At a dinner in May, a small group of elite mainland Chinese businesspeople turned Hong Kong residents attempted to convince the city’s leader to abandon her plans to implement an extradition treaty with China.

“The purpose of the dinner was to try to get her to climb down,” recalls one person present at the meeting with Carrie Lam, the chief executive of Hong Kong, as the territory’s postcolonial leaders are known. “It was not an issue of facts. It was an issue of lack of trust in China. The CE totally underestimated the psychology and the paranoia of Hong Kong people.”

When the pleas fell on deaf ears, another participant at the dinner told Lam that officials in Singapore — Hong Kong’s financial-center rival in the region — were looking forward “to the day the extradition bill passes.”

A number of mainlanders who live in Hong Kong told me they will emigrate if the law goes through. Zhiwu Chen, University of Hong Kong

Distrust of the government has for years led mainland Chinese business elites to move their wealth out of the reach of Beijing. For the richest of the rich, Hong Kong used to be seen as a haven, but in recent years they have become increasingly wary as China has tightened its grip on the territory.

These fears are shared by a range of businesses operating in the territory, a financial, media and professional services hub, particularly after the introduction of the extradition bill earlier this year. Lam suspended debate on the bill after an estimated 2 million Hong Kong residents took to the streets earlier this month. But the attempt to push through a law that would allow criminal suspects to be extradited to mainland China has given new impetus to the exodus of capital and businesses from the city.

“We have seen a trend to offshoring assets in the last few years, and the recent protests on extradition legislation are another catalyst underpinning this,” says Marc Geary, managing director at Major Domus, a multifamily office. “Our office has been diversifying outside Hong Kong for years since the Umbrella Movement [protests in 2014] …. The recent protests have really concerned principal families.”

Family offices provide wealth-management services for the richest individuals, whose net worth is often more than $100 million. Geary says during the protests last week, he was asked to sell commercial real estate and move the proceeds to Perth in Australia.

Hong Kong was handed over by Britain to China in 1997, but the territory’s mini-constitution guarantees it a high degree of autonomy until 2047, when it will be fully reincorporated into China. The controversial extradition legislation is the latest step in what many Hong Kong people fear is a steady erosion of the safeguards that separate Hong Kong’s legal system, which is based on common law, from that of mainland China, which is regarded as opaque and subject to the whims of Beijing.

“A number of mainlanders who live in Hong Kong told me they will emigrate if the law goes through, not only because they feel less secure about property rights but also about their personal safety,” says Zhiwu Chen, professor of finance at the University of Hong Kong.

Officials in Singapore have already sought to exploit those growing fears in marketing campaigns for their city. On one such trip to Hong Kong last year, an executive vice president from the Singapore stock exchange said that Hong Kong’s securities regulator was under the control of the China Securities Regulatory Commission — something Hong Kong’s Securities and Futures Commission resolutely denies. The same SGX official cited the abduction of tycoon Xiao Jianhua from Hong Kong’s Four Seasons hotel in 2017 by Chinese agents as evidence that the city’s wealthy were no longer safe.

“One has to ask if an individual is not safe in Hong Kong, will their assets be safe here?” says Michael Benz, a Hong Kong-based senior adviser at private banking consulting firm Synpulse and the former global head of Standard Chartered’s private bank. This would especially be so if the extradition bill was resurrected — Lam has refused to completely scrap the proposal.

Benz adds, “A substantial share of the money in Hong Kong comes from China, and maybe without clear origins. This is raising the question on what the bill would mean for these people.”

Analysts warn that along with rich individuals and their capital, some companies are also expected to relocate to other business hubs to avoid China’s growing reach into Hong Kong. A person working in the due diligence field, one of the professional services that use the city as a regional hub, says the extradition bill and the accompanying political uncertainty were “factors in consideration for relocating our research team to Singapore.” This was because of the sensitive nature of the work, which often focused on powerful companies and figures on the mainland.

Lawrence Loh, a professor at NUS Business School in Singapore, notes that while the extradition bill had unnerved businesses, the “broader uncertainty is not because of the protests but rather because the end of Hong Kong’s autonomy is clearly getting closer and closer.”