US warns investors over risks of doing business in Hong Kong

Written by on July 18, 2021

The Biden administration warned investors about the risks of doing business in Hong Kong, issuing an advisory that said China’s push to exert more control over the financial hub threatens the rule of law and endangers employees and data.

The advisory published Friday said Hong Kong’s “new legal landscape” posed particular risks for businesses, investors, individuals and academic institutions, among others, operating in the city.

It said those threats fall into four areas: “risks for businesses following the imposition of the NSL; data privacy risks; risks regarding transparency and access to critical business information; and risks for businesses with exposure to sanctioned Hong Kong or PRC entities or individuals.”

“Business and rule of law risks that were formerly limited to mainland China are now increasingly a concern in Hong Kong,” according to the advisory, which was issued by the Departments of State, Commerce, Treasury and Homeland Security.

The advisory is the latest salvo in a competition that President Joe Biden has called one of the defining challenges of the century, and it signals a remarkable turnaround for a city which over decades became a financial hub on a par with London and New York.

The move underscored how swiftly China’s push for more control over Hong Kong has brought an end to the “one country, two systems” approach that Beijing had promised when it took back control of the former British colony in 1997. That’s proved a death knell for the island’s independent judiciary, pugnacious media and lively protest movements.

“The situation in Hong Kong is deteriorating, and the Chinese government is not keeping its commitment that it made, how it would deal with Hong Kong,” Biden said Thursday, ahead of the advisory’s release.

Shortly before the advisory was issued, Beijing pledged a “firm response” to any action by Washington.

“We urge the U.S. side to stop interfering in the Hong Kong issue and China’s internal affairs in any form,” Chinese Foreign Ministry spokesman Zhao Lijian told a regular news briefing Friday in Beijing.

While the advisory doesn’t order companies to scale back investments or leave Hong Kong, Biden administration officials worry that major banks and other multinational businesses with headquarters in the city haven’t yet come to grips with just how much the landscape there has changed and how much risk they now face.

Credit: Aljazeera

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