Hong Kong’s Startup Culture Threatened by Political Turmoil

The loss of the region's special status from the US could have a big impact

Hong Kong
Hong Kong, seen from above.
Diego Delso/Creative Commons
By Tobias Carroll / July 6, 2020 6:00 am

In the last year or so, Hong Kong has been the site of a number of protests calling for greater democracy and self-determination for the region, amidst concerns that the Chinese government will exert more control over it. The protests have had an impact on several things far from Hong Kong’s borders, including a controversy late last year involving the NBA.

This month, things have taken a significant turn, with China imposing a new security law on Hong Kong that allows the central government a much greater degree of control. The days of the “one country, two systems” principle seem to be at an end, which has alarmed many observers — to say nothing of the residents of Hong Kong. In an article for The New York Times, Vivian Wang, Elaine Yu and Tiffany May explored the changes that Hong Kong is presently facing. This includes a dramatic crackdown on dissent:

The security law criminalizes “subversion” of the government, a crime that the police say encompasses speech such as political slogans.

The passage of the security law has led the United States to revoke Hong Kong’s special status. A statement from Secretary of Commerce Wilbur Ross noted that “Commerce Department regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended.” The statement went on to call for the Chinese government to reverse the security law.

In an article at TechCrunch, Catherine Shu writes that the loss of Hong Kong’s special status could have other adverse effects on a region already reeling from the effects of COVID-19. Specifically, it puts Hong Kong’s distinctive startup culture in an uncertain position going forward:

In conversations with TechCrunch, investors and founders said they believe the region’s ecosystem is resilient, partly because many companies offer online services — especially financial services — and have already established operations in other markets. But they are also keeping an eye on further developments and preparing for the possibility that key talent will want to relocate to other countries.

While not as severe as the loss of basic freedoms, the possibility of Hong Kong facing another blow to its economy is worrying. It’s another unsetting aspect to an ongoing crisis.

Subscribe here for our free daily newsletter.

Daily Brief

News From Around the Web

August 11, 2020 August 10, 2020