4 ★ FINANCIAL TIMES Friday2 August 2019PRIMROSE RIORDAN AND NICOLLE LIU
HONG KONGThe head of the Chinese military in
Hong Kong has issued a warning to pro-
testers at the same time as the People’s
Liberation Army released a video show-
ing how the territory’s garrison was
capable of quelling a violent protest.
The comments and the video are
another warning from Beijing and its
supporters to the city’s protest move-
ment of the possibility ofmilitary inter-ventionahead of more planned demon-
strations this weekend. They are also
the first public remarks about the
unrest from Major General Chen Daox-
iang, the garrison commander.
Maj Gen Chen condemned the pro-
testers in remarks during a reception
celebrating the 92nd anniversary of the
PLA on Wednesday that were made
public yesterday.
In a report, the state-run China Daily
said Maj Gen Chen “voiced support for
the Hong Kong police to rigorously
enforce the law and for [Hong Kong]
government agencies and the judiciary
in punishing criminals engaged in acts
of violence”.
The “violent protests” that have runfor nearly two months and started with
popular opposition to an extradition
bill, were “absolutely impermissible”.
The bill, which would have allowed
criminal suspects to be sent to China for
trial, has sparked the territory’s worst
political crisis in two decades and led to
questions about the ability of Carrie
Lam, chief executive of Hong Kong, and
the police to assert control.
In its video, the PLA showed how the
Hong Kong garrison could subdue a riot
or protest in an urban environment.
“One online [viewer] suggested that
the video was a warning to the seces-
sionists,” the state-run Global Times
said in a report on the video.
The speech and the video follow com-ments in late July from China’s defence
ministry that the PLA can legally inter-
vene to help Hong Kong to “maintain
social order” if requested to do so by the
territory’s government.
Amid persistent accusations from
Beijing that the US or various other for-
eigners are the “black hands” behind
the protests, Tung Chee-hwa, Hong
Kong’s former leader, who was at the
PLA reception with Maj Gen Chen,
accused the US and Taiwan of orches-
trating of the demonstrations.
Ms Lam also attended. It was her sec-
ond PLA event in four days.
A number of establishment figures in
Hong Kong have suggested they are not
in favour of a PLA intervention.Charles Li, head of the Hong Kong
stock exchange, told a meeting of busi-
nesspeople that the police, and not the
PLA, should handle any protests or vio-
lence in the territory.
The protesters view the extradition
bill as a threat to the “one country, two
systems” principle under which Hong
Kong has enjoyed a high degree of
autonomy since its handover from the
UK to China in 1997. The protests have
widened to include other demands,
including constitutional reform.
This week police chargeda number of
people, among them a Cathay Pacific
pilot, two gym owners, a teacher and a
16-year-old girl, with rioting as part of
the protests.Hong Kong
China redoubles warning on protests
Military chief ’s threat
coincides with PLA video
on urban crowd controlANDRES SCHIPANI— SAO PAULO
On a drizzly day in Manhattan last
spring, Rodrigo Maia’s mood was as
gloomy as the weather.
The Speaker of Brazil’s lower house of
Congress was carrying a presentation
showing that pension spending would
balloon to 17 per cent of gross domestic
product in the next four decades. With-
out reform of the pension system this
year “we’ll enter a social collapse”, he
said on his way to a lunch with investors.
Luckily for Latin America’s largest
economy, the lawmaker from Rio has
emerged as the man of the hour and a
reluctant ally of President Jair Bol-
sonaro by whipping a majority of votes
for a pensions reform bill to pass acru-
cial hurdlethis month. On July 10, the
lower house of Brazil’s fragmented par-
liament approved it in a first-round vote
by 379 votes to 131.
More than 20 years in the planning,
the overhaul that is key to shoring up
the public finances and restoring confi-
dence in Brazil’s sluggish economy is
closer than ever to being approved.
Mr Maia has been propelled into the
spotlight since the rightwing Mr Bol-
sonaro reached the presidency in Janu-
ary. The six-term congressman does not
share the president’s ultra-conservative
beliefs but he does agree with the need
for economic reform, helping rally sup-
port for government legislation.
Now Mr Maia must make sure the bill
sails through the lower housenext week
or “what has already matured could
rot”, before heading to two votes in the
Senate for its final approval.
“Imagine, if the reform does not pass,
we’ll walk to a recession,” he said.
Mr Maia, of the centre-right
Democratas party, hails from one of
Brazil’s best-known political families.
He was born in Santiago, Chile, where
his father, César, a former communist
militant, was in exile during Brazil’s mil-
itary dictatorship. On his return his
father served three terms as Rio mayor.
In 1998, after unfinished studies in
economics and a stint as banker, he was
elected to Congress aged 28. An unchar-
ismatic figure, he failed to succeed his
father as Rio mayor seven years ago,Mr Maia has proven a critical conduit to
lawmakers to help build support for
crucial economic reforms through a
mixture of skill, arm-twisting and pork-
barrelling, according to analysts.
