Not great timing

NatSec-era Hong Kong is becoming more like the Mainland in governance style and closer to the Mainland economically, just as China’s economy is entering a post-boom slowdown and the US is leading a backlash against Beijing’s over-production/over-exporting policies.

Following Friday’s link to a Reuters story on shippers moving operations out of Hong Kong, a couple more pieces…

HKFP talks to a local industrialist facing rising US tariffs and uncertainty, and an academic…

“Hong Kong is in a tougher spot. The US no longer treats it as separate from mainland China, which strips away any trade advantages it once had,” said Julien Chaisse, an international trade expert at the City University of Hong Kong (CityU).

“That’s not just symbolic because, I would say, it makes Hong Kong an even bigger liability for businesses that rely on access to North America,” Chaisse told HKFP. “Some will rethink their presence [in Hong Kong] or at least hedge their bets elsewhere.”

And more from Reuters…

…Hong Kong has a separate rule of law from China and its own financial policy-making autonomy, but some lawyers, diplomats and business executives say that after China’s imposition of a national security law in 2020, the city was essentially being viewed by the West as fully under the control of Beijing.

This has hurt it economically and cast doubt on whether it is a jurisdiction separate from mainland China with global best practices, they said.

…”Hong Kong is being increasingly lumped in with China … that’s a fact,” said a board member of a leading Hong Kong business family with interests locally and overseas, including retail and property.

“To a degree, this has raised the complexity and cost in our business dealings. We have to live with this.”

According to a person with knowledge of the matter, CK Hutchison had initially tried to fight to keep its two main port businesses in Panama after Trump alleged the Panama Canal was under Chinese control.

But later, Hutchison opted to cash out and mitigate longer term reputational risks.

“People in the Hutch empire are running for cover,” said the person with knowledge of the ports negotiations, who declined to be identified due to the sensitivity of the issue. “This is a nightmare situation and we’ve never dealt with anything like this before.”

…Others, including business executives and lawyers, agreed that Hong Kong is increasingly being viewed as similar to other Chinese cities, even though officials like the territory’s financial secretary, Paul Chan, say the city remains a global hub for the free flow of capital, goods and people.

“The market is based on expectations,” said Vera Yuen, an economics lecturer with the University of Hong Kong business school. “The valuation (of Hong Kong) is based on what they (the world) think, not what you claim.”