One Country Two Systems Forfeit

"Right now, it's just an option. I don't see a mass exodus."

"It's people looking around, saying 'can I be somewhere else if I need to'?"

Evelyn Ackah, Canadian immigration attorney

"There's been an incredible increase in demand especially for Canada in Hong Kong, so much that in the middle of COVID-19, I had to double the team and the size of the office in Hong Kong."

"This is more than a spike. this is a wave."

Jean-Francois Harvey, Canadian lawyer, Hong Kong

 

"The security law allows freezing of assets for matters endangering national security, which are not specified."

"[Hong Kong is] unusual in the breadth of potential offences that 'endanger national security'."

Philip Dykes, former Chairman, Hong Kong Bar Association 

Hong Kong | File photo: Shutterstock

 

People from Hong Kong began their exodus to Canada years ago, when Britain and China agreed to hand Hong Kong over to Beijing with the proviso that it would remain semi-autonomous for a period of 50 years. That agreement took place in 1997; the fifty-year period to end in 2047. The Chinese Communist Party has since seen fit to set aside that agreement in the greater interests of complete reunification. Hong Kongers, accustomed to their brand of democracy had no wish to surrender to Beijing law and become part of the People's Republic of China.

 

The protests that gathered steam in the past several years, culminating in massive, agitated protests at the end of 2020, brought the strong arm of Beijing into Hong Kong to settle matters once and for all. Hong Kong legislators supportive of the protests were removed from office. Protest organizers and leaders were arrested. The new restrictive laws were finalized, and the Hong Kong Special Administration is history. Hong Kong, as a result, saw its highest capital outflow to Canada on record last year, surpassing $40 billion.

The report comes as Hong Kong is facing massive crackdowns from the central Chinese government in Beijing stemming from a comprehensive set of national security laws that effectively stamps out the city’s “one country, two systems” autonomous mandate in 2020. Those national security laws are firm yet ambiguously applied; someone who continues to agitate for democracy can be arrested, his goods and chattels fall into government hands, and most disturbing of all, his extended family's wealth can also be frozen; the pressure of group punishment.

Ted Hui arrested during a protest in June 2020.

Photographer: Justin Chin/Bloomberg

"As the vice tightens, Hong Kong is going to look less and less safe as a place for people to park their money."

"We haven’t reached the tipping point but none of this bodes well for the future of the Hong Kong financial system."

Andrew Collier, managing director, Orient Capital Research 

Residents of Hong Kong have moved tens of billions of dollars to Canada in preparation for thousands of Hong Kongers forging a new future there in the wake of the sweeping national security law imposed last year by Beijing, following massive protests. About $43.6 billion in electronic funds transfers flowed into Canada, reaching their highest level on record, from banks in Hong Kong, recorded by FINTRAC, Canada's anti-money laundering agency.

This represents the first evidence of a sizeable flight of capital overseas from the financial hub following the turmoil over the new security law geared to stifle dissent. Equitable Bank had seen a surge in deposits after the new law was introduced in June 2020. According to Beijing the law was implemented simply as a requirement to strengthen national security. The current outflow is of a magnitude not seen since the 2019 anti-government unrest following a now-shelved bill to allow extraditions to mainland China.

Hong Kong police had frozen accounts of several people with links to pro-democracy protests which led to concerns among residents of the safety of their assets. FINTRAC dafa is known to capture a fraction only of total legal inflows into the Canadian economy since transfers via cryptocurrencies between financial institutions or those under $10,000 are not included. But there is no question of a massive increase in overall electronic funds transfers having taken place. Outflows have gone elsewhere as well, including to the United Kingdom and Australia.

Immigration consultants, lawyers and real estate brokers providing services to Hong Kongers report a growing number of Hong Kong residents looking to begin a new life elsewhere, and Canada is a choice location for many who bring with them millions of dollars, awaiting the lifting of pandemic travel restrictions. Visa applications to Canada from Hong Kong have risen ten percent with the expectation that further capital flows are likely.

Canada will be "a booming market for new immigrants, especially from Hong Kong", causing Andrew Lo, chief executive of immigration consulting Anlex searching to expand into wealth management services in Canada. According to Mr. Lo, his firm has assisted 36 families in their emigration to Canada in the past year, each bringing with them $1.5 million on average. Canada is already a second home for many from Hong Kong from the time when their families moved to Vancouver and Toronto ahead of the British handover.

Having attained Canadian citizenship many had returned to Hong Kong, now home to roughly 300,000 Chinese-Canadians -- representing one of the larges Canadian communities abroad. Following the 2020 security law however, more Hong Kong residents plan to make their home in Canada, aided by the Canadian government relaxing the process whereby they can obtain permanent residency and work permits. Eroding rights and freedoms are cited by residents for their decision to leave Hong Kong.

 

Many look forward to a better education for their children, while many are in the process of selling their properties in Hong Kong to bring their money with them. People are concerned over the future as firmer measures brought in by Beijing to 'normalize' Hong Kong as part of China bring uncertainty to the values prized in Hong Kong. Canada is considered an option for those unwilling to remain under the firm clasp of the Chinese Communist Party. 

Globally, Hong Kong ranked second in wealth per adult after Switzerland in mid-2019, and 10th in the number of people with more than $50 million in assets, according to a Credit Suisse report

Hong Kongers anticipating their eventual move once travel restrictions are lifted and immigration processing times pick up, have chosen to move their money into Canadian accounts even before making the geographic move themselves. Based in Hong Kong, Jean-Francois Harvey who specializes in high-net-worth individuals' immigrating, has experienced a five-fold increase in clients preparing to leave for Canada who have transferred between $5 million and $10 million in the past year.