Fernando Henrique Cardoso, the
former president, said he was “bal-
anced” and did not “confuse public with
electoral interests”. One political oppo-
nent on the left described him as the
“right man for the dirty job” of pushing
through the bill.
“This may be victory of the Bolsonaro
government, but Maia has a relation-
ship with lawmakers that the govern-
ment doesn’t have,” said Aline Souza, a
political analyst.
He has even won over members of Mr
Bolsonaro’s base. Alexandre Frota, an
adult film actor turned congressman
with the president’s Social Liberal party,
said: “Be it with the moderates, the right
or the left, Rodrigo has been working in
a way that is extremely cohesive.”
Asked if he was becoming Brazil’s
most powerful person, Mr Maia chuck-
led: “I am just doing my job and it is not
an easy one.”SIDDARTH SHRIKANTH,
DANIEL SHANE AND EDWARD WHITETrade frictions and weak global
demand are taking their toll across
Asia, show data publishedyesterday.Manufacturing conditions in south-east
Asia worsened for a second consecutive
month in June, with factory output fall-
ing for the first time in two years. Activ-
ity also contracted across Japan, South
Korea and Taiwan.
In a sign the woes are likely to persist
into the second half of the year, South
Korean exports declined for the eighth
consecutive month in July.
Although China’s manufacturing
slowdown stabilised in Julyand outper-
formed analysts’ expectations, it
remained in contraction territory.
“Manufacturers appear in a difficult
position and require stronger demand
growth to lift them out of the current
soft patch,” said David Owen, economist
at IHS Markit. Slowing overseas
demand and the impact of Sino-US
tradefriction have combined to disrupt
supply chains across the region.
The Nikkei-Markit manufacturing
purchasing managers’ index for Asean
countries saw its first decline in output
for two years in July, to 49.5from 49.7 in
June, below the 50 mark that separates
contraction from growth. Factories had
only a marginal increase in new orders.
In Indonesia, Asean’s largest econ-
omy, the sector slipped into decline for
the first time in six months, with worker
numbers reduced at their fastest pace in
19 months. Conditions in Malaysia and
Singapore continued to deteriorate,
although the pace of the latter’s decline
moderated in June.
Japan’s Jibun Bank Manufacturing
purchasing managers’ index for July
posted its third straight month of con-
traction at 49.4 against 49.3 in June.
In South Korea, the latest IHS Markit
figures showed that new export orders
for manufacturers in Asia’s fourth-
biggest economy fell at their fastest rate
in almost six years. During the month
the index fell to 47.3 from 47.5 in June,
the third month of contraction in a row.
South Korean exports totalled
$46.14bn in July, down 11 per cent from
$51.8bn in theperiod a year ago but a
less dramatic fall than the 13.7 per cent
year-on-year decline in June, according
to government data.
In Taiwan, activity in July bounced
back to 48.1 from a neareight-year low
of 45.5 in June, although the latest
number still represents a contraction.
The Caixin China general manufac-
turing PMI index rebounded to 49.
from 49.4 in June — the second consecu-
tive month that China’s manufacturing
activity has shrunk. But thesurvey
reported business confidencepicking
up. It pointed to firmer domestic de-
mand for manufactured goods, which
partly offset weak export orders amid
trade tensions and a global slowdown.
Julian Evans-Pritchard, senior China
economist at Capital Economics, said:
“The uptick in July manufacturing PMIs
was the result of domestic strength
overshadowing external weakness.”
Zhengsheng Zhong, director of macr-
oeconomic analysis at CEBM Group,
said: “Business confidencerebounded,
reflecting the strong resilience in the
economy. Policies such as tax and fee
reductions designed to underpin the
economy had an effect.”Manufacturing
Trade tension
and demand
slowdown hit
Asia factories
Brazil.Political detente
Bolsonaro foe turns ally in pension reform
The lower house Speaker has
become an indispensable fixer
in an unwieldy parliament
“Bolsonaro’s sons learned to use social
networks before other politicians did,”
Mr Maia said, noting that such style is
“contesting liberal democracy”.
On Tuesday, Mr Maia defended media
rights in a video after Mr Bolsonaro sug-
gested jail time for Glenn Greenwald,
the Rio-based US journalist, whose
news website revealed messages ques-
tioning the credibility of Brazil’s justice
minister. “This is not in favour of Glenn,
this is in favour of our freedom of
expression,” Mr Maia said.
The soft-spoken Speaker has reined in
one of the world’s most unwieldy parlia-
ments, with its almost 30 parties and
constantly shifting loyalties. “He’s a
backroom operator who is respected by
the lawmakers, the grand majority of
the parties look at him and they see
leadership in him,” said Thiago de
Aragão, a political consultant with Arko
Advice in Brasília.
