Hong Kong: Tougher security law will add legal worries and further cloud the business environment

Event  

The national security law was made more restrictive after Article 23 of the Basic Law (Hong Kong’s constitution) was updated with the aim to raise repression against any dissent action. The new law came into force on 23 March and allows the Lee government to severely punish seven types of alleged criminal actions such as secession, subversion against China’s government, cooperation between local and foreign political organisations or theft of state secrets.

Impact

The national security law was enacted in 2020 under Beijing’s push to restore order after historically large democratic and anti-government protests against the then proposed stricter Article 23. This was a turning point in Hong Kong’s history as it marked the return of Beijing’s full control on the island, threatening the “one country, two systems” principle, which symbolises the island’s exceptionalism.

The new security law, free of any political opposition, was an easy and speedy government task and should have a triple impact. First, it will continue to cloud the future of Hong Kong’s basic freedoms, the independent rule of law and business environment (the risk rating is currently in C/G). Indeed, the latest terms of the law are sufficiently vague to spook foreign investors. They might be afraid of being tried for political reasons if they do not apply self-censorship, as the new law allows people to be detained for up to 14 days without charge for sharing perceived state secrets externally. Second, it will accelerate the move to a system and a city resembling mainland China, free of foreign interference. Finally, the stricter legislation will deter any civil and political dissent voice and pro-democratic actions on the island even more, probably favouring long-term political stability.

Analyst: Raphaël Cecchi – r.cecchi@credendo.com