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HK Police Make First Arrest Under National Security Law; China Discovers New Swine Flu With Pandemic Potential; E.U. Allows Travel From 14 Countries, U.S. Excluded; China Passes National Security Law for Hong Kong; Fauci: U.S. Could See 100,000 Cases Per Day if Surge Continues; Trump Under Fire Over Russia Bounty Intelligence; Russians Hit the Reset Button for Putin. Aired 2-3a ET

Aired July 1, 2020 - 02:00   ET




PAULA NEWTON, CNN ANCHOR (voice-over): Hello and welcome to our viewers joining us from all around the world. I am Paula Newton.

Coming up on CNN NEWSROOM: Hong Kong's new reality. China imposes a sweeping new law as the territory marks its handover anniversary.

Plus the U.S. could soon be reporting 100,000 coronavirus cases a day. The latest dire warning from a top health expert.

And pandemic potential: why a new swine flu is raising some big concerns in China.


NEWTON: China is defending a contentious national security law that it has imposed on Hong Kong, calling it "a perfect embodiment of the one country two system policy." It comes as the territory marks the 23rd anniversary of its handover from British to Chinese rule.

Earlier, officials held a flag raising ceremony to commemorate the occasion. As you can see on your left, to the right, drastically different scene last year when protesters marked the event last year by storming the legislative council building.

Hong Kong chief executive Carrie Lam says the new security law could prevent scenes like this from happening again.


CARRIE LAM, HONG KONG CHIEF EXECUTIVE (through translator): It shows that the Hong Kong government, after a whole year of ceaseless, escalating violence and riots, is determined to restore stability to Hong Kong.

It shows the central government's determination to protect the absolute majority of lawful Hong Kong citizens from the harms done by a small minority of people who endanger national security.


NEWTON: Remember, we didn't see a law until a few hours ago. China has finally released details and here's what the law will do. It broadens Beijing's power to investigate and punish acts of secession, subversion and what it considers terrorism. That's key.

And it also allows the mainland to establish its own law enforcement presence in the city. Those convicted could face up to life in prison. CNN's Will Ripley joins us from Hong Kong and Steven Jiang is with us from Beijing.

Will, first to you. When we caught up with you earlier, we had seen that, in fact, already some enforcement was going on on the ground there. Keep us up to date.

WILL RIPLEY, CNN CORRESPONDENT: We have now confirmed that Hong Kong police have made their first arrest (INAUDIBLE) hall, a man in possession of a Hong Kong independence banner and possession of that (INAUDIBLE) will be taken to a processing center and questioned by officers, who are now part of this organized effort to silence any independence, pro-independence voices who are on the streets in Hong Kong today on July 1st, the anniversary of the handover from the British to Chinese rule.

So it's a little bit more calm here now than when we saw you last hour. By the way, the man that we saw detained last hour, we don't know what charges he is facing. We don't believe it's the same person who Hong Kong police have confirmed have been arrested.

As you can see, they put down police tape here. Every location where there has been an unruly crowd, they have put up the police tape. I have to move the mike closer because it's so loud. I am wearing noise canceling headphones because it's almost impossible to hear otherwise.

As you can see, this whole street where we were earlier has now been closed off. They've even closed off the entrance to a shopping mall there. There are people standing inside the mall just watching to see what happens next.

Do you see that officer with the flag? He has not cloned (ph) but we see the flags deployed just within the last few minutes. There is the blue flag warning people to disperse. There is a new purple flag as well, warning people that even the things that they are saying could be in violation of the national security law, which carries penalties of up to life in prison.

So as hectic (ph) as it feels out here, I can tell you, compared to last year, the size of the crowds is smaller. The police presence feels significantly bigger. They are definitely out here, I would say, taking a proactive approach or you could call it an aggressive approach.

Anyone who says anything that could be deemed as provocative, inflammatory, any chance of anything in support of Hong Kong or Taiwan independence will be taken into custody. And the police are making that very clear out here. One arrest so far. We will see how many more occur as the day and hours unfold here.

NEWTON: This is clearly stifling not just deeds but words themselves and freedom of expression on the streets of Hong Kong.

To Steven Jiang now in Beijing.


NEWTON: How does Beijing interpret, because they say that in fact this law preserves one country, two systems. As we saw, on the streets at this hour in Hong Kong, freedom of expression is no longer guaranteed, not by a long shot.

STEVEN JIANG, CNN SENIOR PRODUCER, BEIJING BUREAU: Paula, I think they'd say it's already achieving its desired effect in terms of stopping acts that the government deems harmful to China's national security, in terms of the thinner crowds of protesters and the arrest of people unfurling pro-Hong Kong independence banners.

They have been staunchly defending this law since its passage on Tuesday. In a press conference that ended here not long ago, a Chinese official sais people have too long tended to focus on two systems and forgetting one country is the foundation of one country two systems. That policy was designed to give Hong Kong a high degree of autonomy.

