(THREAD) Over the last few years I've had many conversations with business people in Hong Kong about how they see the growing pressure on the city's autonomy and freedoms. These chats inspired today's @FT big read (1/) on.ft.com/2AMuKwX
Pressure has come in many forms from the abductions of bookseller Lee Bo and billionaire Xiao Jianhua by mainland Chinese agents to legal interventions by Beijing and the Hong Kong govt's own creative use of vague colonial laws and administrative measures to curb opposition (2/)
Over the last couple of years, some local and international investors have admitted in private that they are becoming more concerned about the implications of Beijing's growing encroachments and the increasingly bitter political divides in Hong Kong (3/)
But the vast majority of those I spoke to in the past insisted that "local politics has nothing to do with business", arguing that the rule of law will remain intact for commercial matters no matter what happens to critical publishers or outspoken democracy activists (4/)
Some business people have even attacked myself and other journalists for "playing up" the threat to the autonomy and freedoms that, they admit, helped make the city an economic success story in many respects. They argue the problem is only one of "perception" (5/)
But something changed when my editor, @VJMallet, was effectively expelled by Hong Kong govt. Some investors who'd previously been nonplussed started to freak out. Why, I asked, was it this case (and not more egregious incidents like the abductions) that opened their eyes? (6/)
There were several answers. To some it was the straw that broke the camel's back. To other intl investors, the Mallet case resonated because they were FT readers and so this example of govt censorship felt much closer to home (7/)
More broadly, people realised that, as the HK govt keeps saying itself, press freedom is at the core of Hong Kong's success. The media is a key industry here, employing thousands of people, and supporting HK's role as an important global financial centre (8/)
And, as several foreign diplomats told me, investors were alarmed by the unprecedented nature and capriciousness of the decision to expel @VJMallet, which is the kind of retribution normally taken by the Communist govt north of the border (9/)
So investor fears seem to fall into two categories: i) that the pace of "mainlandisation" is accelerating in Hong Kong and ii) that the legal certainty that underpins Hong Kong is being threatened by the intensity of the crackdown on opposition and dissent (10/)
While there's been a marked change in sentiment, let's keep things in proportion. So far, it's mostly chambers of commerce and foreign govts who are speaking out on the record, although many more investors have raised private concerns to me, from banking to private equity (11/)
There's no evidence yet of investors running away en masse, esp with such low tax rates. But pressure on rule of law is a major added concern at a time when HK's attractiveness is declining because of v high costs, the relative economic pull of the mainland & other factors (12/)
As businesses do their long-term planning, 2047 - when One Country, Two Systems expires - is not looking that far away any more, which adds to these other existing uncertainties (13/)
What would it take for companies to up & leave? Tara Joseph of @AmChamHK says they would have to feel their data/IP were no longer safe here (which some investors have told me they already believe) or that the overall playing field is being tilted toward mainland companies (14/)
Some people have asked why HK can't just follow the Singapore model, where intl business thrives despite tight control of the media and local politics? It's a good question and many Chinese officials must be pondering the same (15/)
There are a few key differences. i) Civic freedoms have been at the heart of HK's modern success, unlike Singapore ii) Taking something away from people sparks a much stronger reaction than if they didn't have it in the first place (16/)
iii) HK is part of China and the intl acceptance of the maintenance of its freedoms and "high degree of autonomy" is vital to it retaining its crucial status as a separate trading entity (17/)
iv) Singapore is a hub for SE Asia, HK is a hub for China. So Singapore can allow relatively free debate about the economies around it. But if you can’t freely discuss Chinese affairs in Hong Kong, how can it sustain its role as a gateway to world’s biggest emerging market? (18/)
For a more in-depth look at these issues, check out the big read (19/19) on.ft.com/2AMuKwX
