Beijing’s newly proposed National Security Law for Hong Kong has inspired fear and uncertainty in a business community accustomed to operating in a stable and precisely defined legal environment.

Beijing surprised Hong Kong by introducing new security legislation that is fueling fear in a business community operating since 1984 under assumptions set out by the Sino-British Joint Declaration – a treaty registered with the United Nations and signed by the British and Chinese governments. 

The key characteristic of this treaty that has created the foundation of Hong Kong’s economic miracle is the promise of a «high degree of autonomy» for the city.

But such assumptions were challenged after a resolution presented at the recent National People’s Congress, introduced a new security law intended to prevent, stop and punish acts in Hong Kong that threaten national security including secession, subversive activities, foreign interference and terrorism.

«Fear Factor»

Following the introduction of new legislation, Hong Kong's business community was caught on its heels with regards to the exact implementation of the law and its potential threat to many key pillars and institutions that have upheld trust in the autonomous jurisdiction. 

«Hong Kong today stands as a model of free trade, strong governance, free flow of information and efficiency,» said Robert Grieves, chairman of the American Chamber of Commerce in Hong Kong (AmCham). «No one wins if the foundation for Hong Kong’s role as a prime international business and financial center is eroded.» 

In an issued statement, AmCham underlined «independent judiciary and freedom of assembly» as key components maintaining Hong Kong’s status as one of the world’s top international business centers, adding that top-tier talent recruitment and retention are also under threat.

Legal Uncertainty

The theme of increasing legal ambiguity as a result of growing Beijing encroachment has been expressed by leading figures in Hong Kong even prior to the current introduction of new legislation. 

Last month, Hong Kong authorities made three separate and contradicting interpretations of a key law (Article 22) that supposedly barred the central government’s liaison office from interfering in local matters. Authorities eventually ruled it legal for the liaison office to interfere, claiming that it was not a department under the central government (former Constitutional and Mainland Affairs Secretary Patrick Nip Tak-kuen was immediately transferred following his initial interpretation that the office was subject to the rules Article 22).

A letter issued by Philipe Dyke Chairman of Hong Kong Bar Association (representing more than 1,500 practicing barristers) demanded clarification and Hong Kong’s Secretary for Justice Teresa Cheng Yeuk-wah delivered the final word confirming that the liaison office was indeed not a department of the Beijing-based central government.

Legal Uncertainty (Again)

Less than a month later, Hong Kong’s legal environment is being shaken again and marred in uncertainty by the NPC’s new security law. In response to these concerns, Hong Kong chief executive Carrie Lam has said that the plans to impose the new law would not affect the city’s judicial independence or its legal entities though she also separately stated that her administration would «fully cooperate» with Beijing to enact the law.

«Definition and details are really necessary to alleviate a fear factor developing in the business community,» added AmCham President Tara Joseph.

«A Beijing inspired national security law leaves open an interpretation of how such an act will be enforced. How will it affect the rule of law? Will it mean limiting online, press and personal freedoms? People may also ask whether Beijing’s concern over foreign interference adds an element of risk to foreigners living here.»