They said, despite the quick passage, the law was carefully thought through and lawmakers took into consideration opinions and feedback from Hong Kong society. One official rhetorically asked if we really want to have just one country, one system, why would we go to such lengths to tailor-make a new law for Hong Kong instead of enforcing existing Chinese laws in the territory?

They also emphasized time and again that, only under the most extraordinary circumstances, would Chinese state security agents and judicial authorities get involved in Hong Kong's national security cases.

They say this law is only targeting a tiny minority of people who intend to do real harm. The vast majority of Hong Kong residents will not be affected. They also brushed aside any concerns and criticisms over its impact or potential impact on freedom of speech, judicial independence and political diversity.

And one official quoting Deng Xiaoping, saying, in Hong Kong, it is still OK to verbally attack the Chinese Communist Party, as long as you don't turn the verbal attacks into concrete actions. So they are trying their best to allay fears. But based on what's going on on the ground, it may be far from enough.

NEWTON: Speaking through a loudspeaker, waving a flag is the kind of things the Communist Party considers concrete action.

Back to Will Ripley on the streets of Hong Kong, you've pointed out before that there are many people in Hong Kong reacting to the sense of unrest on the streets and the fact that it was really hammering the economy.

RIPLEY: Yes, it really was. There are now businesses along the street that have closed as a result of this relatively small area of disruption. But compared to last year, entire sections of the city were shut down, traffic wasn't moving, businesses were closed.

One of the reasons China has decided to impose this law, bypassing the Hong Kong government, is because they felt they didn't have confidence that Hong Kong's local government could pass legislation to get this under control.

Now police are acting with new authority and it's no coincidence that it's on this day, July 1st, that this law, the first full day, now in effect.



RIPLEY (voice-over): July 1st is a public holiday in Hong Kong.

UNIDENTIFIED MALE: Now Hong Kong people are to run Hong Kong.

RIPLEY (voice-over): The anniversary of the 1997 handover from British to Chinese rule.

Last year, the day descended into chaos. Protesters storming and occupying Hong Kong's legislative complex. Beijing promised Hong Kong a high degree of autonomy for 50 years, under one country two systems. Pro democracy protesters accused China of going back on that deal, taking away their freedoms.

Beijing's response to months of unrest; a sweeping national security law, drafted and imposed by China's ruling body, by passing Hong Kong's government.

Beijing says the law is necessary to contain the protests, part of what it calls a foreign plot to destabilize the mainland by turning Hong Kong into a chess piece external powers can use to contain China.

UNIDENTIFIED MALE: We need the rule of game (ph) and then the society (INAUDIBLE) rule of law.

RIPLEY: So who is winning this game of Chinese chess right now?

UNIDENTIFIED MALE: Still ongoing now. Now the (INAUDIBLE) high degree of uncertainty.

RIPLEY: The U.S. administration is already making moves in response to the law, planning to strip away the special trade relationship between the U.S. and Hong Kong. This week the U.S. announced restrictions on defense and dual-use technology exports.

The E.U. has also warned of negative consequences for the global financial hub. Trillions of dollars flow through the Hong Kong stock exchange, among the largest in the world. [02:10:00]

RIPLEY (voice-over): Analysts say any disruption could rattle an already shaky global economy. But a growing list of corporations have voiced support for the new law, along with some prominent Hong Kong business owners.

UNIDENTIFIED MALE: In the scare (ph) system, we have our own system. OK? Let's work together.

RIPLEY (voice-over): Pro Beijing lawmaker and clothing chain founder Michael Tien says the law could revive Hong Kong's struggling retail and hospitality sectors.

RIPLEY: When you see big companies saying that they support the law, is (INAUDIBLE)?


RIPLEY: You think they're just trying to --


TIEN: It's because of (INAUDIBLE) money (INAUDIBLE).

RIPLEY (voice-over): Pro-democracy restaurant owner Gordon Lam says it's about more than money.

"Hong Kong's core business value is freedom of expression and freedom to conduct business," he says.

"If we don't have this, Hong Kong is no longer Hong Kong."

Last year's graffiti, replaced by this year's billboards, ads all over the city, promising the new law will restore stability.

The question, at what cost?


RIPLEY: So that's the question.

What price has Hong Kong paid for the stability that may result from this very heavy police enforcement?

In fact, officers ran in this direction. It looks like they have a man in a blue shirt there. We don't know if he's being taken (INAUDIBLE) safer location. Just getting close there again. Let's watch what's happening. I think they pulled out the zip ties. Let's see if they are putting his hands behind his back or maybe they're just walking him to a safer place.

Either way, we are here to show you these pictures. We're here to show you this as it unfolds. But how you interpret it is up to you. There are certainly people in this city that think today is a devastating moment in Hong Kong, the oppression and the silence of free speech. But there are also people who are ready for the city to get back to

business. They are ready for businesses to reopen, ready for tourists to feel safe to return when borders reopen.

