China’s New Legislation will Cripple Hong Kong's Global Financial Hub Status

China approved sweeping "national security" legislation for Hong Kong just a few days ago in a move that threatens the autonomy of the city, risks pro-democracy activists as well as urged international criticism. 

Furthermore, already the intensifying economic tensions amid the US and China continue to jeopardize Hong Kong’s economy, and now this new national security law proposed by China would possibly view greater controls including:

• Acts of secession
• Subverting state power
• Activities that would hinder the internal affairs of the Hong Kong Special Administrative Region (HKSAR) followed by the involvement of foreign powers.
• Organizing and carrying out terrorist activities along with other behavior threatening national security
• In addition, Mike Pompeo, the US secretary of state’s announcement that Hong Kong will no longer be seen as independent from China may perhaps undermine Hong Kong’s longstanding role as an intermediary between China and the world.

Therefore, it wouldn’t be wrong to say that the new legislation, as well as Pompeo’s comments, are enough to hurt the Hong Kong’s image as the global financial hub.

The city was expected to be benefited from the recently passed US senate’s legislation that would perhaps force almost all the Chinese companies to delist from the US stock exchange. This would create Hong Kong’s regular path for Chinese companies looking towards accessing foreign funds, a thing that would have been long provided by the city’s financial markets. 

On the other hand, Hong Kong’s currency, which is pegged to the US dollar via a currency board is something that will remain outside of Chinese government control, safeguarding at least one pillar of the Hong Kong economy. This might perhaps have substantial remunerations for the city, especially when it is already trying to deal with adamant socioeconomic challenges. Nevertheless, this would necessitate further public expenses from the superior administrative government of the region. Additionally, maintaining the currency peg will offer Hong Kong’s government sufficient opportunity in terms of fiscal benefit to deal with challenges faced by the economy.