Security law ‘puts Hong Kong’s appeal for business at risk’

Chinese leaders said the new law was needed to combat unspecified threats in the semi-autonomous region.

Riot police stand guard at Central during the second day of debate on a contentious bill that would criminalize insulting or abusing the Chinese national anthem, in Hong Kong

Hong Kong’s status as a leading place to do business could be in peril following the adoption of a national security law.

The legislation, which was approved on Thursday in Beijing, led US Secretary of State Mike Pompeo to say Washington will no longer treat Hong Kong, already reeling from anti-government protests and the pandemic, as autonomous from China.

The Chinese government has not given details of the law, which is aimed at suppressing secessionist and subversive activity in the former British colony.

Chinese leaders said the new legislation was needed to combat unspecified threats in the semi-autonomous region of seven million people.

But business groups, lawyers and financial analysts said potential repercussions range from loss of business for Hong Kong’s financial markets and law firms to a loss of professional talent in the city.

Global companies already were shifting some operations out of Hong Kong due to rising costs and uncertainty after prolonged, sometimes violent clashes between police and pro-democracy protesters.

Scott Salandy-Defour, founder of clean-tech startup Liquidstar, has been considering moving out of Hong Kong, and said the security bill is the “last straw”.

He added: “I don’t see how it gets any better from here.

“When we say we’re a Hong Kong-based company when talking to investors, it’s just not as attractive as it was as a year ago.

“We’re potentially cutting ourselves off from a lot of different funding avenues, like grants from the US government.”