Commentary on Political Economy

Wednesday 20 March 2024


Once a glittering financial hub, Hong Kong is facing a mass exodus. Critics say Article 23 will hasten the city's decline

Three police officers stand in a line guarding a street as protesters linger nearby.
Hong Kong's legislature has unanimously passed a new law granting more powers to the government to quash dissent.(Reuters: Tyrone Siu)

Hong Kong's legislature has passed a new security law the government says is essential for stability.

But activists have described it as the final nail in the coffin for the freedoms the city once held close.

When it was first proposed 20 years ago, about 500,000 people took to the streets in protest.

This time, there was little public opposition locally — a sign of how much the city has changed, especially since Beijing imposed a draconian national security law after the enormous 2019 protests.

Hong Kong's leader, chief executive John Lee, described the passage of Article 23 as an "historic moment".

But critics say it could further drive what appears to be a mass exodus of Hong Kongers and businesses, which could forever change this city.

What is Article 23?

Article 23 is actually part of the city's Basic Law, which came into effect on the day Britain handed back control of Hong Kong to Beijing in 1997.

It set out how Hong Kong would be governed once it was again a part of China.

The Hong Kong government's website says the Basic Law "enshrines within a legal document the important concepts of 'one country, two systems', while ensuring Hong Kong people [are] administering Hong Kong and guaranteeing a high degree of autonomy". 

But until now, Article 23 had not been passed, having always been considered a controversial part of the Basic Law.

People raising their hands
It has taken two decades to pass Article 23 through the Hong Kong legislature. (Reuters: Joyce Zhou)

When Hong Kong authorities first tried to implement it in 2003 it was met with enormous opposition — considered by some as the beginning of the city's protest movement.

The law introduces dozens of new crimes such as sabotage, sedition, the theft of state secrets and espionage, and threatens jail time up to life imprisonment for the most severe offences, including treason and insurrection.

Article 23 was shelved in 2003 in response to the protests, but Hong Kong has changed dramatically in recent years.

Why has this law been brought back after all this time?

The draconian national security law introduced in 2020 has effectively stamped out any dissent against pro-Beijing reforms in the city.

In the years since that was introduced, thousands of people have left Hong Kong.

Research suggests there are socio-political factors behind the surge in emigration in recent years.

"Trust and confidence of people in the law and the legal system influenced people's migration intention … higher levels of trust and confidence are correlated with a stronger tendency to migrate to mainland China, while lower levels of trust and confidence drove people to consider international migration," the authors of a 2022 study concluded.

Pro-democracy activists, human rights advocates and Hong Kongers in exile have expressed their dismay at what they say is a further erosion of the freedoms the city was supposed to enjoy for 50 years after the 1997 handover.

Australian lawyer Kevin Yam, who in July found out he was "wanted" and the subject of a $HK1 million ($191,824) bounty for charges of collusion, says it's a devastating development.

"I just feel sad for the people of Hong Kong that lawfare will continue unabated," he said.

"The legislators who passed this bill unanimously have shown themselves to be even more servile than their counterparts in China — at least National People's Congress votes often involve a few abstentions or 'no' votes to put up a pretence of due deliberation.

"The puppets in Hong Kong don't even bother with such a pretence."

Heavily armed police stride through Hong Kong streets set alight with petrol bombs as riots continue.
A huge protest movement took to the streets in 2019 to demonstrate against a proposed security law. (Reuters: Thomas Peter)

But authorities argue Article 23 is still needed to fill legal loopholes, while security chief Chris Tang asserts the government needs more ways to deal with espionage and foreign agents.

"Today is a historic moment in Hong Kong, a historic moment we have waited 26 years, eight months and 19 days for," city leader Mr Lee said.

"Today, Hong Kong finally completed its constitutional duty of legislating Article 23 of the Basic Law.

"We live up to the expectations of the central government and our country."

Beijing congratulated Hong Kong's government for passing the new law.

A statement from the Hong Kong and Macao Affairs Office of the State Council said it would improve security and prosperity in the city, calling it a "long awaited common aspiration" of people across China.

"To protect national security is to protect 'one country, two systems', to protect Hong Kong's prosperity and stability, to protect the interests of foreign investors, to protect Hong Kong's democracy and freedom, and to protect the human rights and fundamental wellbeing of all Hong Kong residents," the statement said.

What does Article 23 mean for Hong Kong's future?