Some members of the Bolsonaro
administration have championed the
pension reform, including Paulo
Guedes, finance minister, and Rogério
Marinho, social security secretary. Butwinning less than 3 per cent of the vote.
Mr Maia was elected house Speaker
after the impeachment of Dilma Rouss-
eff, the leftist president, in 2016. Under
Mr Bolsonaro, the congressman rose in
prominence, pushing through economic
reforms and acting as a counterweight
to the president’s culture-wars agenda
and shoot-from-the-hip policymaking.
For once in Brazil’s three-decade
democratic history, “parliament will be
the fireman and not the arsonist” of the
political scene, Mr Maia said.
However, the congressman has not
shied away from criticising the scandal-
prone government, calling it a “crisis
factory” where Mr Bolsonaro’s fixation
on identity politics “hampers” eco-
nomic reforms.
For this, he has been targeted on
social mediaby Mr Bolsonaro’s support-
ers, who have called for a shutdown of
Congress. He comes under “constant,
violent pressure from the ‘Bolsomin-
ions’”, a congressional staffer close to Mr
Maia said, among them Carlos Bol-
sonaro, the president’s second son and
de facto spokesman.Plain talker:
Rodrigo Maia
has called the
Bolsonaro
government a
‘crisis factory’
Andre Coelho/BloombergParliament
‘will be thefireman
and not thearsonist’
of thepolitical
sceneINTERNATIONAL
EDWARD WHITE AND SONG JUNG-A
SEOULA South Korean legislator said a former
North Korean diplomat in Italy was
now known to have left that country
and is under protection in an unidenti-
fied country, in a fresh embarrassment
for North Korean leader Kim Jong Un.Jo Song Gil, Pyongyang’s acting ambas-
sador in Rome since 2017, in early Janu-
ary was widely reported as having aban-
doned his postand gone into hiding with
his wife, after the pair went missing two
months earlier.
Opposition lawmaker Lee Eun-jae
said legislators were told by the head of
the National Intelligence Service that
Mr Jo was “protected somewhere”. She
gave no further details.
Mr Jo is only the fourth known high-
level diplomat to have defected in about
30 years, according to Andrei Lankov, a
professor and North Korean expert at
Kookmin University in Seoul, noting
there had been other top officials whose
defections had “never been officiallyadmitted” including members of the
ruling Kim family.
While the defection of a senior official
holds the potential to complicate inter-
national diplomatic efforts between
Seoul, Washington and Pyongyang —
given the fresh details about the Kim
regime Mr Jo might know — Mr Lankov
said Pyongyang’s representatives
abroad were often “kept in the dark”
about government secrets.
“They are suspicious of their own dip-
lomats. From their assumption, every
diplomat is a security risk, that person
cannot be watched around the clock,”
he said.
On Wednesday a North Korean sol-
dier made the treacherous journey
across one of the world’s most heavily
fortified borders and expressed his
desire to defect to South Korea, defence
officials in Seoul said.
The defections threaten to be a fresh
thorn in the side of the North Korean
dictator, who has strengthened border
security in recent years, lowering the
number of North Koreans fleeing.Defection
Pyongyang’s former Rome
envoy in hiding outside Italy
ROBIN HARDING— TOKYO
EDWARD WHITE AND SONG JUNG-A
SEOULJapan was set to remove South Korea
from its export “white list” at a cabinet
meeting today in an escalation of a dis-
pute over wartime forced labour.According to one former minister, Japan
was “100 per cent sure” to go ahead with
a move that could require exporters to
obtain licences when they ship a range
of chemicals and electronic goods to
South Korea.
The decision to remove South Korea
from Japan’s list of friendly countries
would come despite US efforts to medi-
ate. It marks a worsening of the dispute,
with Seoul threatening to tear up an
intelligence-sharing pact in retaliation.
Kang Kyung-wha, South Korean for-
eign minister, said after a meeting with
Taro Kono, her Japanese counterpart, in
Bangkok, that Seoul would have no
option but to review the security rela-
tionship between the countries if Japan
went ahead with its move.Japan has alreadyimposed controls
on three chemicals crucial to South
Korea’s world-leading semiconductor
industry: fluorinated polyimide, pho-
toresists and hydrogen fluoride etching
gas. Japan has a dominant global market
share for each.
Tokyo insiststhat its move is a regu-
lar, bureaucratic decision on arms con-
trol but it is widely regarded as retalia-
tion against a ruling by South Korea’s
Supreme Court last autumn that
awarded damages against Japanese
companies, including Mitsubishi Heavy
Industries, for forced labour during the
second world war.
According to Tokyo, all such claims
were “settled completely and finally” by
a 1965 treaty under which it paid com-
pensation to South Korea.
Officials in Seoul braced themselves
for the new controls after a meeting
between the countries’ trade ministers
this week failed to make any progress.
President Moon Jae-inhas stopped
short of adirect retaliatory response,
despite rising anger over the issue.War compensation
Japan to remove S Korea from
export friendly country list
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