The United States has issued a fresh warning to businesses operating in Hong Kong, citing concerns over national security laws that could pose significant risks to companies and individuals. This warning, which was jointly released by five US government departments—including State, Treasury, and Commerce—emphasized that entities in Hong Kong are subject to the broad and ambiguous provisions of both Beijing-imposed and local security laws. The warning updates a similar advisory first issued in July 2021.
Background on the Warning
The US authorities specifically pointed to the 2020 national security law imposed by China, which criminalizes activities such as subversion, secession, and collusion with foreign powers. They also mentioned the local Safeguarding National Security Ordinance, enacted in March 2024, which further broadens the scope of actions considered a threat to national security. According to the US advisory, these laws could affect normal business operations, subjecting companies to potential legal action, financial penalties, and increased scrutiny.
Hong Kong’s Response
In a swift rebuttal, the Hong Kong government released a statement dismissing the US warning as an attempt to create unnecessary panic. Hong Kong officials emphasized that the fundamentals of the city’s economic success remain intact and that foreign businesses continue to show confidence in the region.
“The US government’s claims are false and baseless,” a Hong Kong spokesperson stated. “We urge them to stop spreading misinformation and creating unnecessary alarm with their so-called ‘business advisory.’ Normal business activities and international exchanges remain unaffected, as long as they do not endanger national security.”
Security Law Overview
The national security law imposed by Beijing in June 2020 was implemented following widespread pro-democracy protests in Hong Kong. It gives the local government broad authority to crack down on what it deems threats to national security, including arresting activists, limiting freedom of expression, and dissolving civil society groups. Critics argue that the law has stifled political dissent and diminished the city’s autonomy, which had been guaranteed under the “one country, two systems” principle.
The newer 2024 law, often referred to as Article 23, further targets offenses such as treason, espionage, and foreign interference. Critics, including human rights groups and international observers, claim that both laws are overly vague and allow for arbitrary enforcement, raising concerns about the safety and security of foreign business interests.
US Sanctions and Risks to Businesses
The US also noted that companies operating in Hong Kong might face risks associated with conflicting legal requirements. For example, compliance with US sanctions—imposed on Hong Kong officials such as Chief Executive John Lee—could potentially clash with local regulations, leading to legal and financial repercussions. Since the enactment of the 2020 law, the US has imposed sanctions on 11 high-ranking Hong Kong officials, including former leader Carrie Lam.
In its latest warning, the US government said that non-compliance with US sanctions could result in penalties, including criminal charges, for businesses. This adds another layer of complexity for foreign firms operating in Hong Kong, which are already grappling with regulatory uncertainties under the security laws.
Concerns Over Activist Crackdown
The warning also cited recent actions by the Hong Kong government, such as offering bounties on self-exiled activists and blocking their access to financial services. In July, arrest warrants were issued for several activists, including former lawmakers Ted Hui and Dennis Kwok, with rewards of HK$1 million for information leading to their capture.
International media reported instances of activists facing difficulties accessing their pension funds from financial institutions like HSBC and Manulife, raising concerns that businesses may be indirectly involved in the enforcement of national security laws.
Conclusion
Despite assurances from Hong Kong authorities that the national security laws will not hinder normal business operations, the US advisory urges companies to remain cautious. The conflicting legal frameworks between US sanctions and Hong Kong’s local laws present significant challenges for foreign businesses.
The debate surrounding these security laws continues to cast a shadow over Hong Kong’s status as a global financial hub, as businesses weigh the risks of operating in a region where legal frameworks have become increasingly intertwined with national security concerns.