Former Hong Kong legislator Ted Hui, who now lives in Adelaide and is also among those subject to a bounty, called this the "final nail in the coffin" for the city.

"This new law is legislated by the Hong Kong Parliament itself, unlike the national security law forced into Hong Kong four years ago," he told the ABC.

"But this time, this law is five times more draconian than the one before … I personally expect more people going to jail just for fighting for freedom of democracy and criticising the governments.

"So this is something tragic to Hong Kong."

A man in a business shirt sits on a park bench surrounded by trees
Former Hong Kong Legislator Ted Hui, who now lives in Adelaide, described the law as "tragic". (ABC News: Lincoln Rothall )

He fears this will make it easier for everyday Hong Kongers to get caught by the broad national security apparatus.

"It's very easy to be caught by this new legislation, just for criticising the government. For example, over the internet, where criticisms are not tolerated and it's easily caught by sedition and incitements to hatred," Mr Hui said.

"Traditionally, it was a minor offence, for two years imprisonment. Now they can put you in prison for a decade."

Will Hong Kong still be a business hub?

International businesses operating in Hong Kong have also been growing increasingly wary of the stronger national security rules and how these may impact their work and investments.

Bloomberg reported on Tuesday that Bank of America was cutting office space in central Hong Kong, joining several others downsizing their offices.

Andrew Collier from Orient Capital Research says he's speaking to business operators who say they're quietly moving parts of their firms to places like Singapore.

"A lot of money has been moving out of China, out of Hong Kong," he said.

"If you're talking about the larger corporates and banks, they are not that worried about their personal safety, but they're a bit worried … [if] the risk officer says [to the CEO], 'well, there's a 1 per cent chance that you could be liable for some problem in Hong Kong or China,' that's too high.

"If you're the head of a major multinational or major bank, you can't take that risk, it's too much of a security risk.

"If you're a smaller company, then maybe it's worth it, because you need to do the business. But your threat is going to be even higher there because you don't have the protection of having a big brand name."

A skyline at dusk
Some business leaders say they fear Hong Kong is losing its status as a financial hub. (Reuters: Tyron Siu )

US-based Anna Kwok from the Hong Kong Democracy Council says this is the "perfect moment" for the international community to show their disapproval of the continual crackdown on the city.

"We are also looking at how foreign companies and investors are looking into this issue and understanding how Hong Kong has changed as this global financial hub," she said.

"So even though I'm very dismayed, and honestly, very saddened by the development, because it would mean more and more people getting arrested in Hong Kong arbitrarily, I think our hope actually now relies on how the international community may band together."

The US State Department joined the likes of the UN in expressing concerns about how the law would erode freedoms in the city, and particularly over the wording of the legislation.

"We believe that these kinds of actions, have the potential to accelerate the closing of Hong Kong's once open society," US state department spokesperson Vedant Patel said.

"We're alarmed by the sweeping … provisions, laid out in their article 23 legislation. We think that this is fast-tracked through the non-democratically elected Legislative Council after truncated public comment period.

"We also believe that a lot of the phrasing and crimes that are outlined are poorly defined and incredibly vague."

Concerns have also been raised over how this will affect the media in the city, once considered a sanctuary of free press compared to mainland China.

The organisation Hong Kong Media Overseas (HKMO), which represents journalists previously based in the city who are now campaigning for press freedoms, says the legislation creates a "very low threshold for criminalising statements claimed to be false or misleading".

"Hong Kong's tolerance of free speech has now sunk to a terrifying low," the organisation's chairman Joseph Ngan said.

People taking photos of Hong Kong at sunset
Research suggests a surge in the number of people leaving Hong Kong in recent years. (Reuters: Tyrone Siu)

Mr Lee said the new law meant the city would never see "rioters hurl petrol bombs" or have the lives of Hong Kongers endangered again.

"From now on Hong Kong people will never have to experience the pain that we've experienced before," he told members of the legislative council after the bill was passed.

But Mr Hui fears people in the city he used to serve face a different kind of pain.

"Hong Kong is not a democracy, so when these laws are draconian and when these laws are abused, there's no checks and balances by the people, we can't vote them down," he said.

"We can't go on to the streets and do protests because of the crackdowns and nowadays, thousands of people are imprisoned because of having protests in the streets for freedom of democracies.

"It's coming into effect in a few days — over the weekend — so I'm expecting the rushes … I'm expecting more people to get arrested, to get arrest warrants over their heads. So it's coming real soon."


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