Hong Kong, until recently an oasis of political stability in Asia, is now gripped with unprecedented regulatory and legal uncertainty that threatens its position as one of the world’s top financial hubs.
China’s recent imposition of a sweeping, but vaguely worded national security law has already begun to change the business landscape. Tech giants like Google and Facebook Inc. have suspended processing data requests from the government. Banks are struggling to figure out how to comply with the contradictions in U.S. and Chinese legal changes. Even mainland bankers in the city got a shock when China started taxing their incomes at rates as high as 45 percent, compared with 15 percent in Hong Kong.
On Tuesday, U.S. President Donald Trump stripped away certain special privileges for Hong Kong under U.S. law. The landmark decision eliminated a range of measures that allowed the capitalist city different treatment from the mainland, from preferences for passport holders to allowing access to sensitive technologies to a Fulbright scholar exchange program. And he signed a law that would punish banks for dealing with officials facing sanctions.