US Warns Companies About ‘New and Heightened Risks’ of Doing Business in Hong Kong

People walk past a National Security banner at a train station on National Security Education Day in Hong Kong on April 15, 2023. Peter Parks/AFP via Getty Images

The United States has warned American businesses, academic institutions, and media about “new and heightened risks” in Hong Kong, saying they could be targeted for their regular operations in the Asian financial hub.

The updated Hong Kong Business Advisory, issued jointly by the State, Agriculture, Commerce, Homeland Security, and Treasury departments on Sept. 6, highlights the risks stemming from a newly passed national security ordinance, commonly referred to as Article 23, which is a provision of Hong Kong’s Basic Law.

The new ordinance, which built upon similar legislation imposed by the Chinese Communist Party (CCP) in Hong Kong four years ago in the wake of mass pro-democracy protests, has already drawn criticism from the United States, the UK, and other foreign governments.

Under the new legislation, which went into effect in late March, offenses such as treason, insurrection, and sabotage now carry a maximum penalty of life imprisonment.

The U.S. advisory states that the new ordinance contains “broad and vague provisions” taking aim at activities such as “colluding with external forces” and engaging in acts related to “state secrets” and “espionage.”

“The vaguely-defined nature of the law and previous government statements and actions raise questions about risks associated with routine activities,” the advisory reads.

These activities encompass a wide range of actions, such as researching government policies; analyzing China’s economic landscape; maintaining contact with officials, journalists, and nongovernmental organizations; and managing data within Hong Kong, according to the advisory.

Businesses operating in Hong Kong could be exposed to “privacy-related risks, including electronic surveillance without warrants and the surrender of data to authorities,” it notes.

The advisory states that the expanded legal power allows Beijing and Hong Kong officials to obtain data from businesses and individuals in the city for activities that they perceive to violate “national security” or involve “theft” of a “state secret.”

The advisory also raises concerns regarding the extraterritorial reach of Article 23 amid the CCP’s transnational repression.

The advisory notes that Hong Kong authorities had already imposed arrest bounties on overseas-based pro-democracy activists even before the law was enacted.

In December 2023, Hong Kong police offered rewards of HK$1 million (about $128,000) for any information leading to the capture of five activists. They have already moved to other countries, including the United States and the UK.

These individuals, including U.S. citizen Joey Siu, are being sought under the CCP-imposed national security law, which criminalizes speech or actions deemed secessionist, subversive, terroristic, or involving collusion with foreign forces against Beijing.

Secretary of State Antony Blinken condemned this action, saying it reflects Hong Kong authorities’ “disregard for international norms and human rights in Hong Kong and the deterioration of that city’s once proud tradition of respecting the rule of law.”

“We strongly oppose any efforts to intimidate and silence individuals who choose to make the United States their home,” the top U.S. diplomat said at the time.

Chow Hang-tung (R), a leader of a Hong Kong Alliance that organized vigils marking the Tiananmen Square massacre, arrives at the Court of Final Appeal in Hong Kong on June 8, 2023. Isaac Lawrence/AFP via Getty Images

The national security law has been used to jail the city’s most vocal pro-democracy activists, including Chow Hang-tung, Claudia Mo, and Joshua Wong. Dozens of civil society groups were forced to disband, and several media outlets have ceased operations.

More than 200 people have been arrested on allegations of violating the existing security law since its enactment in 2020, with about half subsequently convicted, according to the advisory.

The advisory states that the Hong Kong government’s implementation of the national security law has resulted in “major structural changes that significantly reduced Hong Kong’s autonomy and undermined human rights and fundamental freedoms.”

In response, the Hong Kong government called the U.S. business advisory “misleading.”

The city’s pro-Beijing leaders said they want the U.S. government to stop making what they called “false and baseless accusations about the situation in Hong Kong,” according to an online statement issued on Sept. 7. They accused the U.S. government of “trying to create panic” by issuing the advisory to American companies and individuals in Hong Kong.

The State Department updated its travel advisory for Hong Kong following the enactment of Article 23, urging Americans to “exercise increased caution” because of the “arbitrary enforcement of local laws.”

Canada also issued a similar warning, advising people to “exercise a high degree of caution“ while visiting Hong Kong, citing ”the risk of arbitrary enforcement of local laws.”

In May, Hong Kong authorities charged six individuals with allegedly publishing “seditious” posts on a social media platform. It marked the first publicly known arrest under the city’s new security law.