A majority of United States-based companies in Hong Kong surveyed by the American Chamber of Commerce (AmCham) are concerned about the sweeping new national security law in the global financial hub, with a third looking to move assets or business longer-term.
The legislation, which punishes secession, subversion, “terrorism” and collusion with foreign forces with up to life in prison, has further strained relations between the US and China.
The AmCham survey, published on Monday and to which 183 or 15 percent of its members responded on July 6-9, showed 36.6 percent of respondents were “somewhat” concerned and 51 percent were “extremely concerned” about the legislation.
More than two-thirds of the respondents were more concerned than a month ago, when the full details of the law, which came into force just before the anniversary of the former British colony’s return to Chinese rule on July 1, 1997, were unveiled.
The legislation, which allows a Chinese intelligence agency to openly operate in the city for the first time and gives police and mainland agents broad powers beyond the scrutiny of courts, raises a broad spectrum of worries for US companies.
Some 65 percent were concerned about the “ambiguity in its scope and enforcement” and roughly 61 percent said they worry about the independence of Hong Kong’s judicial system.
About half were concerned about the city’s status as a global finance centre and the erosion of the high degree of autonomy it was promised 23 years ago when the United Kingdom handed it back to China.
Other major concerns cited were data security, a loss of talent and retaliatory measures by other governments. The prospect of extraditions to mainland China, where courts are controlled by the Communist Party, was considered a “game changer” by about 46 percent, with 17 percent not considering it so.
About 49 percent said the law would have a negative impact on their business, while some 13 percent said it would have a positive impact.
Some 30 percent considered moving capital, assets or business out of Hong Kong in the medium-to-long term, while five percent said they consider doing so in the short-term.
More than half of the respondents said they felt less safe about living and working in Hong Kong. Also about half said they personally considered leaving the city.
The Wall Street Journal reported on Sunday that the US is weighing a restricted set of options to deal with China over its recent moves in Hong Kong, as tensions between Washington and Beijing heat up.
Steps against Hong Kong’s financial system risk hurting US, Western and Hong Kong companies and consumers, according to the report, citing US officials and analysts.
Measures such as targeted sanctions against Chinese officials and trade moves against products made in Hong Kong would have little impact on Beijing’s integration of the city into the mainland’s political and security system, the Journal added.
On Thursday, officials in the administration of US President Donald Trump discussed Hong Kong plans in a White House meeting, people familiar with the gathering told the Journal. Officials will regroup early this week and may announce sanctions or other measures, one person added.
Washington last week imposed sanctions on the autonomous region of Xinjiang’s Communist Party Secretary Chen Quanguo, a member of China’s powerful Politburo, and three other officials.
Beijing described the sanctions as “deeply detrimental” to mutual relations between the countries and warned that China would impose reciprocal measures on US officials and organisations.
As bilateral tensions escalate over matters ranging from the coronavirus, trade, the new Hong Kong security law and allegations of human rights violations against Uighurs in the Xinjiang region, the US government alerted its citizens on Saturday to “exercise increased caution” in China.
Earlier, a Bloomberg news agency report said Trump’s top advisers weighed proposals to undermine the Hong Kong currency’s peg to the US dollar, although the idea did not appear to have gained traction.
Chinese state lenders were revamping contingency plans over the threat of US sanctions, according to a Reuters news agency report last week.