HONG KONG was once one of the world’s most storied international centers. With the planned proposals for a new security law, the government is transforming it into yet another mainland Chinese city, with even more control exerted from Beijing. This will not just be bad for business, but also for the financial hub’s global reputation.
Watching Chief Executive John Lee deliver his press briefing on the public consultation of Article 23 was an exercise in surrealism. He consistently put forward the idea that the city needs this on top of the National Security Law, which was passed in 2020 by China’s top legislative body, and endorsed by President Xi Jinping without public debate. At the time, Beijing said the measures were intended to bring calm back to Hong Kong’s streets, which had been rocked by pro-democracy protests. In reality, it was about control. The Hong Kong government is making similar arguments for its new law, saying it is intended to keep the financial hub safe and attract investors. It is yet another poor attempt at justifying even further restraints.
By any measure, Hong Kong is a shadow of its former self, both in terms of economic vibrancy and political activity. With this new plan, the Chinese transformation of the city is now almost complete, and Article 23 is just the latest piece of the jigsaw. The government says this will attract foreign interest and funds, but the strategy is at best disingenuous, and at worst, a charade that officials are hoping the international business community will buy.
More security laws are not what the financial hub needs. But Lee was adamant that it does despite the fact that the city has changed so much in the last few years. Covering the 2019 protests against a then unpopular extradition bill, I remember meeting with scores of angry, defiant protesters out on the streets. Looking back at those images today, it is hard to believe those scenes even happened. The likelihood of any significant dissent during the public consultation period this time around is low.
“They saw their window of opportunity,” Timothy McLaughlin, co-author of Among the Braves, a recent book documenting Hong Kong’s now failed democracy movement said, explaining the government’s decision to launch this consultation. “There’s no opposition in the government, there’s no opposition in the district council, there will be no protests on the streets. This is a done deal.”
McLaughlin also points to an expanded focus on espionage in the document that in his view references the way the mainland has been handling state secrets. “There’s a provision here that seems to broaden the definition of a public figure and that puts greater risk on those divulging information,” he said. “You have to assume that this will put a chill on people in terms of sharing information they might have or would have liked to discuss more openly.”
The nod to how the mainland handles things will no doubt spook investors, and this is already being reflected in the markets. Hong Kong stocks have been hammered. Some of that is down to concerns over the Chinese economy, but also about the difficulties of doing business in the mainland as a foreign firm. In the last year, American consultancies have been questioned by authorities, who didn’t reveal details on the nature of the investigation. Foreigners have been detained or imprisoned, ostensibly for divulging information and intelligence, according to China’s foreign ministry.
The worry now is that with this new proposed legislation, Hong Kong will begin to resemble China even more. Overseas companies are already nervous, with the latest survey from the US Chamber of Commerce in the city saying, “that members continued to worry about US-China relations and overseas perception of Hong Kong.” The hushed question being asked in boardrooms across the island is no doubt, “How do we make sure not to fall afoul of these new proposed regulations, when they are so vague and ambivalent?”
That may be precisely the point; the more ambiguous and wide-ranging the plan, the more of public and private life it will cover. This latest move — instead of attracting investment — will bring further damage to the city’s reputation and international business image, argues Willy Lam, senior fellow at The Jamestown Foundation, a Washington-based think tank. “What they are doing is hastening the pace of Hong Kong’s decline,” he told me. “It’s no longer the third financial center in the world, expat workers are leaving, and locals are too — and if they haven’t left yet, they’re planning their exit.”
As Westerners are leaving, professionals from the mainland are taking their place. Hong Kong likely overtook Switzerland to become the world’s largest cross-border financial center last year, as a result of the inflow of Chinese wealth. All of this further emphasizes the city’s dependence on China, and its transformation into another mainland city. Hong Kong’s new reality is one where the openness and transparency that were once its hallmarks, are now a sepia-toned memory. — Bloomberg Opinion