USA warns Hong Kong government may demand business and customer data, run surveillance without warrants

Hong Kong authorities 'alarmed by unsubstantiated remarks'

Hong Kong's Chief Executive Carrie Lam has slammed a US government advisory that warns business of warrantless surveillance and the potential for forced surrender of corporate and customer data in the Special Administrative Region (SAR).

The advisory [PDF], issued on Friday US time by the US Departments of State, Treasury, Commerce, and Homeland Security, lists "Heightened Risks Regarding Data Privacy" as one of four concerns for businesses operating in the Region.

The advisory offers the following blunt assessment of the situation in Hong Kong:

Businesses face risks associated with electronic surveillance without warrants and the surrender of data to authorities.

The reason for that assessment is Hong Kong's National Security Law (NSL), an instrument that came into force on July 16th, 2020 – the same day as this advisory was published.

In a press release announcing the advisory's publication, US Secretary of State Anthony J. Blinken stated "The policies which the People's Republic of China government and the Government of Hong Kong have implemented undermine the legal and regulatory environment that is critical for individuals and businesses to operate freely and with legal certainty in Hong Kong."

The release added: "Businesses should be aware that the risks faced in mainland China are now increasingly present in Hong Kong."

The advisory states the law "introduced a heightened risk of PRC and Hong Kong authorities using expanded legal authorities to collect data from businesses and individuals in Hong Kong for actions that may violate 'national security'".

While the agencies that issued the advisory haven't seen national security used as a pretext to put the NSL into action on unrelated matters, the document suggests such overreach is possible. That potential, plus the NSL's empowerment of Hong Kong's Chief Executive to authorise wiretaps or electronic surveillance without the need for a court order, has the US worried that business data could be at risk.

Lam slammed the advisory, calling it and the press release "sweeping and totally unsubstantiated".

The Chief Executive also argued that "Hong Kong remains an open and free economy, underpinned by the rule of law and a robust regulatory regime", that the NSL is an uncontroversial instrument designed only to protect national security and respects human rights in Hong Kong.

Left unsaid is that the very introduction of the NSL was widely seen as a major change to the arrangements under which Hong Kong was returned to Chinese control in 1997, and meant that Beijing effectively gained more control over the SAR's affairs than was promised under the original "One nation, two systems" plan.

The US was critical of the NSL when it was announced and passed, and has regularly sanctioned Hong Kong officials on grounds they have eroded democracy.

The new advisory matters because Hong Kong remains an important financial centre, which China sees as a way for it to engage with global players that don't want to operate under mainland laws. Hong Kong needs its financial services industry to remain strong to sustain its economy. US criticism therefore has the potential to bruise Beijing by damaging Hong Kong's prospects – even if doing so imperils individual Hong Kong residents.

Hong Kong's government seems aware of that potential, as a second statement on the matter is titled "Malicious US attempts to damage Hong Kong's reputation as a global business hub doomed to fail". ®