In Q2 2020, Hong Kong’s GDP contracted 9% compared to the previous year. Already in recession due to the US-China trade war and pro-democracy protests, economic woes were compounded by the COVID-19 pandemic. Despite agreeing phase 1 of a trade deal in January 2020, close economic ties between the US and China, which were established under President Richard Nixon's administration, appear to be unravelling. The recent posited ban of popular social media app Tik Tok in the US, ostensibly due to security fears, and pressure from the US on the UK and Europe to boycott Huawei’s 5G network technology, are emblematic of the difficulties of doing business with China in our increasingly interconnected world. Hong Kong often finds itself in the middle of such disputes.
The protest movement of summer 2019, in which Hong Kongers took to the streets to block an extradition treaty with China and call for greater freedoms in the city, was severely diminished due to the COVID-19 pandemic and the enforcement of social distancing rules. On 30 June 2020, the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (SAR) came into effect. Its stated aims are to ban secession, subversion, terrorism, and collusion. Western powers, including the US and UK, were quick to chastise Beijing for the move which effectively curtails freedoms in the SAR. Although aimed at personal liberties, there is a worry that the law will affect Hong Kong’s attractiveness as an international business hub and economic powerhouse.
With regards to the legal market, Orrick, Herrington & Sutcliffe LLP has exited Hong Kong and closed down its offices. Chinese firm Fangda Partners continues to go from strength to strength and this year has entered the equity capital markets table in tier four and corporate (M&A) table in tier five. Elsewhere in the market, Howse Williams alumnus Kevin Bowers has setup Bowers Law with a fixed-fee only pricing structure. The Big Four are now all active in Hong Kong; in 2019, KPMG and Deloitte entered the marketplace with affiliations with SF Lawyers, in association with KPMG Law and JE Jamison & Co, respectively. EY’s LC Lawyers LLP and PwC’s Tiang & Partners continue to increase their presence in the region. And, in a blow to its banking and finance capabilities, Kirkland & Ellis has lost its banking practice head David Irvine to Linklaters LLP in London.