Caught In US-China Crossfire, American Companies Exit Hong Kong

American companies that had their regional offices in Hong Kong are leaving the city quickly. Hong Kong, known as Asia's financial center, is losing its appeal because of a national security campaign and economic problems.

In 2012, there were 333 US companies in Hong Kong, but now there are less than 240. The Wall Street Journal reported that the number of US companies in Hong Kong has been decreasing for four years. For the first time in 30 years, there are more Chinese companies in Hong Kong than American ones.
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In July 2021, US President Joe Biden warned American companies in Hong Kong about new laws that could affect their business. The National Security Law in 2020 allows Beijing to have more control over Hong Kong, which used to have a strong legal system that attracted foreign companies.

American companies also had to deal with strict COVID-19 rules in Hong Kong. There were also concerns about the Hong Kong dollar being tied to the US dollar. If it becomes tied to the Chinese Yuan, it could affect Hong Kong's status as a financial center.

Besides facing restrictions, American companies had to follow censorship and data security rules imposed by Beijing. As the cost of doing business in Hong Kong went up, many multinational companies started moving to other places, especially Singapore. This trend involves banks, investment firms, and tech companies.

Tensions between the US and China also hurt Hong Kong's economy. Both former President Donald Trump and President Biden took actions that made US companies reconsider their presence in Hong Kong. In August, President Biden signed an order that restricted US companies from investing in Chinese tech start-ups, including those in Hong Kong.

China responded by raiding American companies and blocking foreign executives from leaving China. They also fined a US company, Mintz, for doing work that raised national security concerns.

It has been 26 years since Hong Kong became part of China, and during that time, its freedoms have been reduced. Now, Hong Kong ranks low in terms of human rights and press freedom.

The National Security Law in 2020 led to the arrest of many pro-democracy activists, lawmakers, and journalists. Voting rights have been restricted, and freedom of speech and press have been limited. The offer of a reward for information on political dissidents also raised concerns.

These factors have led to many businesses leaving Hong Kong, making it difficult for the international community in Hong Kong.
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The number of US companies using Hong Kong as their regional headquarters has dropped from 23.5% to 17.4% between 2011 and 2021. While Hong Kong has a valuable stock market, its daily turnover is much lower than other major markets.

The Hang Seng Stock Index and the Hang Seng China Enterprises Index have both decreased by more than 11% this year. Some experts compare the market sentiment to the Global Financial Crisis in 2008.

To restore its reputation as a financial hub, the Hong Kong government has given away air tickets and introduced immigration plans tied to investments and lower stock trade taxes. However, some companies, like Vantage Data Centres and Alberta Management Corp., have chosen to open offices in Singapore instead of Hong Kong. Meanwhile, the number of Chinese companies in Hong Kong has doubled. We kindly request you to disseminate this news and provide your insights in the comments section. Thank you

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