Friday, December 20, 2019

[EJinsight] Erosion of freedoms, not US law, that investors will fret about

When US President Donald Trump officially signed the Hong Kong Human Rights and Democracy Act into law late last month, the mainland officialdom lashed out at Washington almost immediately. Before Trump cleared the legislation, state-owned newspaper People’s Daily described the bill as "a piece of waste paper”.

Beijing's fierce reaction suggests that the new law is indeed seen as a threat by China.

One key provision of the new piece of legislation is that it requires the US Secretary of State to issue certification on the autonomy of Hong Kong on an annual basis so as to justify the city's special trade and economic treatment, as an entity that is different from mainland China.

Such requirement, in fact, is already stipulated in the United States-Hong Kong Policy Act of 1992, only that this time, the Hong Kong Human Rights and Democracy Act has laid down the list of items which the US State Secretary needs to examine in a more specific and detailed fashion.

Some pro-establishment lawmakers in Hong Kong have said that such annual certification move by Washington would trigger uncertainty, prompting an outflow of capital and talents from the city, or affect the development of the innovation and technology sector in the Guangdong-Hong Kong-Macao Greater Bay Area.

In my opinion, pro-Beijing lawmakers have got it all wrong about the causality of the Hong Kong Human Rights and Democracy Act.

It is because the most fundamental concern that is prompting foreign investors to leave Hong Kong is neither the new US law nor an annual report compiled by the US government, but rather their first-hand experience of how freedoms and rule of law were being undermined in recent years.

To give one example, Chief Executive Carrie Lam Cheng Yuet-ngor has invoked the omnipotent emergency law to introduce an anti-mask rule. Also, interim injunctions have been sought to crack down on online posts at the expense of freedom of information.

Such developments are exactly the reason why foreign companies are beginning to have doubts on the issue of keeping their investments and the business operations in Hong Kong.

In other words, it is the diminishing confidence in Hong Kong’s rule of law and autonomy due to the recent events here, rather than Washington's moves to enact new Hong Kong-related legislation, that will trigger a potential brain drain and capital flight from the city.

The only way the SAR administration can hope to rebuild foreign investors’ confidence is by sending a signal that it will safeguard Hong Kong's core values, such as rule of law and freedom of information, and uphold human rights and individual liberties.

This article appeared in the Hong Kong Economic Journal on Dec 5 2019

Translation by Alan Lee


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