Fears are growing that proposed new laws on treason and subversion could pose a threat to Hong Kong's prized financial sector.

The new legislation is required under Article 23 of the Basic Law, the rulebook negotiated between China and the UK as part of the handback of the territory in 1997.

Journalists and human rights groups have been through the Article 23 law, and have warned that it gives Beijing hitherto unprecedented powers over the territory's decision-making.

The surprise is that some in the financial community seem to share their concerns, saying that the "one country, two systems" deal is unravelling - and that Hong Kong's position as a financial hub for Asia is threatened as a result.

Embarrassment

Under the Basic Law, Hong Kong is obliged to enact laws which prevent the "Special Administrative Region" from being used as a jumping-off point for foreign or domestic treason or subversion.

The government of chief executive Tung Chee-Hwa has yet to release the exact wording of its proposed legislation, and may well not do so till immediately before the territory's legislature - filled with pro-Beijing businesspeople - votes on it.

The fear is that rules restricting government contractors and public servants' ability to release "state secrets" could be interpreted to include almost any information the government, either in Hong Kong or Beijing, finds embarrassing.

And in financial terms, the involvement of the state in many Chinese businesses means that not only financial journalists, but also analysts, economists and corporate researchers, could find themselves in trouble for reporting information from mainland sources.

Competitive advantage

The bankers are, of course, cautious about voicing their concerns.

"We want to make certain that we have a free flow of information," David Li, chairman of the middle-sized lender Bank of East Asia, told reporters.

"People say that Hong Kong has a competitive advantage over Singapore because they say we have more freedom."

He and his peers are meeting Hong Kong's security chief on 5 December to discuss their concerns and those of foreign bankers, he said.