From China Law Blog, December 1:
I recently had a nearly two-hour conversation with a Beijing lawyer friend of mine. He’s with a Chinese law firm, and our talks often involve exchanging insights about our respective countries—both of us aiming to better understand emerging trends for our law firms’ future focus. I value these discussions highly as they enrich my understanding and occasionally challenge my assumptions.
During our call, we touched upon a variety of topics, but Hong Kong did not come up, except when we reflected on a past deal we worked on together.
When I got off the phone it struck me that we had not discussed Hong Kong because it doesn’t much matter anymore. Hong Kong seems to come up only when a PRC manufacturing company directs one of our clients to pay indirectly by paying to a Hong Kong company. See Paying Chinese Suppliers in Hong Kong for why this is a bad idea.
In August 2019, in what now seems like an eternity ago, we published Hong Kong for International Business: Stick a Fork in It, declaring what we saw as the end of Hong Kong as we knew it. At the time, what we said was incredibly controversial, and I received more hate comments, hate mail, and mockery for that post than for pretty much all other posts put together. One email from a Hong Kong lawyer stands out. He called me “a liar, a moron, and a know-nothing” and assured me I’d be proven wrong when Hong Kong’s status remained intact. Another
Others, however, praised our candor. One comment stuck with me: “I don’t know why it is that this blog is the one that always seems to be the one to say what everyone is thinking, but it is exactly that that puts this blog at the front of my reading list every morning.” My response was simple: “We’re not tied to China in the way many others are.”
We’ve always aimed to provide objective analysis, always doing our best to view issues through a fact-based lens, regardless of the region in question. This approach helps us maintain a balanced perspective whether we’re discussing Hong Kong, Mexico, or any other locale.
Looking back, the transformation in Hong Kong’s role as an international business hub has been profound, aligning with the observations we shared years ago. The territory’s economic and regulatory landscape has notably shifted:
- Hong Kong’s Economic Decline: Continuous retail sales decline and economic contractions reflect deeper systemic issues. See Hong Kong October retail sales fall 2.9% y/y.
- Financial Crime Concerns: The increasing focus on Hong Kong by U.S. lawmakers regarding financial crimes like money laundering is troubling. See Hong Kong Is Becoming Hub for Financial Crime, U.S. Lawmakers Say. My law firm’s internet fraud litigators are well-known for handling huge butchering the pig scam cases, and in nearly all of them, the stolen funds eventually go to Hong Kong.
- Shift of Assets to Singapore: With $4.1 trillion now managed out of Singapore, the financial sector’s preference is clear.
- Exodus of Foreign Firms: The implementation of the National Security Law in 2020 accelerated the migration of businesses to more stable environments. See e.g., Hong Kong’s legal exodus leaves law students with few places to go.
Diminished Autonomy: The erosion of legal and operational autonomy in Hong Kong has significantly impacted international confidence. See e.g., The United States Government’s Hong Kong Business Advisory. Or to put it more bluntly — and as I’ve heard so many say, “now that that Hong Kong is truly China, who needs it?”
The implications for international businesses are clear, and my role as lawyer is to help my clients navigate these changes per the following....
....MUCH MORE
Hong Kong: "How China strangled its golden goose – and paid a terrible price"
It's deliberate. Beijing has planned on bringing Hong Kong to heel since 2012 and possibly since 1997....
Hong Kong’s Demise
It appears that one of Beijing's options is to let Hong Kong die on the vine and wither away as a business center, with Shenzhen, Shanghai and even Hainan island assuming some of the various roles that Hong Kong has played over the years.
And if HK is no longer an entrepôt and the gateway to China it faces the possibility of becoming a colonial backwater but one that is so overbuilt it ends up as an urban hellscape. Imagine this:
From China Law Blog:
Hong Kong’s Demise
This blog has not minced words when it comes to describing the grim situation in Hong Kong, which, as one of my former colleagues at the State Department puts it, “will get worse before it doesn’t get better.”....
Hong Kong: "Where Have the Traders Gone? A $4 Trillion Market Is Stuck in a Rut"
