NATIONAL SECURITY LAW GIVES CITY A PROMISING FUTURE
Security and stability is good for business and ends the political gridlock distracting the government. Even the threat of US sanctions seems to be receding. The new law also makes China feel more secure about Hong Kong
By Bernard Chan, via the South China Morning Post
The new national security law for Hong Kong was enacted on June 30, 2020.
This article originally appeared on the South China Morning Post on July 3, 2020.
“The Death of Hong Kong” … “The End of Hong Kong” … “Is Hong Kong Over?” Since the national security law was announced a few weeks ago, headlines in the international news publications I read every day have been looking more like the obituary pages than the financial and economic section.
But, to paraphrase the famous quote by Mark Twain: “Rumours of our death have been greatly exaggerated.”
Looking around in Hong Kong, post-national security law, I see a city unchanged – and with a promising future. We continue to have a transparent and business-favourable tax system. We still have world-class talent in growth sectors such as financial services, plus a superb business services industry to provide seamless operational support.
We remain a common-law jurisdiction, with legal rights and company rights intact. And we boast a deep well of legal professional expertise that has made us one of the world’s top five arbitration centres.
Our multiple advantages are not going to vanish any time soon, even though the media hype might have you believing that business professionals are racing for the exits. In fact, I am hearing quite the opposite. Friends and colleagues in the banking and the financial industries say business is coming back strongly after the Covid-19 global shutdown.
And they do not feel in the least threatened by the national security law – they are enthusiastic about it. Security and stability are always good for business, and these will be bolstered by the national security law.
What is more, the national security law will make China feel better and more secure about Hong Kong. And that is a good thing for business too – because Hong Kong’s business future is tied to China.
As strategic adviser Martin Yupangco, of Singapore’s Optima Strategies, observes: “A Hong Kong without an acceptable and wholly integrated relationship with China will have very little commercial or financial value to international financial institutions. Financial institutions will either abide by the authority of China or they will not operate in China. And by ‘China’ I mean any commercial or financial activity in Hong Kong or the mainland that is dependent on its relationship with China.”
That is why bankers and investors – sensibly – have no concern that the national security law will change their business status quo. They understand that if you do not trust China, you should not be in Hong Kong.
There is, however, a risk factor, but not from the national security law itself – it is from the possible sanctions that other countries, in particular the United States, will impose on Hong Kong because of it.
Will the US choose a nuclear option that threatens Hong Kong’s economy, such as trade sanctions or US dollar controls? I really do not think so. The US is Hong Kong’s second-largest trading partner in the world. Hong Kong is its 21st-largest trading partner. Total assets of US banks in Hong Kong were US$166 billion last year. We are tightly interconnected in other sectors such as aviation, wealth management and insurance.
Sure, the US government is making noises about slapping sanctions on Hong Kong. But threats are one thing, actions are another. In his recent press conference, Secretary of State Mike Pompeo backed off considerably, saying that the US would wait and see what happens in the September Legislative Council election.
Given what is at stake, I am not surprised. In the middle of an election year, the US is not reckless enough to burn down the valuable house its companies have built in Hong Kong. It has too much to lose.
Although we cannot know for sure how things will unfold, Hong Kong’s future, post national security law, looks promising on several fronts. China’s government, businesspeople and investors now have the peace of mind to expand and grow their operations here, taking advantage of opportunities related to the Greater Bay Area and the Belt and Road Initiative.
Meanwhile, initial public offerings are turning away from New York and coming “home” to Hong Kong. This will help us considerably as our economy bounces back from the hit of Covid-19.
And with the national security issue settled, Hong Kong will be freed from the political gridlock that has kept us from focusing on running our city. We have many serious problems facing us, from affordable housing and income inequality, to resolving social conflict and improving our environment and quality of life.
As Hong Kong takes a much-needed breath after this extremely challenging year, I am looking forward to turning our attention to these critical issues.
Bernard Chan is convenor of Hong Kong's Executive Council
Bernard Charnwut Chan, born in 1965, is a Hong Kong politician and businessman. He is the grandson of Chin Sophonpanich, the late founder of Bangkok Bank. He is currently convenor of Hong Kong's Executive Council.
Read more content by Bernard Chan on the South China Morning Post.