US warns of business risks in Hong Kong linked to nat. security laws, as city says claims ‘false, baseless’
Hong Kong Free Press
Hong Kong has rebutted American claims about increasing business risks in the city after the US warned that all companies and individuals in the city are “are subject to the broad and vague provisions” of national security laws.
The warning was jointly issued on Saturday by five US departments, including the departments of state, agriculture, commerce, homeland security, and the treasury. It was an updated version of a warning which was first issued on July, 2021.
“Businesses should be aware that the risks they face in the PRC are now increasingly present in Hong Kong,” the US authorities said, in reference to the People’s Republic of China. They added that many risks stem from national security laws, including the Beijing imposed security law that came into effect on June 30, 2020, and the homegrown security law that was enacted on March, 23, 2024.
In response, the Hong Kong government said in a statement – also released on Saturday – that Washington was “trying to create panic.”
“All in all, the cornerstone of Hong Kong’s success remains intact,” the government said, “We urge the US government to stop making false and baseless accusations about the situation in Hong Kong and trying to create panic by issuing the so-called ‘business advisory’ to US companies and individuals operating in Hong Kong.”
It said that, following the enactment of national security laws, overseas business sectors continued to show enthusiasm in investing and doing business in Hong Kong.
Beijing inserted national security legislation directly into Hong Kong’s mini-constitution in June 2020 following a year of pro-democracy protests and unrest. It criminalised subversion, secession, collusion with foreign forces and terrorist acts – broadly defined to include disruption to transport and other infrastructure. The move gave police sweeping new powers and led to hundreds of arrests amid new legal precedents, while dozens of civil society groups disappeared. The authorities say it restored stability and peace to the city, rejecting criticism from trade partners, the UN and NGOs.
Separate to the 2020 Beijing-enacted security law, the homegrown Safeguarding National Security Ordinance targets treason, insurrection, sabotage, external interference, sedition, theft of state secrets and espionage. It allows for pre-charge detention of to up to 16 days, and suspects’ access to lawyers may be restricted, with penalties involving up to life in prison. Article 23 was shelved in 2003 amid mass protests, remaining taboo for years. But, on March 23, 2024, it was enacted having been fast-tracked and unanimously approved at the city’s opposition-free legislature.
The law has been criticised by rights NGOs, Western states and the UN as vague, broad and “regressive.” Authorities, however, cited perceived foreign interference and a constitutional duty to “close loopholes” after the 2019 protests and unrest.
In Saturday’s statement, Hong Kong’s government said the security laws “will not affect normal business operations and local institutions, organisations and individuals that engage in normal exchanges worldwide… Law-abiding persons will not engage in acts and activities endangering national security and will not unwittingly violate the law.”
Negative impact
The US government warned that business communities may face increased scrutiny, potential financial penalties, and legal action if they are perceived to violate the security laws.
They should also be aware that such laws can be applied to territories outside of China, the warning added.
The US also said that actions of the Hong Kong and Chinese authorities – such as imposing bounties on activists overseas – “may negatively affect businesses’ staff, finances, legal compliance, reputation, and operations.”
Hong Kong issued arrest warrants for eight self-exiled activists last July, including against former lawmakers Ted Hui and Dennis Kwok, offering HK$1 million for each of the wanted people.
Last December, it issued arrest warrants for another five self-exiled activists, placing HK$1 million bounties on their heads.
International media outlets reported in early July that two overseas Hong Kong activists wanted under the security law – including Hui – were blocked from accessing their HSBC and Manulife pension funds. The two financial giants have declined to comment on this issue.
US sanctions
Soon after the Beijing-imposed national security law was enacted in Hong Kong, the US slapped sanctions on Hong Kong’s then-leader Carrie Lam and 10 other senior figures.
The sanctions block the 11 individuals’ assets and criminalise any US-related financial transactions with them. Included in the list if now-Chief Executive John Lee.
In mid-July, US lawmakers urged further sanctions on 27 other Hong Kong officials, police commissioners, and prosecutors and judges handling national security cases.
In the warning issued last Saturday, the US said that businesses operating in Hong Kong may face “conflicting jurisdictional requirements and liability” linked to compliance of sanctions.
“Failure to adhere to U.S. sanctions can result in civil and criminal penalties under U.S. law, ” it said.
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