◎ Black Swan events could be triggered on the mainland as the situation in Hong Kong deteriorates.

On July 21, triad members brutalized protesters and journalists boarding public transport in Hong Kong. Protesters criticized the police for failing to stop the gangsters. The Hong Kong government also criticized the violent attacks on protesters, but joined Beijing in strongly condemning the protesters for vandalizing the Hong Kong Liaison Office.

We earlier analyzed that the Chinese Communist Party’s seemingly “irrational” behavior over Hong Kong is the “product of the Party’s survival instincts kicking in and the CCP factional struggle.” We see both factors at play in the recent violent attacks in Hong Kong.

The backdrop:

Events on July 21 and July 22

1. In the afternoon of July 21, thousands of people in Hong Kong marched from the city’s Causeway Bay to the Court of Final Appeal in Central to protest a proposed extradition bill which the Hong Kong government was trying to pass. If passed, the bill would put people in Hong Kong, including those just passing through the city, at risk of being arrested and sent to mainland China to stand trial. The protest march on July 21 called for the proposed extradition bill to be completely withdrawn, for the Hong Kong government to retract its characterization of protests on June 12 as a “riot,” other extradition bill-related demands, and for universal suffrage in Hong Kong elections. The protest march organizers estimated that 430,000 people attended the march.

Concurrently, Falun Gong adherents from Hong Kong and nearby countries held a march from King’s Road Playground in Hong Kong’s North Point neighborhood to Beijing’s Hong Kong Liaison Office in the Sai Ying Pun district to mark the 20th anniversary of the CCP’s crackdown on Falun Gong.

2. In the evening of July 21, some protesters from the anti-extradition bill march headed to the Hong Kong Liaison Office. There, the protesters vandalized the Liaison Office building by spraying graffiti on the walls, as well as throwing eggs and balloons filled with black ink at the front door and the People’s Republic of China emblem. The CCP “allowed” pictures of vandalism and other photos of unruly protester behavior to spread on mainland Chinese social media.

After vandalizing the Liaison Office, the protesters moved to occupy parts of Hong Kong’s Central district. The Hong Kong police cleared the protesters from the area using tear gas and rubber bullets.

3. According to various Hong Kong media and social media reports, a group of men wearing white T-shirts were spotted in Yuen Long, a town in Hong Kong’s rural northwest region, at about 9:00 p.m. Hong Kong time on July 21. Eyewitnesses say that the men started hitting protesters in the streets around 9:30 p.m. At about 10:00 p.m., the men in white T-shirts, many of whom did not bother to hide their faces, begun attacking black-clad protesters inside and around the Yuen Long MTR station. The men wielded wooden and bamboo sticks, canes, and other weapons against unarmed protesters. At least 45 people were injured, including a pregnant woman, reporters, and one lawmaker; one of the injured was in critical condition while five others were seriously wounded. According to various reports, the Hong Kong police only showed up on scene about half an hour after being notified by the Yuen Long attack, and did not arrest the white-shirted men despite having brushed into them en route to the MTR station.

The men in white T-shirts were later identified as triad gangsters by members of the public and some media outlets. Some public members also noted that the men were bussed into Yuen Long in a government rental bus. According to AFP, “some men in white shirts were later filmed leaving the scene in cars with Chinese mainland number plates.” In a video widely circulated online, Junius Ho, a pro-Beijing lawmaker, was seen giving thumbs up and applauding the men in white. Ho even shook hands with two of the men. When a man told Ho that he was his “idol,” Ho replied, “all of you are my heroes.”

4. On July 21, 24 pro-democracy lawmakers issued a joint statement denouncing the Hong Kong police of “colluding” with triads and “condoning” the Yuen Long attack. “The situation makes people wonder if [chief executive] Carrie Lam received instructions from the [Communist] Party to cause divisions among the public,” the statement reads.

On the same day, Hong Kong chief executive Carrie Lam condemned the vandalism of the Hong Kong Liaison Office building as an act that “challenged the country’s sovereignty, breached the bottom line of ‘One Country, Two Systems,’ and hurt the feelings of all Chinese people,” according to an RTHK report. She also criticized the Yuen Long attacks and dismissed “baseless accusations” that Hong Kong police had worked with the men in white T-shirts.