Some may feel that this law is they way to make that happen. And (INAUDIBLE) to give both sides their voice. We will show you what happens in here the coming hours and you can think for yourself whether you think this is a good or a bad development in Hong Kong.

NEWTON: Yes, coming in the cross of 2:15 in the afternoon in Hong Kong, could be a long afternoon and evening there. Will Ripley, thank you for your reporting.

And thank you to Steven Jiang as well in Beijing.

We appreciate you both.


NEWTON: As more U.S. states pause their reopening plans, the country's top infectious disease expert is laying down more dire coronavirus warnings. Dr. Anthony Fauci says the virus is not under control. Outbreaks throughout the U.S. put the entire country at risk. He has also made a startling prediction about the infection rate. CNN's Jason Carroll has more.



JASON CARROLL, CNN NATIONAL CORRESPONDENT (voice-over): The nation's top infectious disease expert, Dr. Anthony Fauci, delivering a stark prediction on Capitol Hill, if the U.S. cannot control the surge in coronavirus cases.

FAUCI: We are now having 40-plus-thousand new cases a day. I would not be surprised if we go up to 100,000 a day if this does not turn around. And so I am very concerned.

CARROLL: Fifteen states now seeing their highest seven-day averages for new cases. More than half do not require masks statewide. Dr. Fauci and others from the Coronavirus Task Force advising the American public to do what the president won't, wear a mask.

DR. ROBERT REDFIELD, CDC DIRECTOR: It is critical that we all take the personal responsibility to slow the transmission of COVID-19 and embrace the universal use of face coverings.

FAUCI: We recommend masks for everyone on the outside.

CARROLL: Ahead of the Fourth of July holiday weekend, 17 states have paused or rolled back reopening plans, bars and beaches closed from coast to coast in California and Florida, where more than 6,000 new cases were announced today. MAYOR DAN GELBER (D-FL), MIAMI BEACH: We don't have a lot of tools left in the kit right now. So we're trying everything we can to stop this spread and reverse what is a very enormous spike in our community and in our state.

CARROLL: In Arizona, concerns over the death rate ticking up, doctors worried they cannot handle the influx of patients.

DR. BRANDON BIKOWSKI, INTERNAL MEDICINE PHYSICIAN: It's something that we don't know how to deal with as medical professionals. I think people should probably be as scared as I am.

UNIDENTIFIED FEMALE: That is discrimination.

CARROLL: In Texas, bar owners protesting the governor's decision to force them to re-close, some of them now suing the governor and state alcohol regulators.

Meanwhile, New York, New Jersey and Connecticut, which have all emerged from the worst of the pandemic, have added eight more states, including California and Georgia, to a quarantine list.


CARROLL (voice-over): Come from one of those states and these states want you to quarantine.

Face coverings are required in public places in all three states, a reminder of that in Manhattan, where, outside the New York public library, the iconic lion statues, aptly named Patience and Fortitude, are donning masks themselves.

And despite seeing a surge in cases in Florida, that state's governor has come out and has said the state is not going back to closing businesses. He went on to talk about those young people who health experts say are gathering in large numbers there in the state and helping to spread the disease.

He said, as for those large gatherings, he said a lot of that is just social interactions -- Jason Carroll, CNN, New York.



NEWTON: Dr. Ashish Jha is the director of the Harvard Global Health Institute and joins me from Cambridge, Massachusetts.

It was a stunning thing during the hearings today. Dr. Fauci saying that 100,000 cases per day in the United States, 2.5 times more than are recorded today, is possible.

That's what we call exponential growth, right?

And that is the worst fear right now. DR. ASHISH JHA, HARVARD GLOBAL HEALTH INSTITUTE: That is the worst

fear. The virus is starting to get out of control in about a dozen states across the United States, out of control in a way that simple interventions are not going to work and we would have to do something very extreme again. So I think Dr. Fauci's warnings need to be heeded.

NEWTON: When you say need to be heeded, I want to ask you about this before we move on, do you think anything short of shutdowns is going to do the trick at this point?

JHA: Over the weekend, Secretary Azar, the health secretary, said that the window of action or the window of opportunity for action is closing. He's absolutely right. I think that if all of those states got very aggressive now, shut down all indoor activities, such as restaurants and bars and gatherings, mandated mask wearing and continued to work on ramping up testing and tracing, yes, I think there's a possibility we can hold off on shelter in place and total lockdown. But I just don't feel like those states are taking it as seriously as they need to.

NEWTON: One thing that obviously people are not taking as seriously perhaps as they should is wearing masks. And I know that you've seen this video today. I'll show it to our viewers. It's fascinating, really, we should run this over and over again.

