HONG KONG — Pro-democracy media tycoon Jimmy Lai’s fraud conviction and prison sentence were overturned by a Hong Kong court on Thursday, in a surprise legal decision that comes soon after Mr. Lai was jailed for 20 years on a separate national security charge.

Judges Jeremy Poon, Anthea Pang, and Derek Pang said in the judgement that they allowed the appeal from Mr. Lai, and another defendant in the case, to proceed, as a lower court judge had “erred”.

“The Court of Appeal gave them leave to appeal against their conviction, allowed their appeals, quashed the convictions and set aside the sentences,” the judges wrote in a press summary of their judgement.

Even with the quashing of the fraud conviction and sentence, Mr. Lai will still remain imprisoned for 20 years in a separate national security case over two counts of conspiracy to collude with foreign forces and one for publishing seditious materials.

That case has drawn global criticism from rights groups and countries including the US and Britain and served as one of the most high-profile events in a years-long crackdown under a national security law imposed by Beijing after mass pro-democracy protests in 2019.

Thursday’s legal victory was a rare one for the prominent China critic who has faced multiple prosecutions in recent years, and described himself in court as a “political prisoner”.

His son Sebastien said, however, the ruling did not change anything for his 78-year-old father.

“He still has a sentence of 20 years in prison and has spent the last half a decade in solitary confinement in maximum security. The right thing is to release him immediately before it is too late,” Sebastien Lai told Reuters.

Also on Thursday, a court sentenced the father of a wanted pro-democracy activist to eight months in prison under a homegrown national security law after he attempted to terminate her insurance policy and withdraw funds.

‘THE JUDGE ERRED’
Mr. Lai was sentenced in December 2022 to five years and nine months in jail after being found guilty of breaching the lease terms of Apple Daily’s headquarters by concealing the operation of a private company, Dico Consultants Ltd, in the building.

Another Next Digital executive, Wong Wai-keung, 61, was found guilty of fraud and jailed for 21 months.

“In conclusion, we hold that Apple Daily Printing did not owe a duty to the Corporation to disclose its breach of the user restrictions or the non-alienation clauses occasioned by Dico’s occupation and use of the said Premises. With respect, the judge erred,” the judgement read.

“His reasoning in concluding that the applicants were liable for the concealment as the prosecution contended is unsupportable. He erred in making those findings.”

In the earlier ruling, Judge Stanley Chan wrote that Mr. Lai was aware of the need to apply for a license from the Hong Kong Industrial Estates Corporation for Dico to operate at the headquarters and had “acted under the protective umbrella of a media organization”.

During the appeal hearing, Mr.  Lai’s lawyer Derek Chan said that Dico, a company owned by Mr. Lai, supported the publishing and printing of the newspapers apart from handling the tycoon’s private affairs.

He noted that at the start of the charge period on April  1, 1998, Dico held a 49% stake in Apple Daily and was linked to Next Animation, the studio that produced animations for the newspaper’s online news reports.

A spokesperson for the Hong Kong government said the Department of Justice will study the judgement to consider whether to appeal the court’s decision.

DETERIORATING HEALTH
Mr. Lai’s son and daughter have warned he might die in prison given his deteriorating health from over five years in solitary confinement. Mr. Lai has suffered from retinal vein occlusion in his right eye, high blood pressure, heart palpitations and progressive hearing loss.

Rights groups and numerous democratic countries have called for Mr. Lai’s release. US President Donald Trump raised the matter with his Chinese counterpart, Xi Jinping, and is expected to follow up again in a closely anticipated visit to Beijing at the end of March. — Reuters

BRUSSELS — Europe’s steel industry said on Thursday that the European Union (EU) provisions due to be set out next week that prioritize the use of locally made materials must include steel, and “local” should be understood as only close EU neighbors such as Britain and Norway.

The EU executive is to propose its “Industrial Accelerator Act” next Wednesday, with requirements to prioritize locally manufactured products when public money is used.