The PRC also condemned the vandalism. Liaison Office director Wang Zhimin said that the actions of protesters challenged the “authority and dignity” of the PRC government and “seriously damaged the feelings of all Chinese people including seven million Hong Kong compatriots.” Other PRC organs that handle Hong Kong affairs also issued statements of criticism. PRC foreign ministry spokesman Geng Shuang said, “Some radical protester behavior violated our bottom line of ‘one country, two systems’. We cannot tolerate that.” Party newspaper People’s Daily published an article that “firmly supports the Hong Kong government in taking all necessary measures to ensure the safety of the central government in Hong Kong. The rule of law in Hong Kong must be upheld and the criminals must be punished.”

Related information and incidents

1. On July 15, Hong Kong newspaper Apple Daily reported that Zhongnanhai, the CCP headquarters, had dispatched a large number of security and United Front officials to Hong Kong for “research” after the 2 million-strong Hong Kong parade on June 16. Subsequently, Xi Jinping reviewed information from his “think-tank” team and the organs overseeing Hong Kong and Macao affairs, and issued a “highest directive” on Hong Kong which forbade the “deployment of troops stationed in Hong Kong,” called for the “avoiding of bloodshed,” and for the “strengthening of overall control.”

On July 18, the South China Morning Post reported that PRC officials in charge of Hong Kong affairs are working on a “comprehensive strategy” to solve the political crisis in the city. SCMP sources say that “Beijing still believes the crisis is best left for the Hong Kong government to handle and it should not get directly involved. The principles of avoiding bloodshed and keeping the city ‘largely stable’ remain unchanged.” Also, “despite speculation to the contrary, they are firm about not considering the use of the People’s Liberation Army as an option. Sources say Beijing regards Hong Kong’s embattled police force as a critical factor in maintaining stability.”

2. On July 20, Hong Kong “self-media” commentators reported the following information leaked by a group of “local-born Hong Kong government directors”:

During a high-level government meeting, Hong Kong chief executive Carrie Lam is alleged to have strongly indicated that she will not “retreat” or apologize again for her government’s statements on the Hong Kong protests. Lam also allegedly indicated that she will not form an independent committee to investigate police actions, and instructed various government bureau chiefs to create other topics to “divert attention” away from the protests.

Lam allegedly said that the Sai Ying Pun district (an allusion to the Liaison Office) had deployed large numbers of “internet water army” (50-cent army) to wage a “discourse war,” as well as hundreds of local thugs to “commit acts of violence.” Further, “moles” embedded in the pro-democracy camp will seek to “smear and split” the pro-democracy crowd.

Lam allegedly said that the “relevant authorities” have arranged for thousands of “unidentified people” to replace police officers and “deal” with the “brave martial clique” (勇武派), or the group of mostly young protesters who prefer to use violence in confronting the Hong Kong government. A person in the meeting pointed out that this tactic was “ineffective.”

Lam allegedly said that “local forces” in various districts have been mobilized to interfere in protest marches and ruin “Lennon Walls” around Hong Kong, and that the police can use this as an excuse to not approve parades.

3. On July 20, Arthur Shek, the deputy director of the pro-CCP Hong Kong Economic Times, said at a public event to support the Hong Kong police that it is like “disciplining naughty children” to hit young protesters with rattan canes and plastic hoses. That is “not violence,” Shek said.

4. Several influential Hong Kong “self-media” commentators expressed their concern that the Hong Kong government would “set up a trap” for the protesters marching on July 21 to “deepen social contradictions in Hong Kong.” The commentators urged all sides to keep calm and avoid causing casualties that will be difficult to reconcile.

Our take:

1. According to the Apple Daily and SCMP reports cited above, Xi Jinping wants to “avoid bloodshed,” “maintain stability,” and “tighten control” over Hong Kong. This is in line with the CCP’s survival instinct reaction which we dealt with in an earlier analysis. However, there are contradictions in CCP survival instincts, which create problems for policy implementation.

