Under the backdrop of the Sino-U.S. trade war, Beijing directly impacted Hong Kong’s legal protection of the rule of law by forcibly enacting the national security law and implementing it in Hong Kong on Jul. 1. Many foreign firms, technology companies and even technology talents have reconsidered whether it is worthwhile to stay in Hong Kong if it is just another ordinary city in China.

The protection of the rule of law has been damaged to the core and Hong Kong’s competitiveness to attract innovation and technology investors and talents are at stake. In spite of these, the attention of the Hong Kong government is focused only on promoting the universal testing that experts find highly questionable and on following China in implementing the health code system for monitoring people.

The overall impact of Hong Kong’s acceleration towards “one country, one system” on the communication infrastructure and information technology (IT) industry has not yet fully materialized. Nevertheless, the situation is already worrying. Some technology companies have pulled their data centers out of Hong Kong. The city is falling short of its goal of attracting global investment and R&D in innovative technology. In fact, it is very likely to be replaced by neighboring regions such as Taiwan and Singapore.

In August, the White House announced the “Clean network program” to launch five new lines of effort to eliminate untrusted Chinese companies from America’s telecommunications and technology infrastructure. The anti-Chinese initiative would mean no Chinese apps, no Chinese app stores, no Chinese cloud services, no Chinese telecoms carriers and no Chinese undersea cables. It is anticipated that Chinese operators will likely be forced out of the U.S. market. Many IT people in Hong Kong are concerned about whether Hong Kong technology companies will be next.

At the time of this article being written, it was still unclear whether Hong Kong IT companies will be considered as “China-funded.” Regardless, the Google/Facebook initiative of the Pacific Light Cable Network (PLCN), a fiber-optic submarine initially planned to span from Los Angeles to Hong Kong has been rerouted to Taiwan via the Philippines; this is an undeniable proof that exemplifies the effects of “sinicization” of Hong Kong on the development of industry development.

The U.S. Department of Justice recommended that the transnational high-capacity undersea data cable system passing through Hong Kong could seriously jeopardize national security and information security. Accordingly, Hong Kong companies have been expelled from the equation and the entire Hong Kong section has been disqualified. After the pandemic, the world is moving towards working, learning and doing businesses remotely. Originally, the PLCN connecting to Hong Kong would create enormous benefits by providing more bandwidth to increase network traffic and reduce network speed delays.

As the confrontation between China and the U.S. continues, any future plans for submarine communications cables to connect to the U.S. will probably not take the risk of passing through Hong Kong and exclude Hong Kong from participating in similar multinational projects. In due time, Hong Kong’s advantageous status as the major telecommunications hub in the region will gradually be replaced.

While Hong Kong is ousted from the communication infrastructure project connecting the city and the world, what about the high-tech trade situation? On the eve before the national security law was implemented in Hong Kong, the U.S. announced that the same restrictions applied to China will be imposed on Hong Kong, ending exports of US defense equipment and sensitive technologies to the city. As a result, U.S. exports including sophisticated computers and communication equipment, artificial intelligence, encryption technology and software, and navigation systems to Hong Kong may be subject to restrictions, affecting industries such as electronics, communications and software. The definition of dual-use technology is quite loose under “The Wassenaar Arrangement,” the global multilateral arrangement on export controls for conventional weapons and sensitive dual-use goods and technologies. Microchip and semiconductor designs or hardware and software that are used in production by the electronics industry may also be included in the interpretation.

Some people believe that even if the U.S. imposes sanctions on Hong Kong, China’s “advanced technology” can completely replace American and European technology products and services. However, the services that Hong Kong people are now accustomed to using such as mobile, fixed-line and internet services, may change after export restrictions. Due to the difficulty to source certain infrastructure and equipment, system security will eventually decrease or cybersecurity and data privacy protection will decline. The deterioration of cybersecurity may hinder the development of some scientific research, communication and medical technology in the long run.

The Hong Kong government has invested tens of billions of dollars in the past few years to establish the InnoHK initiative to develop Hong Kong as the hub for global research collaboration focusing on healthcare technologies, artificial intelligence and robotics technologies. However, due to the high-tech export restrictions imposed on Hong Kong, foreign universities may be reluctant to collaborate with the city’s higher educational institutions to avoid getting into trouble. The impact on the academic and scientific research circles cannot be ignored

The government seems indifferent to the harm directly impacting Hong Kong. In the face of geopolitical risks, companies in other countries likely will not bear the risk of being sanctioned by the U.S. Consequently, they will not continue to supply Hong Kong with high-tech products or invest extensively in data centers or R&D bases in Hong Kong.

The development of the Hong Kong IT industry has always benefited from European and American high-tech gadgets and technologies. Can it be that Hong Kong has to change from facing a global market to serving solely the Greater Bay Area to satisfy Xi Jinping’s “dual circulation economy strategy”? Recently, large Chinese technology companies have flooded to Hong Kong for their secondary listings. This shows that China relies on Hong Kong as an ATM. Unfortunately, these Chinese companies are more likely here to drain money out of Hong Kong than to truly invest capital and develop businesses.

Many technology companies have switched to invest in Singapore and Taiwan. It was reported last week that Google announced plans to build a third data center in Taiwan. Hong Kong is falling behind in its competitiveness to attract investments from technology companies in network infrastructure. There is a trend of loss of technology employment and investment from the city. The Secretary of Innovation and Technology followed the “main theme” anxiously and ignored the problem. Foreign technology companies distancing themselves from the eye of the hurricane may cause a chain reaction in the outflow of talents.

The industry is facing unrest inside and outside. Meanwhile, the government introduces the “Distance business program” that has been criticized for the administrative approval process. It is already deemed incompetent without being completely resolved. The government even imitates the mainland in implementing the universal health code system and contact tracing applications in Hong Kong. In doing so, it cooperates with certain people who urged for the introduction of technologies to monitor citizens, and violate privacy and human rights.

The use of data and technology by the Chinese government as tactics to monitor citizens is constantly “improving.” Health code, social credit code and civilization code are just different names with one ultimate motive, that is, to monitor people’s each and every move. Scoring the conduct of daily lives has turned into invisible constraints and shackles. Under the disguise of anti-epidemic control measures, the health code and social credit code are expanding and here to stay. People have to scan their codes when they go out, enter public places and use public transportations.

Beijing used the national security law to destroy Hong Kong’s precious rule of law, human rights and freedom, making the city no different from mainland cities. Not only has Hong Kong receded as a world city, it has also impacted the development of its technology industry. It is evident that the situation will only worsen in the future. Hong Kong’s “one country, two systems” exist in name only, obscuring the outlook of Hong Kong as the major telecommunications hub in the region and turning it into chicken ribs, almost valueless.

(Charles Peter Mok represents the Information Technology functional constituency on the Hong Kong Legislative Council)

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