Hong Kong was once Asia’s world city, a global financial hub and business gateway to China. But the passage of new national security laws is the latest sign the door is closing.
On Tuesday, article 23 was unanimously passed by Hong Kong’s unicameral, opposition-free parliament. The law covers newly defined acts of treason, espionage, theft of state secrets, sedition and foreign interference.
Numerous foreign governments and rights groups had urged the government not to implement it. Critics said it was ushering in a “new era of authoritarianism”, and would scare off the international business and investment that the city’s chief executive, John Lee, is trying to draw back to Hong Kong.
Many of the listed crimes were already covered by the national security law (NSL) imposed by Beijing in 2020, but the new law contains additional targets on foreign entities and Hongkongers who interact with them. Lee said was it was “needed to guard against people who invade our home”.
Thomas Kellogg, a law professor at Georgetown University, told Bloomberg last month that the provisions on foreign contact could limit the activity of chambers of commerce and economic research groups. “The free flow of information is the lifeblood of any vibrant market economy,” Kellogg said.
Some business groups had expressed particular concern about broad definitions in the new law, particularly around definitions of state secrets and espionage.
Another legal academic, who was formerly based in Hong Kong and requested anonymity, said: “Multinationals in general will now think twice about basing themselves in Hong Kong or moving senior people to Hong Kong, simply because article 23 can be used quite liberally to frame people on the grounds of espionage or theft of state secrets.”
The EU said in a statement that the new law “raises questions about Hong Kong’s long-term attractiveness as an international business hub”. It said the bill had the potential to “significantly” affect the work of its office in the city, as well other organisations and companies.
UK foreign secretary, David Cameron, said it would “make it harder for those who live, work and do business in Hong Kong”.
The Hong Kong Media Overseas (HKMO) group said there was now an increased risk of foreign media outlets, particularly those covering “dissenting voices”, leaving. Some, like Radio Free Asia, have already decided to.
“This legislation creates a very low threshold for criminalising statements claimed to be false or misleading,” HKMO said.
The government rejects claims that the laws will affect international business and investment. Lee says the national security laws will help. “All economic and social activities require a secure and stable environment,” he said in February.
China’s leadership should be heeding the international concerns, said the veteran pro-democracy politician Emily Lau, noting data on the exodus of foreigners, finance and locals from Hong Kong.
“President Xi Jinping and other officials have said many times that they want Hong Kong to continue to be an international business and financial centre,” she said.
Lau said enacting domestic national security legislation was a constitutional requirement – and in fact two decades overdue – but she said the rush of article 23 was unlike anything she’d seen in her 25-years as a legislator, and she had major concerns about the lack of response to parties like the UN human rights commissioner.
“Doing it is one thing, but how you do it, and whether you give people inside or outside Hong Kong the time to raise questions and concerns and get replies – is another.”
The government’s activity is not popular. Lee’s approval rating is at a record low since he took office – unopposed – in July 2022. Observers say the Hong Kong government is carrying out the wishes of Beijing, rather than those of its own people.
In practice, Hong Kong is not balancing its two aims of tightening security and maintaining its international status. New visa schemes, slashed stamp duties on property and big international events were supposed to draw back foreign visitors after the pandemic and a reputation-shattering crackdown on the city’s pro-democracy movement.
But the schemes and property sales have been dominated by people from mainland China, and there has been reporting for months on multinational corporations quietly shifting to Singapore.
Johannes Hack, the president of the German Chamber of Commerce in Hong Kong, said he hoped the passing of the law meant Hong Kong could return its focus to “those qualities that have traditionally contributed so much to its success”.
The European and British chambers declined to comment.
The law will come into force on Saturday.
“The reputation of Hong Kong as an international financial hub is long gone,” said the anonymous Hong Kong academic. “It didn’t begin with article 23 – it was particularly after the passing of the NSL in 2020 – but it’s all been down hill.”
