Citing the introduction of a strict national security law on Chinese territory last year, the US “business council” on Friday warned against increased surveillance of trade data as well as threats to freedom of information resulting from Hong Kong’s crackdown on previously free media.
But businessmen in the city said they were already aware of the risks and complained that the advisory prevented them from convincing their headquarters of the continued benefits of operating in the territory.
“The general tone is that the business world doesn’t need Foggy Bottom to tell them there are risks or how to handle them,” said a person close to US multinationals, referring to the State Department. American.
The American Chamber of Commerce issued a statement shortly after the notice was released stressing the value its members place on their activities in the city.
“It adds another layer of complexity to being an American businessman in Hong Kong,” Tara Joseph, president of the American Chamber of Commerce, said of the opinion.
“It was maybe a little worrying why it was presented this way, leaving people wondering if Hong Kong was at an increased risk of being crushed in US-China tensions when Hong Kong still has qualities. special. “
Since the introduction of the National Security Law last year, prisons have been filling up, those considered disloyal to China have been targeted by the government and the civil service, the media and education systems are in the process of being destroyed. ‘be reshaped to bring them closer to those in mainland China.
But the change has not caused an exodus of banks and foreign companies, eager to profit from China’s pandemic recovery and the promise of liberalized financial markets on the mainland.
A member of the American business community in Hong Kong said that while many were “horrified” by police taking pro-democracy activists in unmarked vans, they did not see it as relevant to their business. “Over 90 percent of the Fortune 500 are represented in Hong Kong and they’re not going anywhere, China is still the world’s largest consumer market,” added a US banker in Hong Kong.
Joseph said there are a plethora of reasons companies want to stay in Hong Kong. ” [Hong Kong is] tax-efficient, it’s an international hub and there’s a reason corporate legal teams are based here.
US officials, however, say China “cannot have it both ways” and insist the political situation will affect the business environment. Biden released the notice in part because he felt companies weren’t taking growing risks seriously enough, one told the Financial Times.
“Imposing a continental system is just not compatible” with being an attractive international financial hub, another US official said.
Hong Kong companies have tried to adapt to the new security regime. They trained staff on how to respond if authorities raided their offices and demanded documents without a judicial warrant. More and more uncomfortable keeping data in town, some have relocated their servers.
The Hong Kong government is pursuing a host of other laws that have caused further unrest. He confirmed on Friday that he would pursue strict anti-doxxing laws, details of which have concerned U.S. tech companies such as Google and Facebook. Under the laws, which apply extrajudicially, employees could face jail time if they did not remove material posted online by order of the city’s privacy commissioner.
Despite the US measures, there is no sign of a change of course on the part of China or the Hong Kong government. “The words and actions of foreign business leaders fully demonstrate that the business environment in Hong Kong has not been compromised after the implementation of the [security law]. On the contrary, it got even better, ”said Edward Yau, the city’s commerce secretary.
Analysts are wondering what the US council will achieve beyond the political posture. It contains no new legal obligations for US companies, although the United States has separately sanctioned seven mid-level Chinese officials in Hong Kong, a ruling according to Chinese state media portrayed the United States as a “tiger.” of paper “.
Kurt Tong, former US Consul General in Hong Kong, said: “The US government is finding that there are few ways to punish China for its broken promises in a specific Hong Kong way without seriously harming US interests and long-time residents of Hong Kong. “
Attempts by the Chinese government to push back the sanctions could, however, harden the balance for American companies in Hong Kong.
Beijing’s recently passed laws allow sanctions to be imposed on anyone who helps foreign countries enforce sanctions against Chinese companies and officials. The United States said the legislation does not explicitly exempt Hong Kong-based operations.
Enforcement of sanctions laws in the city could force companies to separate their operations in China and Hong Kong from the rest of their global operations, said Douglas Arner, professor of law and financial regulation expert at the University of Hong Kong.
But Christine Savage, sanctions expert and partner at King & Spalding, warned there was no guarantee it would protect companies from possible punitive measures by Beijing.
“We certainly fear that there may still be retaliatory measures [because] the national security law contains language that suggests that you can be held accountable in China for actions you take outside of China, ”she said.