Wildel Garcia
The security law proposed by China could cause Hong Kong to lose economic, trade and position preferences to global businesses.
China on May 21 announced a Hong Kong security bill, which outlawed rebellion, secession and subversion.
The display of the HSI stock index in Hong Kong on May 22, after China announced a security bill for the special zone. Photo: Reuters
Investors immediately reacted worryingly to Beijing's plan.
Due to certain legal and political freedoms, as well as no business restrictions such as Shanghai or Shenzhen, Hong Kong is considered by foreign companies to be a stable operating site.
However, according to Nikkei's commentator William Pesek, security laws risk Hong Kong's loss of its position as the world's second free economy as a legacy of the Heritage Foundation.
More seriously, the United States last year passed the Hong Kong Democracy and Human Rights Act, which requires the State Department to review the city's autonomy each year.
Analysts at Citi Bank said that with more than 1,300 US companies operating in Hong Kong, the threat to the city's special trade status "could affect trade confidence."
The plan to impose security rules with Hong Kong was put forward by Beijing amid a wobbly city economy following last month's protests last year, the US-China trade war, as well as the impact of
One of the points of concern of the bill is the criminalization of "foreign intervention", but does not specify what is the objective of evaluation or limitation of "intervention action".
The commentator also cited the possibility that the extradition bill that sparked the protests last year could also be discussed again in Hong Kong under pressure from Beijing, causing concern for multinational companies.
Experts predict the reaction of Hong Kong residents to the security law will be intense, possibly causing a wave of protests to rise again.
Protests lasting more than six months last year led to Hong Kong's first recession in a decade.
According to Pesek, this downward trend is likely to continue after the new security law takes effect in Hong Kong, a law that US Secretary of State Mike Pompeo called "the end" with the autonomy of the special zone.
