Hong Kong’s business hub status imperiled by security law

Anational security law proposed by China could imperil Hong Kong’s status as one of the world’s best places to do business.

The law, approved yesterday in Beijing, led Secretary of State Mike Pompeo to say Washington will no longer treat Hong Kong, already reeling from anti-government protests and the pandemic, as autonomous from Beijing.

The Chinese government has not given details of the law, which is aimed at suppressing secessionist and subversive activity in the former British colony.

After 11 months of protests, Chinese leaders say it’s needed to combat unspecified threats in the semi-autonomous region of 7 million people. But business groups, lawyers and financial analysts say potential repercussions range from loss of business for Hong Kong’s financial markets and law firms to travel restrictions on its residents.

Hong Kong is highly regarded for its skilled workforce, business-friendly legal system, Western-style free speech and ease of movement. But global companies already were shifting some operations out of Hong Kong due to rising costs and uncertainty after prolonged, sometimes violent clashes between police and pro-democracy protesters.

Scott Salandy-defour, founder of clean-tech startup Liquidstar, has been considering moving out of Hong Kong, and the security bill is the “last straw,” he said. “I don’t see how it gets any better from here.”

“When we say we’re a Hong Kong-based company when talking to investors, it’s just not as attractive as it was as a year ago,” said Salandy-defour, whose company provides sustainable battery rental and charging services for developing countries.

“We’re potentially cutting ourselves off from a lot of different funding avenues, like grants from the U.S. government,” he said.

Hong Kong’s leader Carrie Lam has tried to reassure companies and the public that its civil liberties won’t be affected. But the law shows Chinese President Xi Jinping is determined to tighten control.