HK National Security Law perceived positively by foreign investors: finance chief
The national security law legislation in Hong Kong will help the city return to political and social stability and is perceived positively by international investors, said Hong Kong's Financial Secretary Paul Chan.
The foreign investors Chan engaged with said social stability, law and order are very important for an international financial center and investors, and they believe the new legislation will help do that.
Hong Kong's economy shrank by 8.9 percent year on year in the first quarter this year, the third straight quarter of contraction for the city, and the worst since records began in 1974. This came on the back of riots that started in March last year, which disrupted a wide range of business activities, coupled with the coronavirus outbreak this year.
China's top legislature approved the resolution to make a national security law for Hong Kong last week to help the region restore peace, yet this is seen by some as a damaging blow to the city's autonomy and therefore undermining its business advantages. It's a view Chan doesn't agree with.
Chan said that the legislation might stir up some investment sentiment, and it is important to explain what the national security legislation entails and its objective. After the decision of the legislation was approved, Chan talked to different stakeholders. When they understand the objective of the legislation, they feel more at ease, said Chan.
"Although they are waiting for the details to be announced, overall, they see the need for this legislation in order for HK to return to a safe society with social stability."
U.S. sanctions will hurt itself more
After the resolution was passed, the U.S. President Donald Trump threatened to cancel Hong Kong's special trade status with the U.S., a move Chan called an empty bullet, adding its influence on Hong Kong will be minimal.
In terms of trade, Chan said it's actually the U.S. that has been benefiting from trade with Hong Kong, explaining "the U.S. has been registering successive surplus year-over-year with HK."
"The overall surplus to the U.S.' favor with Hong Kong is close to 300 billion HK dollars in the past decade," said Chan. He further specifies that goods manufactured in HK and exported to the U.S. only accounts for 0.1 percent of HK's total export.
As a service economy, manufacturing only accounts for about one percent of Hong Kong's GDP, and the U.S. has a very substantial presence in the professional service sector in Hong Kong, such as the financial sector.
"The U.S. has very substantial business interest in HK, so I will urge them in contemplating any action against HK, to evaluate not just impact on HK, but also the impact on themselves," said Chan.