Dr Bob Seely is chair of the APPG on Russia, and is MP for the Isle of Wight.
Since Beijing imposed the National Security Law (NSL) – which criminalises virtually any activity the government doesn’t like – in Hong Kong on 30 June 2020, British citizen Jimmy Lai, founder of Hong Kong pro-democracy newspaper Apple Daily, has been repeatedly targeted.
In August of that year the Hong Kong police raided Apple Daily’s offices and arrested Lai, who was released on bail. On 3 December, he was taken back into custody and once again released on bail for questionable fraud charges related to the newspaper’s building lease.
However, on 31 December, Lai’s bail decision was overturned by the Hong Kong Court of Final Appeal, when he was last detained; today marks his 1,000th day in prison.
As Lai spends today behind bars, businesses must take seriously the threat posed by the Chinese Communist Party in Hong Kong. Apple Daily is just one of many pro-democracy companies that has been raided and forcibly closed by the Hong Kong government. This is likely to be the fate of not only pro-democracy businesses but any company that does not align with its agenda.
In March, the Atlantic Council underscored the increasing risk of doing business in Hong Kong:
“The National Security Law has been used to target multiple institutions seen as politically challenging to Beijing, including independent newspapers, media outlets, and pro-democracy politicians. It also has limited activities of the press, the publication and distribution of books and films, and the flow of information in other formats, including those essential to the operation of a modern commercial and financial system.”
Where the free flow of information is cut off, so is financial freedom. Government policies in the international financial centre the world once knew are not only dictated by the Hong Kong government, but higher authorities in Beijing. And business in the mainland is far from usual.
Earlier this year, Beijing shut down foreign businesses that deal with sensitive economic data including Capvision, Mintz Group, and Bain & Co. What were reportedly anti-spying raids reflect a larger pattern of growing tension between Chinese and Western companies. China’s Anti-Foreign Sanctions Law allows Chinese institutions to freeze the assets of individuals or entities who have implemented “discriminatory restrictive measures” that contradict China’s interests.
This, combined with vague regulatory laws, geopolitical tensions, and data security breaches, is of deep concern to Western businesses.
Under the NSL, a similar trend is bound to happen in Hong Kong. Article 29 of the NSL states that a person who “engages in activities such as requesting, conspiring with, receiving instructions etc., from a foreign country” commits an offence under the law.
As the Asian financial hub continues to face a heavy-handed crackdown, this will most certainly impact foreign businesses.
Already, there have been cases where the commercial operating environment has been jeopardised and data security compromised, with no independent judicial system to hold anyone to account. Companies have started moving to more politically-neutral spaces such as Singapore, and financial analysts and investors have fled due to the authorities’ ongoing assault against free speech.
The next threat to all of us is the potential shift from Hong Kong’s US currency peg to the Chinese renminbi peg, which would stifle the free flow of capital in and out of Hong Kong from all over the world.
For now, Hong Kong’s current playbook targets pro-democracy businesses and business owners. Lai is the example. After his offices were raided once again in June 2021, five other Apple Daily executives were arrested, and the company’s bank accounts were frozen on suspicion of violating the NSL.
Arbitrary arrests, raids, and the freezing of executive accounts are real and serious possibilities for businesses that continue to operate in Hong Kong. Today it is a 75-year-old British citizen behind bars. Who will it be tomorrow?