China’s Iron Grip Spells The End Of HK’s Status As Financial Hub
HONG KONG – The new national security law in the territory could spell the start of the end for Hong Kong’s status as one of the top financial and trading hubs in the globe, according to a commentary published by The Heritage Foundation on Monday (7 December).
While some offshore firms are adopting a wait-and-see approach, several tech companies have already started leaving the territory, particularly those that gather and manage data as they are susceptible to the new legislation.
“For example, Naver, which owns South Korea’s largest internet-search engine, is relocating its data centres from Hong Kong to Singapore,” wrote The Heritage Foundation’s Research Coordinator Patrick Tyrrell and Carter Beardsley, Fall 2020 member of the group’s Young Leaders Program.
“Measurable AI, which generates data analytics by tracking transactional email receipts, is accelerating plans to relocate parts of its operations to Singapore and New York. And software company Oursky is now planning to set up offices in the United Kingdom with plans to expand in Japan.”
Additionally, international news agencies are evaluating if they need to exit Hong Kong due to a significant loss of media freedoms. This is because the new national security law limits the freedom of speech and allows the government to punish journalists if their publications are detrimental to China’s national interests.
For instance, The New York Times stated that it’s transferring part of its Hong Kong operations to Seoul, while The Wall Street Journal is mulling to relocate as well. Many of the world’s biggest news agencies have regional offices in Hong Kong and likely have related concerns.
After China’s implementation of the new national security law in the territory, a poll carried out by the American Chamber of Commerce (AmCham) in Hong Kong of its 154 members showed that 36 percent of them intend to transfer assets, capital, or operations elsewhere.
Meanwhile, Singapore, which is ranked as the first among 180 countries in the 2020 Index of Economic Freedom by The Heritage Foundation, is considered as the most attractive place to relocate to in Asia Pacific for firms transferring their operations from Hong Kong.
“In addition to economic freedom, Singapore offers an enviable operating environment, given its highly developed infrastructure, ease of doing business, and quality of life. Other regional contenders that have earned high ranks in the 2020 Index of Economic Freedom include New Zealand (ranked No. 3), Australia (No. 4), Taiwan (No. 11), South Korea (No. 25), and Japan (No. 30),” stated the authors.
They also noted that some financial firms are well-positioned to relocate their operations from the Chinese territory. Citigroup and UBS have set up regional offices in New Zealand years ago. BNP Paribas, Bank of America, and Citigroup also have a sizeable presence in Singapore, a country well-prepared to provide a stable environment.