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. Last Updated: 07/27/2016

Hong Kong Firms Fight Subversion Law

HONG KONG -- When businessmen in this bastion of laissez-faire capitalism talk politics, they rarely find themselves siding with pro-democracy activists.

But a government plan to enact anti-subversion legislation is drawing together some odd bedfellows -- bankers and unionists, democrats and traders -- who worry the law could be used to muzzle critical commentary or information deemed sensitive.

That, they say, could wreck a vital competitive advantage Hong Kong enjoys over the communist mainland -- the free flow of information necessary for markets to function as they should.

Such fears have been accentuated by the recent resignation of a researcher, C.Y. Ho, from the Bank of China International after he published an opinion that questioned Hong Kong government policy, drawing harsh words from Chinese Premier Zhu Rongji.

"The only thing we've got going for us is our freedoms," said Bernard Chan, a Hong Kong-based editor and consultant who travels frequently to the Chinese mainland on business.

Chan said he will be more cautious about speaking out after the law is passed.

Ever since Hong Kong was returned from Britain to China in 1997, it has been required under Article 23 of its mini-constitution to outlaw subversion and other crimes, including theft of state secrets.

The government recently began putting the law together, stirring concerns that some financial information or commentary could be deemed illegal given the broad way such crimes are defined inside mainland China.

Hong Kong's leaders insist that few of the city's 6.8 million residents would be affected by the law, which they want enacted by July. State secrets would include only issues related to defense, security and intelligence, Financial Secretary Antony Leung said.

"The government is acutely aware of the importance of the free flow of information to the proper functioning of the markets," Leung said.

Some analysts say they're not worried, even though they are well familiar with the situation in mainland China, where public political dissent is banned, the media are state-controlled and national security laws often are used to quash dissent or punish whistleblowers.

"In China, you know what lines not to cross, but those lines get crossed all the time," said Andy Xie, managing director of investment bank Morgan Stanley Asia Ltd. in Hong Kong.

Still, most financial analysts contacted recently said they're not even allowed to talk about Article 23 or the political pressures that appear to have forced Ho out of the Bank of China.

He quit after issuing a research report questioning the Hong Kong dollar's link to the U.S. dollar -- a cornerstone of Hong Kong's monetary policy that some critics say is hindering the troubled economy's recovery. The bank said Ho left for "personal reasons." He was not available for comment.

Several big tycoons cozy with Beijing have spoken out in favor of Article 23.

But executives of more than 10 foreign banks reportedly told Hong Kong's Security Secretary Regina Ip this month that they feared the law could stifle the free flow of information.

The British Chamber of Commerce in Hong Kong, which represents 500 companies, warned Hong Kong could become "a much less favorable location for international business to be based simply because it will remove its regional and national uniqueness."