Early this month, Hong Kong-based shipping conglomerate CK Hutchison announced it was delaying signing a deal to sell ports it owns near the Panama Canal to BlackRock. The announcement comes as regulators in mainland China are expected to launch an antitrust investigation into the deal. The investigation, combined with media pressure, is part of a campaign by the Chinese Communist Party (CCP) to pressure businesses into making deals the CCP likes. These efforts further demonstrate that Hong Kong can no longer be trusted as an international business hub, and American businessmen would be wise to seek other options.
To better understand this situation, it is important to know more about Hong Kong and its relationship to the mainland. Hong Kong was a British territory before 1997 and, as a result, developed a culture of economic and political freedom thanks to the work of people like Chris Patten, the last colonial governor of Hong Kong. As a part of the handover agreement between Britain and Hong Kong, Beijing agreed to give Hong Kong a significant amount of autonomy for the next 50 years as a Special Administrative Region (SAR). This included things like free markets and the rule of law. Unfortunately, the CCP began to violate this agreement almost immediately and has spent the past twenty years cracking down on the freedom of Hong Kongers. The interference has been so significant that several groups, both private and public, have stopped regarding Hong Kong as an autonomous entity.
These crackdowns appear to be part of political reforms that Beijing claims have no impact on Hong Kong’s status as a financial hub. However, in the eyes of the Communist Party, everything is political, including the economy. One illustrative case is that of Jimmy Lai and his Apple Daily Newspaper. Lai himself has been convicted for his pro-democracy activity and faces life in prison for violating Beijing’s National Security Law. However, Next Media, the parent company of Apple Daily, had its bank accounts frozen without due process. This would sully Hong Kong’s reputation by exposing that businesses can no longer receive the fair trial they have come to expect in Hong Kong. In a half-hearted attempt to cover this up, Hong Kong’s government has accused Next Media of fraud and frozen its bank accounts without a court order or a conviction.
Lai was a rarity amongst the billionaire class of Hong Kong. Many of his fellow billionaires and entrepreneurs chose to stay silent throughout the protest movements that have sprung up throughout the years. Many believed that by staying silent on politics, they could avoid the CCP’s wrath and continue making money. That dream is going up in flames as the CCP is turning up the pressure on Li Ka-Shing in the aftermath of the deal to sell his company’s ports near the Panama Canal. At one point in time, Li would have been free to run his companies how he sees fit. In today’s brave new world, an otherwise ordinary business deal that disadvantages the CCP can now be viewed as criminal and treasonous.
So why does this matter? Despite all the changes in Hong Kong over the years, it remains an important hub for international business. In fact, of the almost $4 trillion foreign investment there, 68% of it comes from countries outside of China. That means that businessmen from Britain, mainland Europe, and all over the world continue investing in China. Like Li, they believe that Hong Kong is a safe bet and they can escape the crosshairs of the CCP. However, what happened to Jimmy Lai and what is happening to Li Ka-Shing could happen to anyone. If billionaires like Lai and Li aren’t safe, who is?
The danger isn’t limited to Hong Kongers and mainland Chinese; foreigners are also at risk. According to China’s National Security Law, passed in 2020, non-citizens are liable if they are found to undermine the authority of the CCP and could face life in prison, even if such violations took place outside of Hong Kong. So not only are the property and companies of international businessmen at risk, but their lives are as well.
For decades, Hong Kong’s dynamism, freedom, and commitment to the rule of law have made it an economic powerhouse. Recent years, however, have seen the erosion of the freedoms that made Hong Kong great. Jimmy Lai’s imprisonment could be dismissed as the natural consequences of political dissent in a place that does not tolerate it. The case of Li Ka-Shing shows that it is no longer only political actors who should be worried. At any moment, a business deal can be deemed a threat by the CCP and the stakeholders punished accordingly. If the business community wants to maintain their businesses and their freedom, they would be wise to steer clear of Hong Kong, at least until freedom returns to the city.
Matt Cookson is a contributor and was a Middle East History and Policy Fellow with Young Voices. He also works in the supply chain for a U.S. Defense Contractor. His commentary has appeared in the Mises Institute, Real Clear Politics, the American Thinker, Providence Magazine, China Source, and the Idaho Freedom Foundation. You can follow him on X @MattCookson95.
