Why internet censorship would be a fatal blow for Hong Kong PLC, not pro-democracy protesters

Why China's decision to block website and app access aimed at Hong Kong pro-democracy protesters may, instead, put Hong Kong's reputation as Asia's pre-eminent business hub at risk

Ever since the British flag was raised over Possession Point in 1841, Hong Kong has played a key role in international trade. To this day it remains the gateway to China, and the wider region, for a large number of international businesses. That's why many will be concerned by new reports of government plans to block certain apps and websites in order to disrupt long-running pro-democracy protests there.

The Hong Kong ISP Association (HKISPA) has released an urgent statement opposing such moves. If it isn't heeded, the SAR's hard-earned reputation as Asia's pre-eminent business hub could be at risk.

Protestors take to the internet

Pro-democracy, anti-government protesters have been hitting the streets in Hong Kong for nearly three months now — sometimes in their millions. Although there have been violent clashes, the majority of protesters are peaceful. They use a variety of apps to communicate, organise and share information.

Telegram has gained plenty of column inches, not least because of a major DDoS attack it suffered in June which was blamed on China. However, Hong Kong's tech-savvy citizens have plenty more tools at their disposal. Some, like FireChat — a novel app which uses Bluetooth and Wi-Fi when there's no mobile signal —  were first used in the Occupy Central protests of 2014. Reports have also emerged recently of protestors using little-known Mexican app Bridgefy, alongside platforms like Tinder and Pokemon Go, and even iPhone AirDrop functionality.

That's why HKISPA is right to say a selective ban on certain applications simply won't work. It argued that any censorship efforts would soon escalate as more and more apps and platforms are banned by the government.

"It is very worth noting that such restrictions, which would cost the society huge business opportunities and social costs, would not deter nor stop determined users from accessing their desired services," it continued. "They can still access these services through numerous VPN services available on the internet, until we finally put the whole Hong Kong behind a large-scale surveillance firewall."

What happens next?

The ISP association also claimed that the end of an open internet in Hong Kong would "immediately and permanently deter international businesses from positing their businesses and investments in Hong Kong." But how likely is this?

Hong Kong is certainly not as important economically as it once was to China. Its share of the country's GDP has fallen from 16% in 1997 to around 3% last year. However, the SAR is still a vital gateway for foreign direct investment in the People's Republic of China (PRC). Around two-thirds of the country's inward and outward FDI is channelled through Hong Kong and the island is an important mediator in Chinese global M&A deals, according to Alicia García Herrero, chief economist at think tank Bruegel.

Undermining basic human freedoms such as a free and open internet would send a chilling signal to investors and MNCs in the SAR. But with the 70th anniversary of the founding of the PRC fast-approaching on October 1, CEO Carrie Lam is coming under increasing pressure from Beijing to do something.

Will Hong Kong die?

The rumours are that she could use a colonial-era law last used in the 1960s when riots killed 50 people. The Emergency Regulations Ordinance allows the executive to bypass Hong Kong's legislature for an indefinite time, passing any regulations considered in the "public interest" — including "censorship and the control and suppression of publications … communications and means of communication."

Lawmaker and IT entrepreneur Charles Mok argued that any internet shutdown "will truly be the darkest day for Hong Kong", adding "Hong Kong will die." Is he being over-dramatic?

From 2047, the Basic Law agreed by China and the UK pre-handover will no longer apply. But the Hong Kong executive, under the watchful eye of Beijing, has arguably already done much to erode the individual freedoms supposedly protected by the SAR constitution. It tried to force through an Extradition Law which could have seen the transfer of suspects to mainland China courts controlled by the Community Party. It tried to change the national curriculum in a move protestors claimed was an attempt to brainwash children into support for the Party. And promises about direct CEO elections have been broken, in the eyes of campaigners, with China only set to allow pre-approved candidates on the shortlist.

None of these moves have directly affected Hong Kong's reputation as a stable, tolerant, business-friendly Asian city. But censoring the internet certainly could. MNCs operating in Hong Kong are already being forced to fall in line with Beijing against the protests after the Chinese government made an example out of Cathay Pacific. Risk managers and operations chiefs should be on high alert over the coming months, and look into alternative locations for their Asian headquarters.