The “Made in Europe” provision is designed to cover “key strategic sectors,” including batteries, solar and wind energy, hydrogen manufacturing, nuclear power and electric vehicles. It is not clear if low-carbon steel would be included.

The plans were due to have been presented this week but were delayed by disagreements over the geographic scope.

Norway, Iceland and Liechtenstein, members of the EU’s single market, are likely to be included.

“I would agree for those that have a very similar system to the EU to add them. I have no problem with the UK, but you cannot add all the FTA (Free Trade Agreement) countries,” Axel Eggert, director general of steel association Eurofer said.

The Middle East/North Africa region, India, Indonesia and Vietnam should be excluded, he said.

“These are exactly those who create the overcapacity, who do not decarbonize in a way as we have to in the EU,” he continued.

Carmakers and other industries have called for provisions to extend to include countries in their supply chains, such as Britain and Turkey.

Mr. Eggert said the latest draft appeared to have removed ‘Made in Europe’ requirements for steel. He said many other trade partners were buying locally, “India massively, China, the US all ‘buy national,’ but they do it for all the production, and we are here just talking about low-carbon steel. So if you want to trigger investment in the decarbonization, then you have to put steel here as well,” he said, referring to the Act. — Reuters

HONG KONG — A large Chinese military drone has conducted regular flights over the South China Sea in recent months while transmitting false transponder signals that made it appear to be other aircraft, including a sanctioned Belarusian cargo plane and a British Typhoon fighter jet.

Military attachés and security analysts scrutinizing the operations say the flights represent a step change in China’s gray-zone tactics in the contested South China Sea and appear to be testing possible decoy capabilities in the event of a Chinese invasion of Taiwan.

Since August, at least 23 flights have been logged under the call sign YILO4200, a known long-endurance Chinese military drone, but the aircraft transmitted registration numbers of other aircraft, according to Reuters analysis of data from flight-tracking website Flightradar24.

The flight paths often head east from the Chinese province of Hainan towards the Philippines, near the disputed Paracel Islands, and down Vietnam’s coast, the flight analysis showed.

Reuters is reporting the scale and complexity of the operations for the first time.

The operations represent a new and elaborate element in China’s expanding presence across the South China Sea and around Taiwan as its military responds to Communist Party demands to sharpen the readiness of its forces, according to three regional diplomats, four open-source intelligence analysts and three security scholars familiar with the flight data. The activities include exploiting electronic warfare and deception tactics in real time, they said.

And while the masking is unlikely to fully deceive air traffic controllers or military-grade radars, it could sow time-wasting confusion in a conflict, conceal sensitive surveillance activity or be used for propaganda or misinformation, the envoys and intelligence analysts said.

“We’ve not seen anything like this before,” said Ben Lewis, founder of the open-source data platform PLATracker.

“It’s… a kind of deception trial being carried out in real time using aircraft that are not exactly low profile. It does not appear to be at all accidental.”

China’s defense ministry didn’t respond to Reuters questions about the flights and their purpose.

BELARUSIAN CARGO PLANE
The flights have mostly appeared on Flightradar24 as an Ilyushin-62 cargo plane operated by Rada Airlines of Belarus but also a Royal Air Force Typhoon, a North Korean Il-62 passenger jet and an anonymous Gulfstream executive jet.

Since mid-December, YILO4200 has also made several flights in northwest China, most recently on Feb. 15 when it appeared as an anonymous Pilatus PC-12, a small turboprop passenger aircraft.

Aircraft registration numbers stem from a coded, so-called 24-bit address governed by the International Civil Aviation Organization (ICAO). Broadcast via transponders, the numbers help reveal an aircraft’s position, direction and speed.

While unique to each aircraft, the addresses are publicly known, and two pilots and two analysts say recoding a transponder to give it a different registration number is possible.

Rada was sanctioned by the US Office of Foreign Assets Control in August 2024 for flying cargoes in and out of Africa that included Wagner Group personnel linked to the Russian military, as well as exotic wildlife trafficking.

