Kwun-chung, left the city quietly before the law took effect.
Apart from serving as a deterrent, the executive councilor further highlighted some provisions of the national security legislation, praising them as very useful, effectively targeting and resolving the difficulties that emerged in the past.
He pointed out: “The approval of financial and personnel resources need not go through the Legislative Council and will therefore be free from the longstanding hindrance and filibusters by the opposition camp, while it will be faster for the chief executive to approve covert surveillance and interception of communications, instead of the court.
“Moreover, the national security commission based in Hong Kong retains the jurisdiction to handle the most serious national security cases or cases that the Hong Kong SAR government is unable to deal with, while police can engage professional and technical people from outside Hong Kong to assist in police investigations.”
Wong, however, believes no law is perfect or airtight, saying the national security legislation should be reviewed or amended when necessary in the future. “The National Security Law cannot solve every problem, so the government must take on board additional policy measures to deal with such other existing problem as education, civil servants, housing and lands, and youth affairs,” he said.