Name: Eastworld Spotlight: The “new normal” for businesses in Hong Kong
Uploaded: 2020-07-16
Duration: 10 min 55 s
Description: American Chamber of Commerce in Hong Kong’s Tara Joseph shares concerns voiced by the business community over the new national security law imposed by Beijing.

[SOUND EFFECT] CLAY CHANDLER: Tara Joseph is the president of the American Chamber of Commerce in Hong Kong. She's joining us today from Washington, DC to talk a little bit about Hong Kong and the American business community's reaction to the new National Security Law that's been imposed in Hong Kong. Tara, thank you for joining us. TARA JOSEPH: Thanks for having me. CLAY CHANDLER: So we have this new security law, and I guess my first question is just generally, is this different? I mean what's new about all this? TARA JOSEPH: It is different, and people are calling this now the "new normal" in terms of the National Security Law that's been passed. In my view, it's anything but normal in terms of what we've been used to in terms of how we've lived under One Country, Two Systems in Hong Kong. If you look at just the values of the American Chamber of Commerce, the values are to foster trade between the United States and Hong Kong, that's our main mission. But it's also rule of law, transparency, and free flow of information. And also to help and promote Hong Kong as an international business center. The new National Security Law brings a lot of issues to the floor in terms of those values, and it's a big change from how Hong Kong has operated before. There are areas that companies haven't had to deal with before that they may have to contend with, and they'll be looking at areas like data security, about what their employees say, about what does it mean to have foreign collusion. A lot of areas where people didn't feel uncomfortable before in what was a dynamic gateway city. So it's a different tune, for sure. CLAY CHANDLER: This is actually the second survey that you've conducted about the new National Security Law. Talk to us a little bit about some of the headline findings of what AmCham members told you. TARA JOSEPH: This survey is interesting in that the level of concern since we did our original survey a month ago, the level of concern has risen with the enactment of the National Security Law. So 3/4 of those that we surveyed were remotely concerned or very extremely concerned about the new National Security Law. The main reasons were the ambiguity of the law. Another aspect is there is a feeling that parts of this National Security Law undo the rule of law in Hong Kong, which is actually the key and the main factor while many international companies operate in Hong Kong. CLAY CHANDLER: In terms of what this means for what business does with capital and their assets, their people in Hong Kong, what did we learn from the survey? TARA JOSEPH: That's the interesting side of it is that more than half said they weren't planning to leave Hong Kong yet. There's so much going on in the world right now between the US-China geopolitical issues, a trade war, COVID, and recession, we're not exactly at a point where people are going to make snap decisions to begin with. And then there's another really important aspect of this, Clay, that people just can't figure out how to deal with. And that is there's no real replacement for Asia, for Hong Kong, in the rest of Asia. People might look at Singapore and say well, rule of law, colonial system, a system that we understand because it's in English. But actually, the size of the capital markets in Hong Kong, the flow of money that takes place here, is one of the largest in the world. Singapore can't just pick that up in a heartbeat. Shanghai was supposed to become a major financial center for the world. That hasn't happened. And Hong Kong is really important as a financial center. So this is an issue that may keep companies here for a while to come. CLAY CHANDLER: You mentioned data security concerns. I'd be interested in just hearing from you what the discussion is like about kind of hypothetical scenarios. Could you maybe walk us through the two or three hypotheticals that the people might be most concerned about as a foreign business person in Hong Kong under this new law? TARA JOSEPH: Yes so just at its base, we have especially international financial institutions here with a lot of client data. And Hong Kong is a place where there is free flow of information. People were pretty comfortable setting up their systems here, etc. Now the question is is that data at risk? We do not have the cybersecurity law in Hong Kong the way it's been passed in mainland China, but with this new National Security Law, could someone walk into a major corporation's office and say, I'd like to see that data now, please? Or is it possible for someone to actually take that data one way or another? These are issues that maybe have been thought of, but are suddenly being explored in depth and in detail. CLAY CHANDLER: There have been these very strict limits imposed on certain forms of expression. The police have indicated that protesters that carry placards that call for Hong Kong independence are in violation of the law. If you're an employer and your employees are found to be in violation of these kind of red line offenses of expression, can you forbid them as a condition of their employment not to engage in these kind of activities? TARA JOSEPH: Well, herein lies the question again with the new National Security Law. All the senses of what was right and allowed suddenly come up to question about what people can do, where you draw the line, how you draw the line, and how you're going to get into trouble, and that's what some companies might think. They have to follow the law in terms of dealing with their employees, and that could get a little bit sticky as well. I do want to point out that an interesting aspect of the survey showed how divided society is as well. While we have that clear majority who are concerned or very concerned about the new law, there is a slice of folks who feel the National Security Law was necessary because of the protests we saw last year, because of a sense that Hong Kong was no longer safe. People think this is going to bring some sort of safety to Hong Kong as well. CLAY CHANDLER: One thing that I've heard people raise is the question of sanctions. If the US Congress, the US Congress has already adopted some targeted sanctions against certain members of the Chinese leadership. If the US Congress extends that to, perhaps, mainland authorities who've have been appointed to oversee Hong Kong, banks are required not to deal with them and threatened with sanctions on the US side. How, then, do, especially financial institutions, but businesses across the board respond to that? Because the law does say very explicitly that any individuals or organizations who are supporting sanctions against China will be found in violation of the law. What do you do as a businessperson in that situation? TARA JOSEPH: It's very difficult and this puts businesses really in between a rock and a hard place, smack in the middle of the trade war and growing confrontation between the US and China. Under rules and laws where they have to look in two directions and really be careful about how they're handling different peoples' money, and maybe causing them to, in a sense, take sides based around whether they're an American company or a Chinese company. Another aspect of the National Security Law that worries people is the extraterritorial aspect of the law. Which means if you're a company operating in Hong Kong, and something happens in Hong Kong that's deemed to affect the national security of Hong Kong, your company could be liable outside of Hong Kong. Hong Kong used to essentially feel like it was no risk, a no risk zone. That's changed in the so-called new normal, and if that happened, as it has, almost overnight, it's going to take a while for people to digest it, and recognize how difficult or worrying it actually will be. CLAY CHANDLER: That's fascinating. So you're in Washington right now and have been having conversations with policymakers, people in Congress. What's your sense of what's in store for the Hong Kong issue as it figures in US-China relations? Is there a sense that people feel like they've come up to the brink and they want to de-escalate a little bit, or is this confrontation only getting started? TARA JOSEPH: I really have not heard a de-escalation at all. I think Hong Kong is fully caught up in the US-China relationship. I think there is a very strong sense here that China has stepped over its bounds in terms of Hong Kong, and encroached on Hong Kong in a way that's not acceptable. It would not be surprising to see further actions take place very soon. Sanctions on Chinese, potentially Hong Kong officials, other types of areas that take away what has been a very special economic and cultural relationship over many years. That is quite sad, and that's quite difficult to digest, especially for people like you and me, who have lived in Hong Kong for many years, for the people of Hong Kong, and for a center that's just a dynamic and amazing business city. Can we crawl back from it at this point? The jury is still out. But the way in which the US China relationship is going right now, whether it's a Trump presidency or a Biden presidency, I think it's becoming more and more difficult every day. 

Eastworld Spotlight: The “new normal” for businesses in Hong Kong

International

Businesses are concerned about the new national security law

The "new normal" for businesses in Hong Kong

American Chamber of Commerce in Hong Kong’s Tara Joseph shares concerns voiced by the business community over the new national security law imposed by Beijing.