HONG KONG - The business world has largely fallen in line behind China's campaign to tighten its grip on Hong Kong, including its support for a new national security law that many residents fear will hurt the former British colony's status as a laissez-faire, freethinking city.
But in the business world, many expect Hong Kong to remain a deeply profitable place for commerce, a perception bolstered by billions of dollars in new stock offerings and property deals made by Chinese companies in the past few weeks alone. In retaliation for China's push for the new law, the Trump administration and some US lawmakers have threatened to revoke the trade privileges the US extends to Hong Kong. On Monday, hours before Chinese officials approved the law, the Trump administration put new restrictions on American exports of defence equipment and some high-technology products to Hong Kong.
Those deals follow others in previous months that amounted to endorsements by China Inc in Hong Kong's future. Chinese companies are selling shares in Hong Kong in part because regulators and lawmakers in the US have taken a harder line on Chinese efforts to sell shares on Wall Street after a spate of accounting scandals. With Chinese companies looking elsewhere to raise money from international investors, Jefferies, the investment bank, has predicted nearly US$600 billion could flow into Hong Kong over the next year.
Investment bankers and dealmakers say the continual flow of new Chinese money and other efforts have helped Beijing make its case that Hong Kong will remain competitive. So far, Trump administration warnings have focused instead on trade. Removing Hong Kong's special status would subject goods moving through the territory's ports to the same high tariffs and other barriers the US imposes on mainland China. But Hong Kong's status as a trade hub has declined, and bankers say US retaliation would have little effect on their work.