It's a study from Florida Atlantic University and there they basically have how far the droplets can actually go, the distance that they go. But the issue here is that masks help. And this is what we are looking at right now. We are just looking at the effects of having no mask. That means your cough travels 2.4 meters, even stitched masks with two layers.

So many of the kind that those of us that have ordered online or have had our kids or our neighbors make, six centimeters.

How significant do you think this proves, that mask wearing should actually make a difference?

JHA: It's one more strong piece of evidence in a growing body of evidence. At this point, almost everything is pointing to the idea that wearing a mask reduces spread of the virus. It reduces exponential growth.

And it's really just unbelievable to me that many people are resisting this, when the alternative is the entire community, entire cities, states will have to shut down. That's a much greater abridgement of freedom then wearing a mask is.

NEWTON: Do you wish they had done it sooner?

I was shocked to hear Dr. Fauci a few days ago say that the reason we didn't recommend masks for everyone is we didn't want people to hoard masks. But so many of us were making them at home. Even if you look back to what you were saying in March or April, do you think we should have been more active about that? JHA: To be perfectly honest, I got it wrong in March. I really wasn't convinced of the data and I thought in early March I think I even publicly said I didn't see a clear benefit for masks.

But the data has really changed. The evidence has changed. Now we have been incontrovertible data on this topic. And therefore, our opinions should change as well. But at least for the last 3-4 weeks it's clear to me that everyone should be wearing a mask outside the home.

NEWTON: And to be fair experts like you and other experts all over the world were clear from the outset that we don't know much about this virus. It's a very new one. We are adjusting as we see the evidence.

Before I let you go, I want to talk about young people. I've noticed a kind of fatalism. It's not just in the United States.


NEWTON: It's all over the world, places where even things have started to open up and they're maybe dealing with a second wave. This fatalism, it won't affect me, let's just get this done with, let's get infected and I can be over the coronavirus.

Why is that a dangerous attitude to have?

JHA: There are three reasons why. First of all, we are finding that young people do get sick. Some of them get sick quite severely and we don't know the long-term health consequences. So what I'm saying to young people is if you care about the long-term health of your lungs, of your heart, I wouldn't be so cavalier.

Second, young people getting infected keeps the virus going and provides fuel for further spread.

Third but related to that, young people do have parents and grandparents and aunts and uncles and they can spread it to people. They can spread it to people who will potentially get very sick and die. So lots of reasons why young people shouldn't be so cavalier about this virus.

NEWTON: And we will see if any of their attitudes change as the prevalence goes up, not just in the United States but around the world. A lot of places dealing with what might be the tail end of the first wave, not even the second. Thank you, Dr. Jha.

JHA: Thank you.


NEWTON: Russians are voting on changes Russians are voting on changes to the constitution expected to keep Vladimir Putin in the Kremlin for life. We will look at the amendments and why they are virtually guaranteed to pass.

Plus, why Israel may be holding off on plans to annex parts of the West Bank. Next on CNN NEWSROOM.




NEWTON: The White House is under pressure to explain what President Trump knew and didn't know about Russia's alleged bounty payments to Afghan militants to attack U.S. troops. Administration officials will meet with top lawmakers in the coming hours, as Democrats demand answers. Jeremy Diamond reports.


JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT (voice-over): President Trump had the information; he just may not have read it. A U.S. official telling CNN that officials did share intelligence about Russian bounty payments with the president earlier this year, putting it in the president's daily brief, a highly classified document outlining the U.S.' latest intelligence, known as the PDB.

The White House claims the president was not briefed. When asked whether the information was included in the PDB, White House press secretary Kayleigh McEnany played semantics.



KAYLEIGH MCENANY, TRUMP CAMPAIGN SPOKESPERSON: He was not personally briefed on the matter. That is all I can share with you today.


DIAMOND (voice-over): The problem?

Trump is known for not reading that document, instead relying on an oral briefing a few times a week. Former Vice President Joe Biden calling that a dereliction of duty.


JOE BIDEN, FORMER U.S. VICE PRESIDENT AND PRESIDENTIAL CANDIDATE: The presidential daily briefing is something I read every single day as vice president. So the idea that somehow he didn't know or isn't being briefed, that is a dereliction of duty if that's the case.

And if he was briefed and nothing was done about this, that's a dereliction of duty.


DIAMOND (voice-over): After initial silence, a trio of top national security officials now releasing statements, emphasizing that the intelligence community is still working to corroborate the intelligence, warning that leaks make that task more difficult.

National security adviser Robert O'Brien writing, "To those government officials who betrayed the trust of the people of the United States by leaking classified information, your actions endanger our national security."

But Democratic lawmakers who were briefed on the intelligence today say it's the president who is undermining national security.


REP. ADAM SCHIFF (D-CA), CHAIR, HOUSE INTELLIGENCE COMMITTEE: The president called this a hoax, publicly. Nothing in the briefing that we have just received led me to believe it is a hoax.

