The laws are expected to put mainland national security agencies in Hong Kong and punish dissent in the Chinese territory after a year of protests over Beijing’s influence in the semi-autonomous region.
They could also bring 100,000 Australian expatriates under the jurisdiction of mainland China’s opaque judicial system for breaches of national security for the first time.
In a sign of how sensitive the new laws have become for Australian businesses in the former British-colony, none of the big four or Macquarie, which all have interests in Hong Kong, agreed to a request for an interview this week. In a statement National Australia bank said it was continuing to monitor the evolving situation.
“We review our operational environment to mitigate the risk of services impacting our customers on a regular basis,” it said. A Commonwealth Bank spokeswoman said the bank had “no changes planned”.
Hong Kong business leaders believe HSBC, was cornered and left with little choice but to sign a petition in support of the legislation.
The territory’s former leader Leung Chun-ying told HSBC customers in May to close their account and show the bank “which side of their bread is buttered” if they failed to support the new laws. The company, founded in Hong Kong, is seen as a national icon.
The escalation followed increasing pressure on corporate leaders from Beijing in 2019. The chief executive of Hong Kong’s Cathay Pacific resigned last year after the airline was threatened by Beijing with a safety ban over staff who had participated in democracy protests. This week Hong Kong’s financial secretary announced the company will now have two observers to be the government’s “eyes and ears”.
Up to 55 per cent of HSBC’s profits come from Hong Kong and greater China. The company has more than $3.8 trillion in assets and 230,000 employees. It declined requests for comment. Hong Kong-focused investment conglomerates The Swire Group and Jardine Matheson have also backed the laws.
Australia’s banks, which mounted a push to enter the Chinese market in 2014, withdrew most of their operations ahead of the banking royal commission in 2017 as they sought to free up capital and concentrate on their core domestic operations.
Despite their lower levels of exposure, concerns remain about the longer term independence of Australian financial institutions in the city. Judicial, media and civil rights freedoms were guaranteed by the “one country, two systems” treaty signed when the territory was transferred from Britain to China in 1997.
Foreign Minister Marise Payne said she was “very concerned” by the developments and it was up to Australian companies to decide their own future in Hong Kong.
“The question of commercial safety as well is a judgment that they will also make,” she said.
The Australian Financial Review reported last week that two Australian accounting industry bodies, the Institute of Public Accountants and Institute of Certified Management Accounts, say they have been falsely represented in newspaper advertisements in Hong Kong showing they support the new laws.
China’s Foreign Ministry spokeswoman Hua Chunying accused foreign powers of stoking discord and interfering in China’s affairs.
“It serves the fundamental interests of foreign institutions and personnel in Hong Kong to establish and improve the legal system and enforcement mechanisms for safeguarding national security,” she said,
US Secretary of State Mike Pompeo on Wednesday accused Beijing of coercing the business community and HSBC of “kowtowing” to the Chinese Communist Party.
“The CCP’s browbeating of HSBC, in particular, should serve as a cautionary tale,” he said.
Pompeo’s reference to “kowtowing” was seen as a deliberately inflammatory nod to Hong Kong’s colonial history. British merchants who would show their reverence for Chinese imperial leaders by bowing their head to the floor. Trade and military disputes between the two powers saw Britain colonise Hong Kong in 1841.
In response to the laws, the US has threatened to revoke Hong Kong’s special economic status, which distinguishes it from greater China. The threats are being closely watched by business leaders with fears sanctions could trigger a capital flight out of the country.
Eryk Bagshaw is the China correspondent for The Sydney Morning Herald and The Age. Due to travel restrictions, he is currently based in Canberra.