Hong Kong companies rethink risks as new challenges arise, says Amcham president
Hong Kong companies face a “new normal” as the city faces challenges on multiple fronts, according to the president of the American Chamber of Commerce in Hong Kong.
The ongoing Covid-19 crisis as well as the recently passed national security legislation and difficult trade relations between the US and China are among the top concerns of companies based in the Asian financial center, Tara Joseph told CNBC’s Street Signs Asia. on Thursday.
“Hong Kong has seen a new normal in the past two years. We are dealing with Covid. We have many changes regarding Hong Kong, which is politically at a turning point,” she said, referring to the new National Security Act China was adopted for Hong Kong last year and the overhaul of his electoral system last month. The changes could further limit the city’s freedoms, say critics.
Joseph added that the friction between China and the US made these factors even more complicated – in terms of trade and politics. “All of these items are top of the list for businesses here,” she said.
Take, for example, sanctions between the United States and China. These increase the risk of being here.
President of the American Chamber of Commerce in Hong Kong
The world’s two largest economies signed a first-phase trade agreement in January that eased some of the tensions of the past two years.
While the Biden government has promised to use “all available instruments” to counter China’s unfair trade practices, it has yet to clarify how it will deal with tariffs on China that have harmed businesses in both countries.
“Take sanctions between the US and China, for example. They increase the risk of being here,” noted Joseph. She said Hong Kong companies “may be rethinking, assessing and re-measuring risk here as well.”
While Hong Kong was able to contain the Covid-19 pandemic, Joseph argued that the city’s restrictive travel and strict quarantine measures have led companies to reassess their presence in the city over the long term.
“The Covid problem and the quarantines take it on a personal level,” she said. Those who live in Hong Kong have not been able to visit their families and “this is becoming a personal problem”.
Philippe Lopez | AFP | Getty Images
“People there are asking how long can they stay here. And whether it will be effective for them to be here in the long term,” said Joseph.
This could damage Hong Kong’s reputation as a global financial center.
“Hong Kong is also seen as a place to connect with travel and move around freely. And if we can’t, it will hurt the city’s competitiveness – a growing concern,” noted Joseph.