From Liang Haiming
The Hong Kong Special Administrative Region government initiated a one-month public consultation on Article 23 of the Basic Law on Jan 30, proposing to enact a new “national security law” based on Article 23 which will cover five major offenses. This has prompted some foreign media and politicians to claim that any Article 23-based legislation will deal a serious blow to Hong Kong’s economy and undermine its status as an international financial center.
However, from an economic and financial perspective, the positive impact of an Article 23-based legislation may outweigh the negative effects. National security is of paramount importance to a country, and closely related to its economic development. From the perspective of the theories of division of labor, labor theory of value, free market philosophy and gross domestic product, it is evident that a Hong Kong-enacted new “national security law” is necessary for both the Chinese mainland and the SAR.
National security is a public good
Seen from the view of the public goods theory, national security can be considered a public good. For instance, by using the Article 23-based legislation, the mainland and Hong Kong can better protect national security and ensure the socioeconomic stability of the region.
Viewed through the lens of externalities theory, maintaining national security has positive effects on the entire economic system. Foolproof national security can attract foreign investors and businesses, provide a stable business environment and promote economic growth.
It can also reduce crimes, minimize the threat of terrorism, and increase investors’ confidence, thereby promoting business activities and investment.
Legislation on national security can boost the confidence of businesses and individuals on the mainland as well as in Hong Kong. An Article 23-based national security law can also provide a stable legal and institutional environment, protecting the rights of businesses and individuals, thus promoting investment and innovation.
National security is an important factor in maintaining social stability and vital to promoting economic development. Through the Article 23-based legislation, the mainland and Hong Kong can prevent and address internal and external threats and conflicts, maintaining social stability and promoting sustained economic growth.
An Article 23-based legislation will help better safeguard national security, which is necessary for boosting economic development and laying a solid foundation for the continued development of the mainland and the SAR, as well as maintaining Hong Kong’s status as a global financial center.
First, the proposed legislation would serve as a risk management tool, which is necessary because the financial market is highly sensitive to the security situation. The threats of political instability, terrorism and war can lead to market fluctuations and cause panic among investors. The proposed law can minimize, if not altogether prevent, such risks, provide a stable legal system and reduce uncertainties while stabilizing the financial market.
Second, such legislation can boost global investors’ confidence in Hong Kong’s market. On the other hand, lack of security guarantee could reduce global investors’ confidence, resulting in decreased investment and capital outflow.
Third, a new national security law could promote global financial cooperation and exchanges. In the current globalized economic environment, national security of countries is closely interconnected. As such, through an Article 23-based legislation, the mainland and the SAR can deepen cooperation with other economies, collectively address transnational security threats and help establish a more stable and secure global financial system. Such cooperation in turn could promote cross-border investment, trade and financial flow.
And fourth, such legislation would contribute to financial stability. An Article 23-based law can minimize the security threats to the financial system and maintain the stability of the financial market, while safeguarding the interests of financial institutions and investors. –The Daily Mail-China Daily news exchange item
