In another blow to Hong Kong, the United States on Friday warned its business community of growing risks of operating there due to China‘s clampdown. Following massive protests in Hong Kong, China imposed a draconian security law on the city last year, under which several people, including businessmen, lawmakers and pro-democracy activists have been arrested.

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In its advisory, US government agencies led by the State Department told entrepreneurs that they face “growing risks” in Hong Kong.

“The changing environment “could adversely affect businesses and individuals operating in Hong Kong,” it said.

“As a result of these changes, they should be aware of potential reputational, regulatory, financial and, in certain instances, legal risks associated with their Hong Kong operations,” it further added.

Although it acknowledges that Hong Kong “retains many economic distinctions” from the mainland, it pointed to a declining climate under the national security law.

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Hong Kong, a former British colony, was handed back to China in 1997. It had agreed to govern the city under the ‘one country, two systems’ rule. According to it, Hong Kong would enjoy “a high degree of autonomy, except in foreign and defence affairs” for the next 50 years.

During the widespread protests against the imposition of the security law, Hong Kongers demanded the preservation of fundamental rights promised to the city before the handover.

Dozens of people have been arrested under the law, including media tycoon Jimmy Lai and one US citizen — John Clancey, a prominent human rights lawyer.

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In a statement, the US Secretary of State Antony Blinken said, “Beijing has chipped away at Hong Kong’s reputation of accountable, transparent governance and respect for individual freedoms and has broken its promise to leave Hong Kong’s high degree of autonomy unchanged for 50 years.”

“Today we send a clear message that the United States resolutely stands with Hong Kongers,” the US top diplomat said.

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Meanwhile, responding to the US advisory for the businesses, the office of the commissioner of the Chinese foreign ministry in Hong Kong said the United States was trying to “mislead” international businesses.

“We believe that visionary people around the world will remain clear-eyed, see through the tricks of the US side, and make the right choice,” it said.

This comes as a growing number of international companies have announced plans either to leave or reduce staff in Hong Kong. This includes the US apparel giant VF Corp.

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In a survey conducted by the American Chamber of Commerce in Hong Kong in May, it was found out that 42% of its members were considering or planning a move out of the city.