Sun, Feb 04, 2024 page9

• The Chinese transformation of Hong Kong is almost complete

  As the banking hub’s international clout recedes on Beijing-ordered restrictive laws, Hong Kong is slowly becoming just another Chinese city

  • By Karishma Vaswani / Bloomberg Opinion
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  Hong Kong was once one of the world’s most storied international centers. With the planned proposals for a new security law, the government is transforming it into yet another Chinese city, with even more control exerted from Beijing. This would be bad not just for business, but also for the financial hub’s global reputation.

  Watching Hong Kong Chief Executive John Lee (李家超) deliver his press briefing on the public consultation of Article 23 was an exercise in surrealism. He consistently put forward the idea that the city needs this on top of the National Security Law, which was passed in 2020 by China’s top legislative body and endorsed by Chinese President Xi Jinping (習近平) without public debate. At the time, Beijing said the measures were intended to bring calm back to Hong Kong’s streets, which had been rocked by pro-democracy protests. In reality, it was about control. The Hong Kong government is making similar arguments for its new law, saying it is intended to keep the financial hub safe and attract investors. It is yet another poor attempt at justifying even further restraints.

  By any measure, Hong Kong is a shadow of its former self, both in terms of economic vibrancy and political activity. With this new plan, the Chinese transformation of the city is almost complete, and Article 23 is just the latest piece of the jigsaw puzzle.

  The city government says this would attract foreign interest and funds, but the strategy is at best disingenuous, and at worst, a charade that officials are hoping the international business community would buy.

  More security laws are not what the financial hub needs.

  However, Lee was adamant that it does need it, despite the city changing so much in the past few years. Covering the 2019 protests against a then unpopular extradition bill, I remember meeting with scores of angry, defiant protesters out on the streets. Looking back at those images today, it is hard to believe those scenes even happened. The likelihood of any significant dissent during the public consultation period this time around is low.

  “They saw their window of opportunity,” said Timothy McLaughlin, co-author of Among the Braves, a book documenting Hong Kong’s failed democracy movement, commenting on the city government’s decision to launch this consultation. “There’s no opposition in the government, there’s no opposition in the district council, there will be no protests on the streets. This is a done deal.”

  McLaughlin also mentions an expanded focus on espionage in the document that in his view references the way China has been handling state secrets.

  “There’s a provision here that seems to broaden the definition of a public figure and that puts greater risk on those divulging information,” he said. “You have to assume that this will put a chill on people in terms of sharing information they might have or would have liked to discuss more openly.”

  The nod to how China handles things would no doubt spook investors and this is being reflected in the markets. Hong Kong stocks have been hammered. Some of that is down to concerns over the Chinese economy, but also about the difficulties of doing business in the China as a foreign firm. In the past year, US consultancies have been questioned by authorities, who did not reveal details on the nature of the investigations. Foreigners have been detained or imprisoned, ostensibly for divulging information and intelligence, China’s foreign ministry has said.

  The latest worry is that with this new proposed legislation, Hong Kong would begin to resemble China even more. Overseas companies are nervous, with the latest survey from the US Chamber of Commerce in the city saying “that members continued to worry about US-China relations and overseas perception of Hong Kong.” The hushed question being asked in boardrooms across the island is no doubt: “How do we make sure not to fall afoul of these new proposed regulations, when they are so vague and ambivalent?”

  That might be precisely the point. The more ambiguous and wide-ranging the plan, the more of public and private life it would cover. This latest move — instead of attracting investment — would further damage the city’s reputation and international business image, says Willy Lam (林和立), senior fellow at The Jamestown Foundation, a Washington-based think tank. “What they are doing is hastening the pace of Hong Kong’s decline,” he said. “It’s no longer the third financial center in the world, expat workers are leaving and locals are too — and if they haven’t left yet, they’re planning their exit.”

  As Westerners are leaving, professionals from China are taking their place. Hong Kong likely overtook Switzerland to become the world’s largest cross-border financial center last year, as a result of the inflow of Chinese wealth. All of this emphasizes the city’s dependence on China and its transformation into just another Chinese city. Hong Kong’s new reality is one where the openness and transparency that were once its hallmarks are a sepia-toned memory.

  Karishma Vaswani is a Bloomberg Opinion columnist covering Asia politics with a special focus on China. Previously, she was the BBC’s lead Asia presenter and worked for the BBC across Asia for two decades. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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