China has shown it is willing to pay the economic price of suppressing Hong Kong | James Lim

Now that it has its own financial hubs on the mainland, Beijing may be prepared to risk the fate of its golden goose

Last week, the Chinese government passed a broad national security law criminalising dissent in Hong Kong. While the law has already had a chilling effect on protests, the consequences for Hong Kong's economy are unclear. Since 1 July, Hong Kong's stock market has climbed. Some foreign businessmen in Hong Kong have dismissed the law's potential effect on business. This incredulity is unsurprising: for decades Hong Kong has thrived as a gateway for international capital into and out of China. Surely Beijing wouldn't kill its own golden goose"?

But investors and businessmen, used to the unencumbered movement of capital, may have lost sight of recent changes. Contemporary China is different today to just 10 years ago, let alone to the 1990s when Hong Kong was handed over by the British. Now a global power that commands one-sixth of the world's GDP and is increasingly authoritarian, it is approaching Hong Kong with a new rationale that is both political and economic.

If Hong Kong loses its legal and economic institutions, investors can skip straight to Shanghai, Shenzhen and Beijing

Related: China's grip on Hong Kong eroding its status as financial hub, investors believe

James Lin is an assistant professor of international studies and history at the University of Washington