The disappearance of Apple Daily deals another blow to Hong Kong’s damaged reputation

Hong Kong authorities sought to distance the newspaper’s closure from what it called “normal journalistic work” and claimed the rebel and pro-democracy publication threatened national security.

Beijing responded on Friday that Biden’s comments were “baseless” and urged the United States not to interfere in China’s “internal affairs”.

The decision was “love at first sight and a reminder of the ambiguity of national security law,” said Tara Joseph, president of the US Chamber of Commerce in Hong Kong. The law prohibits any activity that Beijing considers to constitute sedition, secession and subversion, and allows Chinese state security to operate in the territory.

“It’s not just the shutdown of Apple Daily,” she told CNN Business. “This is the new normal and the change that Hong Kong is going through from its era as a post-British colony to one where it is increasingly an integral part of China.”

The government dismissed these concerns. Asked for comment, a representative of Hong Kong Secretary of Commerce Edward Yau referred CNN Business to the previous one remarks by city leader Carrie Lam.

“Do not try to accuse the Hong Kong authorities of using the national security law as a tool to suppress the media or to stifle free speech,” Lam said at a press conference Tuesday.

A sensitive period

Hong Kong has been a critical hub for foreign companies looking to engage with China for decades. While Beijing largely regulates how foreign companies do business on the mainland, Hong Kong offered them the opportunity to operate without heavy restrictions on investment and other operations.

Media organizations have traditionally had more freedom in Hong Kong than on the mainland, where Beijing state-run publications are ubiquitous and foreign media have strict rules to follow on how they employ journalists.
Tech companies also face major hurdles in mainland China, with companies like Google being shut down altogether.
But Beijing has acted aggressively to align Hong Kong since 2019, when mass pro-democracy protests erupted across the city. The National Security Law was the most obvious symbol of this tightening, raising questions about the city’s future as an international business center – especially for media or tech companies dealing with sensitive or contentious information. .

“If you have sensitive data, and if you don’t want Hong Kong police to be on your doorstep sooner or later, take your sensitive data out of Hong Kong,” said Stefan Schmierer, managing partner of Ravenscroft & Schmierer. , a Hong Kong-based law firm that advises international companies.

Some companies have already reduced their presence in Hong Kong due to political upheaval. Last summer, The New York Times moved its digital news operation for Asia from Hong Kong to Seoul, citing the potential impact of the security law. Investment advice site Motley fool and TikTok has also pulled out.
Big Tech players have also expressed reservations. Last July, Facebook (FB), Google (GOOGL) and Twitter (TWTR) said they would suspend consideration of city government user data requests.

Facebook, Twitter and Google confirmed on Friday that there had been no change in their position.

Self-censorship has also become more apparent. Last year, the German Chamber of Commerce wanted to hold a seminar in Hong Kong on national security law, but could not find a law firm willing to attend, according to Schmierer. The room did not immediately respond to a request for comment.

Kevin Lai, chief economist for Asia excluding Japan at Daiwa Capital Markets, said he has also noticed a change among his fellow analysts and economists, adding that many have been “quieter than in the past.”

“There may have been some self-censorship,” he said.

Security for some, discomfort for others

Schmierer said he didn’t expect the growing crackdown to affect everyone, adding that “it’s not like Beijing is going to kill Hong Kong business.”

“If you buy machines in China and sell them in the United States, what’s the problem with [the] national security law? ”he added.

Frederik Gollob, president of the European Chamber of Commerce in Hong Kong, echoed this sentiment.

While “in some sectors it has become more political … I don’t think you can say that for all industries and all sectors,” he said.

Yet the general malaise was not limited to media and technology. In recent months, a feeling of apprehension descended on the city, various institutions finding themselves in the spotlight.

Last December, HSBC (HBCYF) has come under close scrutiny after Hong Kong police froze the bank accounts of former pro-democracy lawmaker Ted Hui and his family after Hui announced he was going into exile.

Police alleged that Hui embezzled funds raised through a crowdfunding campaign, claiming he violated national security law by colluding with foreign powers to undermine national security.

HSBC said at the time that it must “obey the laws of the jurisdiction in which we operate”.

HSBC pushes even harder in China and India
But the incident sparked a furore among foreign politicians, and HSBC CEO Noel Quinn was called before UK lawmakers. to question in January.

The bank continued to experience tensions in Hong Kong, its largest market. This week, for example, the bank was forced to apologize to customers in the city after confusion over a reported change to its terms of service.

A notice posted by the lender, who has since been revised, said it “may not be permitted” to provide Hong Kong customers with access to online or mobile banking services outside of the city, prompting public outcry over how this would restrict customers and undermine its status as an international financial hub.

HSBC then clarified that there was “no plan to change services.”

“HSBC Hong Kong customers can continue to access banking services through online banking and mobile banking outside of [the city]”he said in a statement.” We apologize for the inconvenience caused.

The perfect storm ‘

In some ways, “we’ve had a perfect storm over the last few years,” said Joseph, the president of AmCham.

Schmierer said Hong Kong had suffered a “triple blow” of trouble, from historic mass protests in 2019 to the coronavirus pandemic and now to the fallout from the National Security Act.
Hong Kong has only one real rival for companies considering leaving

The government has also faced growing criticism of the city’s largely closed borders and strict quarantine rules, which have made international travel nearly impossible for many people.

This added to fears of a “brain drain,” according to Gollob.

“I am worried about businesses and people who are leaving in greater numbers, and probably not coming back, due to the inability to move around freely,” he said.

In some communities, the issue has become more urgent. More than 40% of expats polled by the US Chamber of Commerce in Hong Kong said they were considering leaving the city, the group said last month.

Gollob said he was more concerned with reopening the city than political tensions.

“In certain sectors of the business community, [the mood] is certainly close to despair, ”he said.

“We have a lot of work ahead of us to restore Hong Kong’s image to where we think it should be, and it is, I think, at the moment, quite a difficult job to do.”

– Eric Cheung, Jadyn Sham, Nikita Koirala, Jenni Marsh and the Beijing office of CNN contributed to this report.