Is Hong Kong a viable place to invest, or for multinational companies to use as an Asian base? I've lived here for 20 years now, and fear that it no longer is.
I am not alone, as a couple of new data points show. Half of Hong Kongers (49%) are considering working overseas, and one-quarter (23%) want to emigrate permanently, according to the Salary Survey 2021 released today by JobsDB. Of equal concern is that 52% of respondents think the employment outlook is bleak.
It is yet another manifestation of a rot that is spreading through the financial capital of East Asia. The selective application of the law in Hong Kong by Beijing's lackeys should worry international investors, and is eating away at business confidence. Employees are obviously equally concerned.
A separate poll this month by the American Chamber of Commerce in Hong Kong, or "AmCham," finds that 42% of its members are considering or actively planning to move away from the city. A similar number (41.5%) say they are "pessimistic about Hong Kong's future competitiveness." And a lot of people want to leave immediately; 52.3% of those looking to leave aim to do so by the end of the year.
I've seen it with my own eyes. Hong Kongers are not hanging around. They are voting with their feet, since they cannot do so at the ballot box.
My wife's best friend from high school has already moved to London with her family of five. A tennis teammate of mine will within a month take his two young kids to Coventry, also in Britain, ostensibly to benefit from better schooling - the subtext being that he does not want his kids brainwashed with a "patriotic" syllabus.
The biggest concern surrounds the much-hated National Security Law forced on Hong Kong by the Beijing government, which essentially outlaws dissent. Two-thirds (62%) of those who want to leave in the AmCham poll say that this law makes them "uncomfortable." One-third (36.2%) say they fear for the quality of education their children will receive now that the National Security Law censors teaching, textbooks and force feeds pro-Communist propaganda. Same concern as my tennis friend.
Hong Kong is a famously free market, and has few restrictions on capital flows. The ease of moving money in and out of the city remains, and the Hong Kong dollar is not only freely convertible (unlike the Chinese yuan) but stable, since it is pegged to the U.S. dollar.
Those attractions remain. What is of great concern is the whittling away of freedom of speech, not to mention the use of the courts and the legal system to target people who the Communist Party of China does not like.
This is now directly affecting investors. Trading in the shares of Next Digital (HK:0282), the company that owns the city's largest tabloid newspaper, remains suspended since a trading halt put in place last Monday. That's because the newspaper, Apple Daily, is proudly pro-democracy. The authorities have frozen the assets of founder and owner Jimmy Lai, who is under investigation for violations of the National Security Law, and already in prison.
His real crime is advocating democracy, and criticizing Beijing. Yet the authorities deny that their bullying of Apple Daily, which the police raided very publicly while leading away Lai in handcuffs, is an attack on press freedom. It "has no direct relation to journalistic work," Hong Kong Security Secretary John Lee said, surely with his fingers crossed behind his back. "The action we took this time was a crackdown on behavior that endangers national security in accordance with the law."
Yeah, right. The Hong Kong government has frozen all shares held by Lai in Next Digital, as well as bank accounts belonging to three of his other companies. The authorities have warned that "a person must not, directly or indirectly, deal with" those frozen properties. Investors and business partners of any company whose executives have pro-democracy or anti-Communist sentiments could feel the same impact to their own holdings or operations.
Former Hong Kong Chief Executive C.Y. Leung, one of Beijing's most rabid lapdogs, pressured Next Digital to answer a series of questions for small shareholders, or face being sued by them. Lai, who does not hold an executive position at the company, is currently serving a 14-month sentence for "unauthorized assembly" connected with the pro-democracy protests. Essentially, he attended an anti-government demonstration that had not been approved by the government, itself a ridiculous standard in a city that is supposed to have freedom of assembly.
The authorities are preparing another assault on press freedom with a planned law outlawing "fake news." That means, of course, news that the pro-Beijing puppet government does not like, rather than news that is not true. It's the term autocrats and dictators the world over like to use, their little euphemism for media bullying and censorship.
Hong Kong's highly unpopular leader, Chief Executive Carrie Lam, would rather not read just how unpopular she or her administration is. She told lawmakers in February that "hateful and discriminatory remarks and fake news" are flooding the Internet. Chief of Police Chris Tang has singled out Apple Daily for direct criticism, saying it is "inciting hatred," and the authorities are just itching to find a reason to ban the paper. They'll find one, eventually.
There have been waves of immigration out of the city before, most notably in the runup to the 1997 handover of the city by the British to the Chinese, and a virtual tsunami is cresting.
Britain is the top destination of choice after Hong Kong's former colonial power offered the equivalent of citizenship, without actually offering citizenship, which would violate the terms of the handover agreement. Instead, Britain offers Hong Kongers the chance to move to Britain and live and work there for five years, after which they can apply for "settled status" or permanent residence, which they can then hold for another year before applying for British citizenship.
After Canada in February made it easier for young Hong Kongers to emigrate there, almost 6,000 people (5,727, to be exact) applied inside the first three months. The scheme allows any Hong Konger who graduates from a Canadian university to apply to work for up to three years. Canada will also consider young graduates with equivalent overseas credentials.
There are around 300,000 Canadians in Hong Kong. Many are the product of prior immigration in 1997, after which many newly minted "Canadians" returned to Hong Kong, secure in the fact that they now had a foreign escape hatch should conditions in the city turn for the worse.
Hong Kong was once a bastion free from Beijing propaganda, where all points of view could be expressed. Increasingly, companies as well as individuals are pressured to toe Beijing's line. For instance, the city's leading bank, HSBC (HSBC) , was forced into public support of the National Security Law, while Hong Kong's flagship airline, Cathay Pacific (CPCAF) , was forced to conduct a witch hunt of its employees to root out those who supported the 2019 pro-democracy demonstrations. Fail to comply, and Cathay would lose its ability to operate in Chinese airspace.
The attack on Next Digital and the media is expanding that kind of corporate coercion. Which company, which Beijing critic is the next target? Increasingly, Hong Kongers aren't hanging around to find out. They'd rather get out. They leave.