July 29, 2020

 As tensions between government and protesters remain high in Hong Kong, China has enacted a new national security law in response. Several opposing nations have criticized the new law, and many citizens are uncertain as to how to comply with the new law.

Hong Kong’s new national security law officially came into effect July 1, criminalizing secession, subversion, terrorism, or collusion with foreign governments. For mainland Chinese officials the law is necessary to end the year-long political protests in Hong Kong. Under the law, actions deemed against China’s national security could lead to arrests or, possibly, lifetime imprisonment. The national security law establishes a national security office in Hong Kong and allows mainland Chinese agents to conduct raids without warrants and extradite individuals to be trialed in mainland China in some cases. Since the law came into effect, authorities have arrested individuals for using protest anthems and slogans, now prohibited under the new law. Critics of the national security law fear that Hong Kong’s judiciary has lost independence, as the chief executive now has the power to appoint judges in national security cases, and Beijing’s interpretation of the law takes precedence over Hong Kong’s.


Several Nations Oppose New Law and Threaten to Impose Sanctions and Halt Trade

Several Western countries, including the US, UK, Canada, and the EU, have condemned Hong Kong’s national security law, claiming it violates the Sino-British Declaration of 1984 and highlights mainland China’s growing control over the city. The US has had the most severe response, under the Hong Kong Autonomy Act. President Donald J. Trump signed the bill July 21. It requires sanctions against officials the US identifies as contributing to the erosion of Hong Kong’s autonomy. Trump signed an executive order the same day, repealing Hong Kong’s preferential trade status, and Washington officials have suspended defense sales and restricted some technology access to the territory. Without the special economic status, Hong Kong’s trade with the US could come in line with export restrictions and tariffs placed on mainland China, potentially reducing Hong Kong’s importance as a shipping point for Chinese goods. However, any sanctions will likely target a few political elites in the country, as many US individuals and institutions have a large presence in Hong Kong. China has threatened to respond to any US actions, and Beijing could move to sanction proponents of the US law in response.

The UK has also opposed the national security law as a violation of the Sino-British Declaration of 1984 and the Basic Law of Hong Kong. London suspended an extradition treaty with Hong Kong July 20 due to concerns that anyone extradited to Hong Kong could be tried in mainland China, a likely reference to human rights activists and political dissidents. The UK has also offered 3 million Hong Kong citizens with British National Overseas status and their dependents five years of limited right to remain in the UK. Germany and France have also urged all EU member states to ban the export of tear gas and rubber bullets to Hong Kong. China’s foreign ministry has responded to the UK and the EU’s threats by warning nations against interfering in its internal affairs. Australia and Canada have also suspended extradition treaties with Hong Kong and updated their travel advisories for the territory, cautioning against travel to Hong Kong, likely to make individuals aware of the changing security situation in the city.

There are countries that have shown support for China and the passing of Hong Kong’s national security law. At the 44th session of the UN Human Rights Council, countries debated the new national security law in Hong Kong. Most of the countries supported China’s decision to enact the new law to protect its national security. These countries consisted of mostly African and Middle East nations, as well as Venezuela, Cuba, and Pakistan. The support these countries have shown China should not come as a surprise, as most of these countries have always supported China on the UN Human Rights Council.


Risks Associated with China’s New National Security Law

The development and implementation of the national security law was shrouded in secrecy and only made available to the public the day before it came into effect. It remains unclear how governments in Beijing or Hong Kong will use it to affect day-to-day operations. Compliance with foreign sanctions is illegal under the national security law, potentially forcing institutions to shed clients or face punishment from Chinese authorities. Financial institutions that conduct business with individuals under US sanctions or with ties to known anti-Chinese government entities or individuals could find themselves under increased scrutiny from Beijing and Washington, DC in the coming months. Failure to comply with US regulations may prompt fines from US officials. Concern is also rising among financial institutions that noncompliance with the national security law could lead to charges of collusion from Chinese authorities, although it remains unclear if Beijing would use this tactic given its impact on businesses in Hong Kong. However, even severing business ties with entities and officials that could face US sanctions may have negative effects, as it will likely lead to a decrease in revenue from Chinese state-owned enterprises and Chinese banks.


Data and Employee Risks under the New Law

Companies operating in Hong Kong face an increased surveillance threat and are required to comply with authorities’ requests for data and information. Certain demands by the Chinese government regarding data may cause some businesses, especially technology companies, to choose between compliance and user privacy data. Failure to protect data could see citizens lose confidence in privacy protections. Chinese authorities could also use the new law to pressure companies to reproach employees who have shown anti-China sentiment or who have supported anti-government protests and actions. This can extend to employees not just in Hong Kong but around the world, as the range of the law - as written - has global jurisdiction, applying to territories outside city. Companies that fail to comply with authorities could be fined. Alternatively, employees in Hong Kong could face imprisonment if they commit an act deemed a form of subversion or terrorism. Employees attempting to enter Hong Kong could face difficulty if they have been identified as showing support for protesters in Hong Kong, possibly being denied a visa or entry into the city. Due to the possibility of imprisonment and extradition to mainland China, countries such as Australia and Canada have advised their citizens not to travel to Hong Kong and those in the city to reconsider remaining there.


About WorldAware

WorldAware provides intelligence-driven, integrated risk management solutions that enable multinational organizations to operate globally with confidence. WorldAware's end-to-end tailored solutions integrate world-class threat intelligence, innovative technology, and response services to help organizations mitigate risk and protect their employees, assets, and reputation.