Some shipping companies are quietly shifting operations away from Hong Kong and removing vessels from its flag registry, while others are making contingency plans to follow suit, according to six shipping executives.
These low-profile moves stem from concerns that ships could be commandeered by Chinese authorities or face US sanctions in the event of escalating tensions between Beijing and Washington. Industry insiders say Beijing’s focus on Hong Kong’s role in national security and increasing US scrutiny of China’s commercial fleet—particularly in a potential military conflict, such as over Taiwan—are driving uncertainty across the sector.
Last month, the US Trade Representative’s office proposed imposing steep port fees on Chinese shipping firms and operators of Chinese-built vessels to counter what it described as China’s “targeted dominance” in shipbuilding and maritime logistics. Meanwhile, Washington has warned American businesses about rising operational risks in Hong Kong, where US sanctions already apply to officials involved in a security crackdown.
For over a century, Hong Kong has served as a key hub for shipowners and the financial, legal, and insurance services supporting them. Official data show that the city’s maritime and port industry contributed 4.2% to its GDP in 2022. The Hong Kong flag remains the eighth most-used by ships worldwide, according to maritime data group Veson Nautical’s subsidiary, VesselsValue.
However, interviews with two dozen industry figures, including shipping executives, insurers, and lawyers familiar with Hong Kong’s maritime sector, reveal growing fears that commercial shipping could become entangled in a US-China conflict. Many cite China’s intensified national security focus, ongoing trade disputes, and the broad emergency powers granted to Hong Kong’s Beijing-backed leader to take control of shipping assets if necessary.
“We don’t want to be in a position where China comes knocking, wanting our ships, and the US is targeting us on the other side,” one executive said, speaking anonymously due to the sensitivity of the matter.
The extent of shipowners’ concerns and their efforts to reduce exposure to Hong Kong have not been previously reported. The sense of risk has grown in recent years, coinciding with heightened security measures in the Chinese-ruled city and rising tensions between the world’s two largest economies.
All commercial vessels must be registered, or flagged, under a specific country or jurisdiction to meet international safety and environmental standards. Despite an influx of Chinese-operated ships onto Hong Kong’s registry, the number of oceangoing vessels flagged in the city has declined by more than 8%—falling from 2,580 four years ago to 2,366 in January, according to independent analysis by VesselsValue. Government data reflect a similar drop.
Faridah Abdulkadiri
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