The real Belarusian Il-62 has been active throughout the period with a different call sign and was once airborne at the same time as the Chinese drone attempting to mask it, the Flightradar24 data showed.

Rada Airlines did not respond to a request for comment and Britain’s defense ministry said it could not comment.

An ICAO spokesperson said the body does not comment on issues or speculation concerning specific member states.

OPERATION COULD SOW CONFUSION
Flying out of Hainan’s Qionghai Boao International Airport, the aircraft frequently remained airborne for hours, flying star- or hourglass-shaped patterns over the same areas.

The flight profiles matched those typically associated with large military drones on surveillance operations and covered sensitive parts of the South China Sea, including areas frequented by submarines, four intelligence analysts familiar with the data said.

The Chinese military generally flies its drones “dark,” transmitting neither call signs nor registration numbers.

Two flights among the 23 reviewed by Reuters appeared to be particularly unusual: In one, that straddled Aug. 5 and 6, the drone initially transmitted a code belonging to the RAF Typhoon, then switched signal to three other planes over about 20 minutes, eventually landing as the Rada Airlines plane.

In another, on Nov. 18, the drone was airborne purporting to be the Belarusian plane when the actual Rada Il-62 plane took off near Belarus headed for Tehran.

Singapore-based security analyst Alexander Neill said the Hainan operations appeared to be a fresh tactic in a suite of Chinese digital options to “muddy the waters” should regional tensions escalate into conflict.

“They don’t appear to be exercises as much as the kind of action the US Indo-Pacific Command has described as rehearsals for a confrontation — anything the Chinese can do to sow confusion in the minds of their rivals is to their advantage,” said Mr. Neill, a fellow at Hawaii’s Pacific Forum.

“The US and its allies know that given the realities of highly automated conventional conflict, even milliseconds count along the kill chain of escalation.”

The Pentagon did not respond to a request for comment on the Chinese drone flights.

Mr. Lewis and three other open-source intelligence analysts said the YILO4200 call sign came from long-endurance Wing Loong 2 unmanned aerial vehicle, an aircraft similar to the US Reaper drone, with a wingspan of 20.5 meters (67 feet).

The Wing Loong is used mainly for surveillance but can be fitted for other tasks, including command and control operations, precision missile strikes and anti-submarine operations.

It is produced by the state-linked Chengdu Aircraft Corp., a subsidiary of the Aviation Industry Corp. of China. The company said it would not be commenting on the issue.

Online flight tracker Amelia Smith first connected the Wing Loong 2 to the call sign by analyzing flight data, state press reports and government announcements.

Mr. Lewis, Ms. Smith and two other intelligence analysts said it was unclear which Chinese agency was operating the aircraft out of Boao Airport, which is a dual-use commercial and military facility.

Satellite images from July, September and January obtained by Reuters show large drones on the tarmac, alongside support buildings in a part of the airport now being expanded.

REHEARSAL FOR TAIWAN
Flightradar24 Communications Director Ian Petchenik said the tracker had noticed the Hainan flights and had not seen such activity before, beyond apparently accidental miscodings, nonexistent addresses or corrupted data.

“Based on the flight patterns and the kind of usage of these 24-bit addresses, it doesn’t seem like it is a mistake in the programming of the transponders,” Mr. Petchenik said.

Reuters couldn’t determine whether the flights are running on programmed paths or being controlled from the ground.

The paths run through areas of heavy naval activity, including the waters south of Hainan near Chinese submarine bases and east toward the Bashi Channel between Taiwan and the Philippines — a key choke point for China’s navy to access the Pacific.

The route patterns suggest a rehearsal for an operation over Taiwan, said Mr. Neill, the security analyst.

Overlaid on a map of Taiwan, the 23 flight paths pass multiple military points of interest, concentrated around Taipei but also extending along the island’s southern coastline. The eastern trajectories bring the aircraft close to Japanese and US bases in Okinawa and other islands in the Ryukyu chain.

“It is a compelling image — extensive rehearsals across the South China Sea to be deployed over Taiwan’s key points,” Mr. Neill said. — Reuters