I shared the concern at the White House today that I think many of us have, which is there may be a reluctance to brief the president on things he doesn't want to hear.


DIAMOND (voice-over): They're also demanding to be briefed directly by intelligence officials.

Meanwhile, the president is spending his time on Twitter, attacking protesters, his political rivals and the media. But when it comes to Russia, he has been silent, confounding even some Republicans.

UNIDENTIFIED MALE: That bothers me that, whether it's Xi of China, whether it's Putin, you don't get bad words against them from the Twitter handle. You'll get it about Germany, for instance. I don't know why that is.


NEWTON: From CNN's Jeremy Diamond.

Not so long ago, Russians began their final day of voting on changes to the constitution. About 200 of them being proposed, including a virtually guaranteed provision that would allow president Vladimir Putin to run for two more terms, which would keep him in office for another 16 years.

Other changes would strengthen Putin's powers over local municipal authorities. Another amendment would outlaw same sex marriage. Matthew Chance has more details.


MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): With its lockdown lifted, it doesn't look much like a pandemic in Russia nor indeed a national vote that could tighten President Putin's already firm grip on power. Yet both are in full swing.

"I would elect him for another 10 years," says Antonina (ph), a pensioner from outside Moscow. "There are no presidents like Putin, he's smart and has improved

lives," she says.

"People like him must be kept, not let go."

He could stay possibly until 2036 if proposed constitutional changes are passed as expected.


CHANCE (voice-over): Ahead of the weeklong voting, some of the biggest stars have been urging the public to approve changes, like the family of former Olympic and world figure skating champion, Evgeni Plushenko.

"We are huge, our country, compared to tiny Austria," his wife, Yana, tells their son.

"This is our country," the skater explains. "Let's vote for the amendment."

The fact that they allow Putin for stand for two additional presidential terms is skated over.

It's an admission drawing the wrath of Russian opposition figures like Alexei Navalny, who sees the vote as a constitutional coup by the Kremlin.

"Poor child, having such greedy, unscrupulous parents," he commented on Instagram, attracting more likes, he says, than the video itself.


CHANCE (voice-over): But the Kremlin has made sure the constitutional changes are not just about Putin's rule. This pro-Kremlin video shows a Russian man adopting a child from an orphanage and then introducing him to his new mom and male partner.

The video has been slammed as homophobic but it reminds voters the constitutional changes would enshrine a ban on gay marriage in Russia, a potential vote winner for a deeply conservative, some might say prejudiced electorate.

And if that does not convince, there are even prizes on offer as you vote, bonus points which, as this Russian TV anchor explains, could be spent at supermarkets, shops and all participating stores.


For a population desperate to put Coronavirus and its economic hardships behind them, this alone could be enough to win support. Matthew Chance, CNN.


PAULA NEWTON, CNN INTERNATIONAL ANCHOR: Israel's Prime Minister is hinting his timetable to annex areas of the occupied West Bank may be slipping. Benjamin Netanyahu was expected to begin what he calls the application of Israeli sovereignty in the days ahead. But after meeting with the U.S. delegation, the Prime Minister indicated the plan may be on hold. After initial support, the Trump administration has reportedly been looking at ways to slow the process.

Pro-democracy activists are condemning the Hong Kong national security law, but some legislators say it will bring much-needed change. We'll speak with one of those officials after the break. Then, as if COVID- 19 wasn't enough of a catastrophe. Yep, experts are now warning of a possible new pandemic, and it may sound familiar.


NEWTON: 23 years ago today, Britain ended its sovereignty of Hong Kong and handed the territory back to China. Every year since then, the city has commemorated historic event on July 1st, often it was protest calling for more democratic freedoms.

This year, Hong Kong is marking the 23rd anniversary on the heels of a new national security law that China has imposed on the territory. CNN has just learned that Hong Kong Police have now made their first arrest under the new legislation. Authority say they detained a man for holding a black flag that had the words Hong Kong independence.

The law has, in part, broaden Beijing's power to investigate, prosecute, and punish what it considers, and this is key, a criminal act. That includes secession, subversion, and alleged acts of terror. Claudia Mo is a Hong Kong legislator and she joins me now live.

And Claudia, we have now confirmed it. The first arrest already in the first hours that the laws come into force. Is this really what is worst feared, what pro-democracy activists have called the beginning of a reign of terror.

CLAUDIA MO, LEGISLATOR, HONG KONG: This is indeed the beginning of the reign of terror. Now, it's clear Beijing wants to stun Hong Kong into oblivion, into nothingness. You'll be in such a catatonic state you wouldn't know what to say what to do. But this is just killing Hong Kong because we used to be the most vibrant city in the Asian region.

And they couldn't care less because the Hong Kong has been attacked as the city of protest, and they need to put a lid on that, to put an end to that, and that's what they're doing.


