Home Business China fear: Why Chinese elite fear Hong Kong law changes to investments

China fear: Why Chinese elite fear Hong Kong law changes to investments

The fears are based on Beijing’s legislation on Hong Kong, which would make undermining Chinese authority illegal. The proposed law has led to international condemnation from Western leaders. Hong Kong has been a centre of international trade for China, where wealthy investors from the mainland invest often. But China’s decision to move ahead with a national security law, which has raised the threat of sanctions from Washington, has some mainland investors unsure about the city’s fate as a commercial hub, and how this may affect their assets.

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Sam Tao, a senior sales manager in Shenzhen, near Hong Kong, said to the South China Morning Post: “I am very worried about developments in Hong Kong because I work for a Hong Kong-funded enterprise in Shenzhen and the company pays my income in Hong Kong dollars.

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“I think the current conflict between China and the US is a head-on collision that cannot be resolved in the short-term.

“Hong Kong is sitting at the centre of the vortex and so are capital and investments in the city.”

READ MORE: Brexit shock: How tensions between USA and China may affect UK’s trade options

CHINESE investors have expressed fears that the new security law imposed onto Hong Kong will damage (Image: PA)

China has enforced strict capital controls onto mainland residents, seeing them ban direct investment into overseas stocks, financial products or property.

However, it is an open secret that many mainland Chinese have deep financial connections with Hong Kong.

They often have Hong Kong bank accounts, purchase Hong Kong insurance policies, and buying or renting property in the city.

Many use these connections as a springboard to invest in foreign markets: According to the Insurance Authority of Hong Kong, last year, a quarter of new insurance policies in Hong Kong were sold to mainland visitors.

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China has enforced strict capital controls onto mainland residents, seeing them ban direct investment into overseas stocks, financial products or property. However, it is an open secret that many mainland Chinese have deep financial connections with Hong Kong. (Image: PA)

According to the Hong Kong stock exchange, mainland Chinese surpassed British citizens in 2018 to become the largest non-resident investor group in Honk Kong stocks.

Liu Anliang, and his friends who are all investors and exporters in Guangdong province, southern China’s manufacturing hub just north of Hong Kong, told SCMP about how he has concerns about what will happen to Hong Kong trading.

Liu said to the outlet: “We all have the same question: how long will our investments and money be safe in Hong Kong if the city loses its special trading status?

“In the past, we thought it would be safe to invest our wealth in Hong Kong properties and to deposit it in Hong Kong banks no matter how the domestic market and policies changed for private businesses like ours … now we are starting to have doubts.”

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Hong Kong has been a centre of international trade for China, where wealthy investors from the mainland invest often. But China’s decision to move ahead with a national security law, which has raised the threat of sanctions from Washington, has some mainland investors unsure about the city’s fate as a commercial hub, and how this may affect their assets. (Image: PA)

It comes as US President Donald Trump announced his plans to strip Hong Kong of its special trade status separate to China.

It has prompted Liu to begin making contingency plans on their foreign investments.

He said to SCMP: “After discussing it among ourselves, we think we need to prepare, like exchanging a large part of our Hong Kong dollars into US dollars as soon as possible, and then investing most of them in US stocks or US bonds.

“Some are considering selling their Hong Kong properties.”

It comes as US President Donald Trump announced his plans to strip Hong Kong of it’s special trade status separate to China. (Image: PA)

Other Hong Kong developments have concerned foreign investments: The UK has offered nearly three million British National Overseas passport holders in Hong Kong right to remain as China begins to implement its new law.

China on Wednesday has told Prime Minister Boris Johnson to “step back from the brink” and “stop interfering” in China’s affairs.

Johnson had said earlier that he would have “no choice” but to offer UK visas to millions of Hong Kong residents if China pushed ahead with national-security legislation that critics fear would remove freedoms in the semiautonomous region.

Writing in The Times of London, the prime minister said the legislation would “dramatically erode” the autonomy of Hong Kong, which enjoys judicial and political independence from mainland China.

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