Former U.S. Consul General in Hong Kong, William Tang (Photo credit: video screenshot)
After Beijing passed a decision to revise Hong Kong’s electoral system, Hong Kong entered a phase of direct rule by the Chinese Communist Party. Kurt Tong, former U.S. Consul General in Hong Kong and Macau, recently wrote an article in Barron’s, a U.S. financial magazine, pointing out that the “new Hong Kong” is politically silenced, but the financial markets continue to be active, as if “schizophrenic”, making the international business community perplexed. He warned that businesses in Hong Kong are not being able to make a profit. He warned that the risks for businesses in Hong Kong have become too great to ignore, with the biggest risks coming from the judiciary and the Internet.
Hong Kong has entered a “new era” in which global governments and businesses are caught in cognitive dissonance, according to the article. At a Time when Beijing is blatantly eliminating all meaningful political opposition, Hong Kong continues to play its role as China’s most critical gateway. In recent weeks, Beijing has detained a large number of Hong Kong’s opposition leaders and systematically stripped Hong Kong’s democratically elected parliament of its powers. Meanwhile, Hong Kong’s financial markets have once again matched New York in terms of IPO (initial public offering) take up, even before the huge Ant Financial listing that was halted by the Chinese regulator.
These strange phenomena, which Tang described as “Hong Kong’s schizophrenia” and the lingering problem of “one country, two systems”. He said that when Trump was president of the United States, he withdrew policy preferences for Hong Kong, and that the Heritage Foundation recently dropped Hong Kong from the list altogether, after hailing it as the world’s freest economy for a quarter of a century. “What’s really happening is that Hong Kong has become a mainland city.” While the Hong Kong market is too important for foreign business leaders to ignore, the business risks that are surfacing in Hong Kong are also too great to ignore.
Tang warned that Hong Kong’s political autonomy will worsen in the next decade, and that Beijing has decided to take a wide range of actions to tighten Hong Kong’s political space while allowing Hong Kong to operate as business as usual economically. How exactly China will achieve these conflicting political and economic goals will have a profound impact on Hong Kong’s economic environment,” he said. Non-Chinese companies in Hong Kong will therefore face a whole new set of reputational, legal and operational risks that will be difficult to assess.”
He also said business leaders are concerned about the deteriorating relations between the Beijing authorities and Europe, North America and Australia, but their deepest concerns are still risks related to justice and the Internet. Hong Kong has had an independent and impartial judicial system in the past, and is internationally respected for its commitment to safeguarding data integrity and information privacy. But in a future of political repression, these strengths could become Hong Kong’s weaknesses.
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