NEWTON: We're looking at pictures from just a few moments ago, the police presence on the streets is extraordinary, very few protesters. It does seem to have had the chilling effect. What is your worst fear in terms of how this law will be applied? Because if you look at it on its face value, just speaking your freedom of expression has been curtailed to the point where you could have a harsh prison sentence just for speaking about independence for Hong Kong.

MO: Exactly. There will be not just speech crimes but also thought crimes, because they would say that your action would have determined your motive, and motive is of importance. Free Press gone, free speech, a joke now. And they will be taking away our civil liberties and political rights as well. I hate to sound rhetorical but indeed today is the darkest day in Hong Kong in the last 23 years.

NEWTON: Michael Tien, you know him well, a pro-Beijing legislator just told us in the last hour that this is an overreaction to the law, that it is a deterrent, and that it will be applied fairly.

MO: Well, it's a matter of trust. Today, back in 1997, I was looking forward to the future with trepidation of what's going to happen, what's going to be in store and so on. But at that time, there was a certain amount of trust and confidence. There were the Sino-British Joint Declaration and the Basic Law, our so-called mini-constitution (AUDIO GAP).

But today, the same presentation but without any trust or confidence, it's so clear that Beijing just wants to shut down Hong Kong. And if you didn't watch out what you say, or what you would do, then you could be in serious trouble. And talking to you, at the moment could be considered colluding with foreign people, agents, forces, we don't know because everything is up to Beijing's interpretation.

It's not rule of law. It's not even rule by law. It's rule by decree. They are the law. If they say black as white, you cannot argue because they are the law.

NEWTON: And in fact, censoring, as you said, people's speech. I have to ask you, though, given the ferocity of the pro-democracy movement, that we saw a year ago and the scenes on the streets that are so familiar to us by now, you know, did it backfire? Do you just think that the passion and the chaos in the streets gave Beijing that opening to, you know, devise a law that is now as we say curtailing so many freedoms that just a little while ago people in Hong Kong thought it was, you know, as common to them as the air they breathe?

MO: You could say that with hindsight that maybe we've gone too far. We annoyed the mother country. The powers that be in Hong Kong too much. But the fact is, as a journalist myself, before 1997, Beijing agreed, that practically promise that we will have full democracy in Hong Kong by the year, what, 10 years after 1997, i.e. 2007, and that didn't happen. We're now in 2020.

All these years, we've been waiting fighting for more democracy, more democratic reform. We were talking to a wall. And so, if you don't fight, they just ignore you. And if you do fight, they say, oh, well, you've crossed the line. We need to teach you a lesson, so they left us no choice. And Hong Kong people have been cracked down upon just like that.

NEWTON: Claudia Mo, we thank you for your comments here as we continue to see the situation unfold really just in the first hours of this law coming into force on the streets of Hong Kong. Claudia, again, thanks so much.

MO: Thank you. NEWTON: Now, in China, researchers have discovered a new flu that they say has the potential to become a pandemic. It's related to the H1N1 swine flu. And one health expert in the United States warns it could be catastrophic. David Culver explains.


DAVID CULVER, CNN INTERNATIONAL CORRESPONDENT: A new virus with pandemic potential emerging once again out of China. This according to a new study published in the U.S. science journal. Chinese researchers warning the disease can infect humans. The origin, pigs.


ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: It's not so-called an immediate threat where you're seeing infections, but it's something we need to keep our eye on just the way we did in 2009 with the emergence of the swine flu.

CULVER: Experts say, this new swine flu called G4 is genetically descended from H1N1. H1N1 became a pandemic in 2009. It killed up to an estimated half a million people globally. While scientists caution that this new virus does not pose an immediate global health threat, they warned that once transmitted from pig to human, it could lead to severe infection and even death.

MARK DYBUL, CO-DIRECTOR, CENTER FOR GLOBAL HEALTH PRACTICE AND IMPACT: If we have at the same time new waves of the Coronavirus or the potential for a bad flu season or swine flu, it is a -- it is a catastrophic future we can face.

CULVER: According to The Journal, Chinese researchers made the discovery during a pig surveillance program. From 2011 to 2018, they collected more than 30,000 nasal swab samples from pigs across 10 Chinese provinces. Of the 179 swine flu viruses identified, one kept showing up year after year. It was the G4 virus.

In two Chinese provinces Hubei and Shandong, more than 10 percent of workers tested on pig farms between 2016 and 2018 were positive for the virus. While not yet seen with the G4 virus, human to human transmission is why doctors believe COVID-19 spread so rapidly. It is also what Chinese officials and Wuhan downplayed and have been accused of covering up early on and the Novel Coronavirus outbreak. China denies that they ever covered up key information.

When asked Tuesday about how China is handling this pathogen, a Foreign Ministry spokesperson said they are watching it closely. Adding that they will take all necessary measures to prevent the spread and outbreak of any virus.

