Nearly four in 10 members of an influential American business group are considering relocating from Hong Kong due to the national security law, an indication of rising corporate fears over the sweeping new legislation, though most are still planning to stay, according to a recent poll.
About 39 per cent of the 154 firms surveyed by the American Chamber of Commerce in Hong Kong (AmCham) said they had plans to move capital, assets or operations out of the city after more details were revealed about the new law, an uptick from 35.5 per cent of businesses polled in July.
The remaining 61 per cent said they had no plans to exit the city.
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On a personal level, 53 per cent of the people who responded said they were considering leaving Hong Kong, compared with just over 46 per cent who said they had no plans to quit the city. The firms, surveyed between August 7 and 11, represent 13 per cent of AmCham’s members, and more than half are headquartered in the United States.
AmCham acknowledged the trend for companies considering leaving Hong Kong had become “more pronounced” due to the controversial national security law, which criminalises subversion, secession, terrorism and collusion with foreign forces to endanger national security.
“In sum, a larger proportion of individuals have considered leaving compared to companies. Of those companies considering leaving, about five-sixths are thinking about doing so in the medium to long run,” it said.
Some 35 per cent of firms surveyed also said they were mulling leaving the city over a series of US sanctions on Hong Kong officials following the passage of the Hong Kong Autonomy Act (HKAA) and an executive order in the US revoking the city’s preferential trade status.
Respondents also anonymously expressed conflicting views in the survey over the impacts of the security law and the rising tensions between China and the US.
One said: “Moved capital as we don’t trust authorities here to honour integrity of banking and financial system.”
But another said: “Nowhere else in Asia can replace Hong Kong with its USD liquidity, capital markets, talent, etc.”
Asked if they had any contingency plans, about 46 per cent cited Covid-19 as a major reason for formulating a plan B, followed by the national security law (37 per cent), US-China trade tension (31 per cent) and the anti-government protests that erupted last year (28 per cent). Only 23 per cent said they had not drawn up any contingency plan.
Some 44 per cent said they were now more concerned about the national security law Beijing imposed on the city on June 30 than they were a month ago, with another 35 reporting being just as concerned as before. The respondents also added that the new law lacked clarity regarding its scope and enforcement.
Another 75 per cent reported feeling pessimistic about Hong Kong’s business prospects in general.
“For some, ambiguity is the norm for Chinese law and within expectations. For others, they are concerned about the chilling effects of such ambiguity,” the poll said.
One respondent said: “Additional clarifications on collusion and impact on free press will be helpful to reassure the foreign business community.”
Another commented: “The law gives the government and China considerable latitude and is causing fear among the citizens.”
As for the impact of the HKAA and the US executive order, close to 56 per cent said they were in a “wait and see” mode, while 45 per cent said their staff morale was affected. About 34 per cent said they were not affected in any way, compared with 23 per cent who said their global headquarters might consider changes to the Hong Kong footprint.
“Caught between a rock and a hard place. Potential mainland and Hong Kong clients aren’t keen on working with an American,” one respondent said. “Concerns over either real or imagined political or data/information risks. Frankly impossible to do anything right now, until there is clarity.”
But another firm saw the security law in a positive light. “By reducing the violent protests and uncertainty brought on by the protests, the national security law has positively helped internal planning and operations and has produced much greater business activity from clients,” it said.
More than 55 per cent of respondents were most concerned about the long-term competitiveness of US firms in Hong Kong and the region, while 45 per cent were worried over the unintended consequences of the US sanctions on specific sectors.
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