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The new national security law in Hong Kong is worrying the city’s business community.

Seventy-six percent of respondents in a new survey conducted by the American Chamber of Commerce in Hong Kong say they are either “extremely concerned” or “somewhat” concerned about the new national security law that Beijing imposed on the region on June 30. Roughly half of the 183 survey respondents are American companies with operations in Hong Kong, while 35% are headquartered in Hong Kong, and the rest are other international firms.

The national security law was first publicly released as it went into effect and provides Beijing with sweeping powers to tackle four specific crimes: terrorism, subversion, secession, and collusion with foreign powers. Of the respondents, 56% said that the details of the law were “more stringent” than they had expected when Beijing first announced the legislation in late May.

Anxious as it may be, Hong Kong’s business community is not yet taking concrete actions in response to the law, such as lodging coordinated business opposition to the measures or moving operations or employees out of the city. For now, businesses seem willing to sit tight and see how Beijing implements the legislation.

Top concerns

The most widely held worry about the law—cited by 65% of respondents who could identify multiple concerns—is the ambiguity of the law’s scope and how it will be implemented.

“The legislation is extremely broad and could be used for anything at all,” one anonymous respondent told the American Chamber of Commerce (AmCham), expounding on their multiple-choice response. “Almost anything could be construed as a threat to ‘national security,’ and any discussions, talks with foreign people could be construed as collusion with foreign powers.”

The second-most cited concern is that the law will erode the independence of Hong Kong’s judiciary system, which forms the backbone of the city’s freewheeling financial markets. One respondent said Hong Kong’s courts will be powerless to stop national security law enforcers from arbitrarily targeting foreign businesses.

Forty-one percent of respondents said they were worried that the law may jeopardize their data security. That apprehension is shared by foreign tech firms such as Facebook, Google, and Twitter that decided to temporarily suspend data sharing with the Hong Kong government last week amid new rules outlining how the law will be enforced.

Still, 11% of respondents indicated they were “not concerned at all” about the law. “My attitude is that I have no intention of violating the law,” one of the respondents said. “Therefore, I have no concern about it.”

Taking flight?

Such worries seem to be leading the business community to conclude that the law will irrevocably change Hong Kong’s status as an international financial center by driving the city closer to mainland China and farther from foreign investors.

Forty-nine percent of respondents said they expected the national security law to negatively impact their business, because of uncertainty over how Beijing will enforce the law, the increased difficultly in attracting foreign talent to the city, and a talent drain if Hong Kong residents emigrate to other countries.

“I believe international firms will slowly leave the city for other headquarter cities in Asia,” one respondent said. “Maybe it takes 20 years, but Hong Kong will become another Chinese city.”

Fifty-one percent of respondents said the law will either be positive for their businesses or not have an effect on their business at all.

Hong Kong will be better off, one respondent said, because the law “accelerates the integration of Hong Kong into [mainland China’s] economy.”

Despite business’s negative perception of the law and its gloomy forecast for Hong Kong, few respondents indicated they were taking any direct or meaningful action as a result.

Sixty-five percent of respondents said they do not have any plans to move capital, assets, or business operations from the city, while another 30% said they would only consider moving business away from Hong Kong in the “medium to long term.” Only 5% said they will be moving business away from the city in the “short” run.

All the same, businesses do appear to be preparing for the worst. Fifty-two percent of respondents said they have contingency plans in place—or are preparing new ones—to leave the city if the situation worsens.

But for now, the majority of these businesses aren’t taking any drastic measures. When presented with a list of options that included reducing or increasing trade and investments in the city, 68% of businesses said they will “wait and see” how Beijing decides to implement the law.

“The law is still ambiguous in many ways,” one respondent told the AmCham. “We have to see where the red lines are in coming months [and] perhaps years.”