Hong Kong Government Adds National Security Law Clause to Land Sales and Leases

Violation will result in termination of contract

The picture shows the land tendered on Sai Yee Street in Mongkok, Hong Kong. Feb 13, 2023. (SungPi-lung/ The Epoch Times)

An extra clause of the National Security Law was included in the land sales and lease contracts by the Lands Department of Hong Kong.

The terms explicitly state that the Hong Kong government holds the right to disqualify any bidding on national security grounds and terminate any short-term lease concerning national security. The Lands Department applied the new legal terms to all land sales and short-term lease bidding documents.

In response to The Epoch Times’ inquiries, the Development Bureau revealed that the Government’s Material Supply and Procurement Regulations were updated on Aug. 29, 2022, with the addition of relevant requirements for maintaining the National Security Law. The principles apply to all types and forms of government procurement.

Political scholars analyzed that the additional national security terms to land sales and leases would increase investment risks and negatively impact the Hong Kong market. They also criticized the Hong Kong government for making such a decision based on nothing but bowing down and showing its loyalty to the Chinese Communist Party (CCP). Current affairs commentators speculated that the relevant terms were directed at foreign developers and funds.

Cases with New Clause

According to Lands Department data, the added national security terms and conditions had already taken effect on the sale records of land sites 4, 5B, and 10 in Kai Tak 2A District, which was up for bidding on Nov. 4, 2022.

In the tendered short-term leasing agreement of Chong Fu Road in Chai Wan, the government clarified that it could disqualify whoever believed to have violated or acted in ways that may lead to or constitute crimes against national security, even after the bidding is over. If it believes the winning bidder is involved in acts that endanger national security or undermine national security interests, the winning bid will be terminated.

The Foreign Correspondents’ Club (FCC) lease was initially scheduled to expire in January 2023 but was granted a renewal on Nov. 30, 2022, by the government. The FCC revealed that the new leasing contract would allow the government to terminate its tenancy at any time with a three months notice. And if FCC is involved in anything that may jeopardize national security, the government can terminate its lease immediately.

Impact on Foreign Investors

Politics and economy commentator Simon Lee Sai-man analyzed the situation on an online program on Feb. 13. He said the incident occurred in November 2022 but was not discovered and reported until recently. The delay reflected that the government wanted to manage the change as quietly as possible and not attract public attention.

Lee believed that the new national security clause would not target local or Chinese real estate developers as they would not fight against the government.

He said that all foreign funds would reconsider investing long-term in the Hong Kong real estate market. In recent years, other than Singaporean companies Maple Tree and CapitaLand, no additional foreign funds have been invested in real estate in Hong Kong.

Although Singapore’s funds are safe from the accusation of threatening national security, it is difficult to predict whether it will become a target of Beijing in five to ten years for being too distant from the regime.

National Security Law

Since the implementation of the National Security Law on June 30, 2020, many government departments have added national security elements to the provisions of financing funds or organizing activities.

In September 2021, the Social Welfare Department required government-funded but nongovernmental organizations to obey the law and form policies and procedures to ensure their service units and employees abide by the law.

In October 2022, Hong Kong Public Libraries included the national security clause in the applications for the annual Chinese Poetry Writing Competition and the World Book Day Creative Competition. The clause states that competition entries cannot violate the National Security Law or deem “detrimental to national security.”

In December 2022, the Home Affairs Department listed the new clause in the regional care teams application form. The applicant group must sign a statement guaranteeing that its employees, members, volunteers, and all other related persons have never engaged or will never be involved in any violation of the National Security Law.

The applicants must also declare whether they have contacted foreign or Taiwanese political organizations and have held or organized any activities related to national conditions.