Money has already started leaving Hong Kong, with US$5bn quitting the territory last year, according to Bank of England figures. The Chinese government’s increasingly tight grip on Hong Kong is undermining the former British colony’s position as a regional financial hub, analysts and investors say.
In its latest move to clamp down on Hong Kong, which has been a centre of resistance against the ruling Chinese Communist party, the mainland government last month introduced a sweeping national security law that criminalises protest and dissent. While the target of the law may have been Hong Kong’s pro-democracy movement, it has also spooked a business sector already nervous about Beijing’s control.
Amid a broader move towards Singapore as a regional hub for multinationals, money has been quietly leaving Hong Kong since late last year – although the territory’s monetary authority disputes this. Investors are also worried about the reaction of the increasingly belligerent Trump regime in the United States, which could put tariffs on Hong Kong or sanction its rulers.
The Australian government is also considering its options, which include cancelling a free-trade agreement struck in February and joining with other western countries in accepting refugees from Hong Kong – a move that could signal the territory’s population is falling into a full-blown exodus. “We desperately wish to see Hong Kong retain its status as a location where under the one country, two systems, the basic law is respected,” said Australian trade minister Simon Birmingham.
Last month, ratings agency Moody’s said the national security law was consistent with attempts by China to bring Hong Kong’s system of government closer to the mainland’s. Moody’s warned that for Hong Kong’s rating to remain higher than China’s, the territory’s “distinctive institutional framework” would need to remain in place.