Late Tuesday, China's government-controlled media quickly downplayed the G4 virus, stressing that disease control experts said the public should not overreact, and hog farms have shown no signs of related disease. They also cited an unnamed Chinese veterinary expert who claimed this new virus is preventable. No doubt allegations of China's early mishandling of the Coronavirus

outbreak along with international criticism over their lack of transparency makes any new virus emerging from this country all the more worrying.

Meantime, we're also hearing from Chinese researchers with new details of a distinct and highly contagious strain of the coronavirus. They believe it was imported by a woman returning home to China from the U.S. in March. They say she spread it first in her apartment buildings elevator and then ultimately to 71 people.

It is a claim that plays into a popular government narrative here stressing in recent months that the greatest Coronavirus threat is external, that is from outside China. David Culver, CNN, Beijing.


NEWTON: As cities across Latin America are easing Coronavirus restrictions, we'll take a look at the economic and human toll it could take. Plus, the European Union polls the welcome mat from under American tourists. Who they are planning to let in?



NEWTON: With Coronavirus cases rising in Latin America, some countries are now adjusting and reinforcing their containment measures while others continue to ease restrictions. Now, bars and restaurants in Sao Paulo, Brazil can reopen starting next week despite the country reporting more than 1,200 new virus-related deaths on Tuesday alone.

Mexico meantime is also seeing a surge in cases, and yet Mexico City will be moving out of the so-called red level and can begin gradually reopening retail and sports clubs. Meantime, Peru is extending its state of emergency through July 31st. But the President says some parts of the country including Lima will advance from a general to a less strict localized lockdown.

And the unemployment rate in Chile, meantime, is soaring from March to May. It shot up 11.2 percent, the highest in a decade. Now, this all comes as the International Monetary Fund says it's predicting a steeper recession than expected. This as Latin American countries still struggling to contain the virus will be hit hard, saying Brazil's economy could shrink by nine percent and output in Mexico could decline by more than 10 percent.

Meantime, Brazil has now surpassed 1.4 million infections and its death toll is nearing 60,000. CNN Shasta Darlington has the latest from Sao Paolo.


SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: While many Latin American cities reopened for business, the Pan American Health Organization warned on Tuesday that more than 438,000 people could die of COVID-19 in the region by October as the virus continues to spread.

The group's directors said Chile and Colombia could see peaks by mid- July, but countries like Brazil, Argentina, and Peru aren't likely to peak until mid-August. Nonetheless, while some cities like Buenos Aires are imposing more restrictive measures, many others are reopening.

In Mexico City, retail and sports clubs have been open since Monday. And on Wednesday, restaurants, hotels, hair salons, and shopping malls will be allowed to open their doors even as Coronavirus cases continue to rise.

Meanwhile, Rio de Janeiro is preparing to reopen bars, restaurants, and gyms on Thursday and private schools next week. That's even as Brazil reported more than 1,200 deaths on Tuesday and more than 33,000 new COVID-19 infections, surpassing 1.4 million confirmed cases. Shasta Darlington, CNN Sao Paulo.


NEWTON: Europe is officially reopening its borders to international travelers in the day ahead, but for now, Americans are not welcome. Now, the U.S. is nowhere near meeting the criteria for re-entry into the E.U. China will be on the list of nations whose citizens are allowed back provided they reciprocate. Many in Europe are already lamenting the loss of billions and tourist revenue without American travelers. CNN's Fred Pleitgen has more.


FRED PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Emptiness and fear on the streets of Rome, one of Europe's most beautiful cities. While the E.U. is opening up for travel after most states have contained the Coronavirus pandemic, American tourists won't be back anytime soon. Restaurant owner Mauro Pizzuti says that's another significant dent in his already meager earnings.

We are very concerned, he says. We live off of this. I wouldn't know if it's right or wrong, but I would have preferred for the borders to be opened because we're on the ropes.

It's not just Italy, France is one of the most popular destinations for American tourists in Europe. According to the country's Tourism Authority, around 4.5 million Americans came here in 2018, spending almost $4 billion in France, much of it in Paris, the head of the city's Tourism Authority tells CNN.

UNIDENTIFIED FEMALE: Americans -- the U.S. is very important for Paris in terms of tourism. People -- American people spend about $2 billion actually, so that a huge loss for Paris for the moment.


PLEITGEN: But the E.U. has decided to continue to ban U.S. citizens from coming to the European Union, excluding the United States from a list of nations from which the E.U. will allow travelers back in, as the Trump administration struggles with skyrocketing cases of Coronavirus in parts of the United States while the president rejects public health measures like wearing a mask.

While the E.U. is keen to jumpstart its ailing tourism sector, officials both here in Brussels and in the member states say the continent needs to be careful when opening up. The last thing Europe needs is another spike and Coronavirus infections and possibly another lockdown.

