Hong Kong’s business professionals welcomed its home-grown security legislation, while political analysts expressed concern that it may erode the city’s uniqueness, ahead of the new law taking effect on March 23.

The city’s 89-strong legislature voted unanimously on March 19 to enact the Safeguarding National Security Law.

The move allows Hong Kong to finally fulfil its obligation under Article 23 of the Basic Law, the city’s mini-Constitution, to implement its own national security legislation, after a 2003 bid to do so was shelved due to mass protests.

But some academics have raised concerns over its potential impact on international perceptions of the Asian financial hub, as well as the manner with which the Bill was passed.

It was the fastest Bill passed in Hong Kong’s legislature since the handover in 1997. The 12-day debate and 30-day public consultation were much shorter than the timeline planned for the 2003 attempt.

Back then, the authorities catered for a combined 10 months of consultation, drafting and debate before the ordinance was expected to be passed into law. But fears that people’s rights and freedoms guaranteed under the Basic Law would be compromised resulted in the Bill being dropped after half a million Hong Kongers took to the streets in protest.

The new law punishes offences such as treason, sabotage, sedition, theft of state secrets, external interference and espionage, with sentences spanning several years in jail to life imprisonment, and can apply to offenders outside Hong Kong.

Chief Executive John Lee described the law as one that equips Hong Kong with “a stronger door and lock... to guard against people who invade our home”, making the city a bigger draw for businesses.

It complements the national security law imposed on Hong Kong by Beijing in 2020, which the leader said is narrower in scope than the new one. The domestic legislation also improves procedures for court proceedings and the handling of absconders, he said.

“We must correctly understand that there must be ‘one country’ before ‘two systems’, and the ‘two systems’ must not be used to resist ‘one country’,” Mr Lee said after the passage of the legislation.

He was referring to the “one country, two systems” framework, under which Beijing promised Hong Kong a high degree of autonomy that lets it retain its own systems unique from that of mainland China.

‘HK now more like mainland China’

Associate Professor Chong Ja Ian, a political scientist at the National University of Singapore, said Hong Kong’s past success was “based on the separateness of its system from that of the rest of the People’s Republic of China (PRC), such that it could play an important conduit that offered foreign and even PRC firms more certainty and legal protections”.

But the new law, which emphasises “one country” above “two systems”, “substantially reduces the legal differences between Hong Kong and the PRC”.

Prof Chong told The Straits Times: “That Hong Kong now becomes more like mainland China means that there is less value in basing businesses in Hong Kong.

“Without the role of a distinct space within the PRC, Hong Kong will be more exposed to the same forces of slower growth, divestment and diversification that the PRC is facing... Such dynamics were already in motion; the trajectory only becomes clearer with the new legislation.”

Professor John Burns, from the University of Hong Kong’s politics and public administration department, said that while democratic-leaning Western politicians have been “uniformly critical” about the new law, “international business people are much less critical as they want clarity and stability” that the legislation may offer.

“It would be a huge mistake to see Hong Kong as the same as the mainland now, as Hong Kong still has more autonomy,” he said.

But Prof Burns said the haste with which the Bill was passed could raise questions about the legislature’s role, as lawmakers might not have thoroughly scrutinised or adequately debated opposition views surrounding vague key terms in the ordinance.

“This entire process demonstrates a further degradation of Hong Kong’s local accountability system,” he added.

Mr Lee had in February called for the law to be enacted “as soon as possible”, after pledging in October that he would see it through in 2024.

On March 19, he hailed the move as “a proud and historic moment” for which Hong Kong has awaited “26 years, eight months and 19 days”. There was a strong urgency to pass the law so that national security threats could not catch the city off guard, he said.

Western powers have spoken out against the law. The United States said the legislation could accelerate the closing of Hong Kong’s open society, and that Washington was assessing the risks for US citizens and American interests.

Britain said the move would “further damage the rights and freedoms enjoyed in Hong Kong”.

A group of 75 foreign parliamentarians and public figures from jurisdictions that include the US, Canada, Britain, the European Union and South Korea jointly expressed “grave concern” over the new law.

Other Hong Kong-based political analysts contacted by ST declined to comment on the new law, citing fear of backlash over their views.

“Already, the room for free expression and independent media has significantly shrunk following the 2020 Beijing-imposed national security law,” one veteran journalist told ST on condition of anonymity.

The Beijing law made it easier to prosecute crimes of secession and allows for offenders to be tried in mainland China. The authorities say the law restored stability and closed loopholes that allowed foreign forces to interfere in a Hong Kong rocked by violent anti-government protests in 2019.

“The new domestic legislation will worsen the chilling effect among Hong Kongers, in particular for people like journalists,” said the journalist.

“One major offence in the law covers external interference, or colluding with foreign forces. Hong Kong-based foreign media may have to reassess their risk, presence and coverage here. Local institutions, too, will become more cautious in forging ties and collaborations with international organisations to avoid crossing the political red lines.”

Hong Kong and Beijing authorities say restrictions on people’s rights and freedoms under the new law are aligned with international standards, and that law-abiding citizens have nothing to fear.

The government has also amended the Bill to allow for a claim to public interest defence, after journalists expressed concern that their reporting might inadvertently lead to legal issues, but the Hong Kong Journalists Association said the scope of that provision was limited.

Cause for optimism

Hong Kong’s business and legal professionals are more optimistic.

“I am very grateful that Article 23 has finally been passed,” Ms Maxine Yao, a surveyor and news commentator for online-based opinion platform Think Hong Kong, told ST. “Now Hong Kong can have real legal protection against foreign influences.”

Citing her professional experience in Hong Kong’s real estate industry, Ms Yao said some influential foreigners or potential money launderers could negatively affect the property market through large-scale transactions.

She referenced a 2023 case where Hong Kong businessman Eric Chu offloaded a hotel, luxury homes and a half-built development at huge losses after his Vietnamese wife, Truong My Lan, was accused of masterminding Vietnam’s biggest financial scam amounting to US$12 billion (S$16 billion).

The artificially low selling prices further dampened sentiment in the city’s already-weak property market – a key pillar of Hong Kong’s economy – at that time.

Ms Yao said the new law allows lawyers handling such deals to report the cases as potential national security risks, while they were previously unable to do so due to client confidentiality.

“This is good protection for Hong Kong and will help weed out ‘dirty money’ from our property market,” she said.

Veteran legislator and lawyer Paul Tse said he welcomed the chance for Hong Kong to move on from its political turmoil of recent years.

Some foreign business leaders have previously said the cost of complying with Hong Kong’s home-grown security law could lead international investors to direct their capital elsewhere.

But Justice Secretary Paul Lam said the new law is “not intended to have any chilling effect or to inhibit any normal activities, especially exchanges with the outside world”. Rather, it is to allow Hong Kong to “focus on its development”, he wrote in a Facebook post after the Bill was passed.