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Understand and navigate Hong Kong’s security law

“US Secretary of State Pompeo says new security law will be a ‘death knell’ for Hong Kong’s autonomy.” 

“China warns UK of economic damage unless it backs down.” 

“National security law for Hong Kong to boost ‘one country, two systems’ and ensure freedoms beyond 2047.” 

What are business leaders to think as they wake up to such screaming and conflicting headlines each morning?  Will passage of the new security law mean the end for Hong Kong’s special status? Or will the territory continue to serve as an entrepôt between China and the world? Why is Beijing passing this law now and what are the real risks of doing business in Hong Kong and China?

In search of answers, I’ll look at the motivation behind Chinese behavior, outline potential best, worst and most likely scenarios and make recommendations to assist businesses in navigating the ever-changing Chinese landscape.  

At the end of May 2020, China’s National People’s Congress (NPC) approved a draft of a new national security law that aims to ban and punish sedition, secession, terrorism, foreign intervention and other activity posing dangers to national security in Hong Kong. The NPC is expected to draft a final version of the law and will enact it by including it in the Hong Kong Basic Law within the next few months.  

By whom, and how, “endangering national security” will be interpreted is uncertain and worrying, but the interpretation undoubtedly will be 100% in line with Beijing’s interests. Any person or business supporting protests will be vulnerable to retribution.

The law also allows China’s security agencies, in particular the Ministry of State Security (akin to the FBI and CIA), to operate openly in the city.

Out of 180 U.S. companies in Hong Kong that responded to a recent American Chamber of Commerce survey, 54% were “very concerned” while 30% were “moderately concerned” about the overall threat to Hong Kong’s business environment as well as the law’s effects on free speech and other basic civil liberties.

Furthermore, 30% of those surveyed said that they were considering moving their operations.

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