CCP officials will always “prefer left rather than right” (寧左勿右) and default to Party orthodoxy in implementing policies from Party central. This is because officials will at most have to make a self-confession when they err but carry out policies in a “left” manner (suppression, heavy-handedness, in accordance with Marxist-Leninism principles). In contrast, officials will be disciplined for being “politically incorrect” when they err in implementing policies in a “right” manner (moderate, compromising, reform-minded). Thus, it is natural for CCP officials overseeing Hong Kong to execute Xi’s orders in a heavy-handed manner even if he were to have no intention of escalating tensions in the city.

2. In analyzing the Hong Kong legislature break-in, we noted that “incitement is a favorite tactic of the Chinese Communist Party,” and that the Party is known to deploy “agents to infiltrate groups, fracture the group and its cause, and provoke violence with the authorities to give the CCP a ready-made reason to launch a crackdown.”

We see elements of incitement in play in the Yuen Long attacks on July 21 and the official response from the Hong Kong government and the PRC organs. Also, the Hong Kong police seem to be creating a “climate of fear” and contributing to the fragmentation of Hong Kong society, points which we identified earlier.

3. We wrote previously that the “you die, I live” factional struggle between the Xi camp and the Jiang faction “has been particularly fierce and messy in Hong Kong.” The CCP has long infiltrated all levels of Hong Kong society, and the Jiang faction “has been the Party faction with the most influence over the underground front, the complex intelligence networks in the city, and the Liaison Office” since 1997. We have reason to suspect that there are complex CCP factional factors behind the violence in Hong Kong on July 21.

The Jiang faction has additional incentive to play the Hong Kong card in light of the Trump administration’s recent human rights moves, including spotlighting the CCP’s crackdown on Falun Gong (ordered by Jiang Zemin) and the persecution of the Uyghur Muslims in Xinjiang. We believe that the Jiang faction will escalate the factional struggle to protect Jiang’s political legacy and prevent Xi from taking advantage of America’s increased focus on China’s human rights issues to purge Jiang Zemin and his faction. And one way in which the Jiang faction can cause real headaches for Xi Jinping is in Hong Kong.

The blatant violence and brazenness displayed by the triad members (not bothering to cover their faces and indiscriminate beatings) and Carrie Lam’s “parroting” of the Party line in condemning the protesters will contribute to the fracturing of Hong Kong society, increase international attention on Hong Kong, and make Xi’s job of calming tensions in the city impossible. Ultimately, the Jiang faction will be hoping to push Xi towards mobilizing the People’s Liberation Army to spill blood in Hong Kong. With his hands bloodied in a high-profile manner and under the world’s gaze, Xi cannot purge Jiang and his faction on human rights crimes, and the momentum of the factional struggle could swing back in the Jiang faction’s favor.

4. While the annual Beidaihe summer retreat period has arrived, official information indicates that Politburo Standing Committee members have not yet gathered at Beidaihe. One possible reason is that CCP elite cadres are busy with official business but may journey to Beidaihe at a later date. Another reason why there does not seem to be a Beidaihe meeting this year is that Xi Jinping does not want the Party’s elite and elders to gather and engage in “improper discussions of Party Central” (妄議中央).

In an earlier analysis, we noted that the CCP “very likely now believes with great certainty that the U.S. has already pressed the” human rights “nuclear” button. If our analysis is correct, then the lack of informal discussions at Beidaihe will likely greatly raise the intensity of the Xi-Jiang factional struggle. The Xi camp will not want meetings at Beidaihe so as to guard against the Jiang faction formulating a coup or other measures to “wreck and split the Party.” Meanwhile, the Jiang faction will likely be wary that the Xi leadership is making preparations to purge them.

What’s next:

1. The people of Hong Kong are likely very angry with what seems like a return to the police-triad collusion of the 1960s and 1970s. We believe that tensions in the city will continue to rise and the Hong Kong people will become increasingly anti-CCP.

2. The Hong Kong government could implement delaying tactics, apply economic pressure, and use the legal and law enforcement system to make life difficult for protesters. Protesters from the so-called “brave martial clique” are already seeking asylum in Taiwan, and more could follow suit.

3. Black Swan events could be triggered on the mainland as the situation in Hong Kong deteriorates. Xi Jinping could be compelled to carry out a “revolution from above” (purge factional rivals and force through structural reforms) to prevent a “revolution from below” (Hong Kong launches a full-blown revolution with plans to export revolution to the mainland) from forcing him to bloody his hands.