European Union officials have long been saying they will place public health above economic motivations when bringing their economies back up to speed.

YLVA JOHANSSON, HOME AFFAIRS COMMISSIONER, EUROPEAN COMMISSION: The most important thing is to protect -- the protection of public health in -- this is the most important priority for the E.U. and its member states.

PLEITGEN: And that means as Rome streets start filling with travelers, once again, restaurant managers like Mauro Pizzuti will have to wait till the U.S. gets the pandemic under control for Americans to return. Fred Pleitgen, CNN, Brussels.


NEWTON: Coronavirus infections are on the rise, of course, as we've been saying in the United States. And economists are worried about a second shutdown, but that's not deterring investors as the stock market just closed its best quarter in decades. The latest recovery forecast next.


NEWTON: The chairman of the Federal Reserve is warning lawmakers that the economic recovery will largely depend on how well the U.S. contain the Coronavirus. Jay Powell testified before the House Financial Services Committee Tuesday. He says the economy is showing signs of progress, but to keep that going, it will come down to reassuring Americans that it is safe to resume their former lives.

Now, while many Americans may still be leery and virus infections, of course, are on the rise, investors are somehow feeling optimistic. I mean, look at those numbers there. U.S. stocks just recorded their best quarter in decades, bouncing back from historic losses in the first three months of the year due to the pandemic.

CNN Business Editor John Defterios joins me now from Abu Dhabi. It's frustrated a lot of people. We will get to the dichotomy between Wall Street and Main Street in a minute. But, you know, Jay Powell really, in terms of talking about this, look, the recovery has been impressive in terms of how resilient it's been. But what was the message about how dangerous the virus still is to the economy and the recovery?

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, Powell was suggesting there, Paula, that the recovery is a bit stronger than expected. But the reality is we had a three-month lockdown, so there was pent up demand. And he says the real question mark is about sustainability. And this circles back to the number of cases.

We've had 10 states doubled their number of cases and very large ones like Texas and Florida. So he's saying it's a combination of putting a cap on the virus. And we heard from Dr. Anthony Fauci saying we're going in the wrong direction, and then on Capitol Hill, providing more support which is likely to come by the end of July. Let's listen to Jerome Powell in person on Capitol Hill this time.


JEROME POWELL, CHAIRMAN, FEDERAL RESERVE: The economy has entered an important new phase and done so sooner than expected. While this bounce back and economic activity is welcome, it also presents new challenges, notably, the need to keep the virus in check.


DEFTERIOS: And wearing a mask here throughout the testimony. That was a signal probably to the White House and to the rest of America that it is important. Steve Mnuchin is also on the Hill, Paula, suggesting they're going to try to redirect $140 billion to the hospitality sector, hotels and restaurants because they'd been on the front line of the economic collapse, and they want to jumpstart it here in the third quarter.

NEWTON: Yes, certainly will be good news. Will it be enough? And I want to get back to that point that's been confounding so many people. Wall Street is still optimistic and yet they've not calibrated, they've not really predicted the way this was -- this would go, valuations in some cases are still sky-high.

I mean, what are they expecting? Because you know that the predictions run the gamut, right? Some people think that there could be a hard fall coming through the stocks in the fall?

DEFTERIOS: Well, you know, we were expecting that kind of repositioning by the major institutional investors to close out the second quarter and it didn't happen. So we have these two parallel universes, I like to say that's Wall Street and Main Street.

We know that nearly 50 million Americans have filed for unemployment benefits through the pandemic here in the second quarter, and we'll have an updated unemployment number coming tomorrow ahead of the long weekend in the United States. That is a struggle of trying to rehire people, right?

Wall Street $3 trillion, funneled into the economy, liquidity into the banking system and elixir for stocks. That's the way it works because interest rates are so low. So let's look at the numbers and the tally for the second quarter again. We have the Dow Industrials up nearly 18 percent, the S&P 500 up nearly 20 percent, and look at the NASDAQ above 30 percent.

You have to go back to 1987 to the Wall Street Crash with the Dow, 1998 for the S&P 500, and right ahead of the tech bubble that burst in 1999 for the NASDAQ. The criticism here for the second round of funding from Capitol Hill is this $3 trillion a first time. How do we direct it more to Main Street, and because of the low-interest rates in the bond-buying program, not fuel a rally that's out of line with the price to earnings for the companies that are still laying off workers in the United States and all around the world?

NEWTON: Yes. And I'm so glad we have that perspective there, especially when you see the NASDAQ up 30 percent. It's important to really take the quarter on its face value and just see the extraordinary gains. John Defterios for us in Abu Dhabi, as always, thanks so much.

And thank you for watching CNN NEWSROOM. I'm Paul Newton. I will leave you in the capable hands of Rosemary Church. She will be here right after the break.