Several shipping companies are shifting operations out of Hong Kong and removing vessels from its flag registry, while others are preparing contingency plans, according to a Reuters report. Six shipping executives cited concerns that their ships could be seized by Chinese authorities or face U.S. sanctions in a potential conflict between Beijing and Washington as the driving force behind these moves.
The executives highlighted Beijing’s focus on Hong Kong’s role in Chinese security interests and increasing U.S. attention to China’s commercial fleet in a possible military scenario, such as over Taiwan.
The U.S. Trade Representative’s office proposed last month imposing significant port fees on Chinese shipping firms and operators of Chinese-built vessels to address China’s dominance in shipbuilding and maritime logistics. In September, Washington cautioned U.S. businesses about rising risks in Hong Kong, where sanctions already target officials linked to a security crackdown.
Hong Kong’s maritime and port industry contributed 4.2% to its GDP in 2022, per official data, with its flag ranking as the eighth most-used globally, according to VesselsValue.
Reuters interviews with 24 individuals, including shipping executives, insurers, and lawyers, indicated growing apprehension about commercial maritime operations being caught in a U.S.-China military conflict, driven by China’s national security priorities, trade disputes, and Hong Kong’s leadership powers to control shipping in emergencies.
One executive stated, “We don’t want to be in a position where China comes knocking, wanting our ships, and the U.S. is targeting us on the other side.” Despite an increase in Chinese-operated ships, Hong Kong’s registry saw an 8% decline in oceangoing vessels to 2,366 in January from 2,580 four years prior, per VesselsValue, with 74 ships re-flagged to Singapore and the Marshall Islands in 2023 and 2024.
Hong Kong’s government responded that such operational reviews are typical amid geopolitical and trade shifts, noting a 400% registry growth over two decades post-1997.
A spokesperson said, “Hong Kong would continue to excel as a prominent international shipping centre,” citing tax incentives and green subsidies, and clarified that neither registry laws nor emergency provisions allow commandeering ships for a Chinese merchant fleet.
Taylor Maritime has reduced its Hong Kong presence since 2021, maintaining its fleet under Marshall Islands and Singapore flags, while Pacific Basin Shipping, with its 110 bulk carriers still Hong Kong-flagged, is exploring re-registration options.
A Pacific Basin spokesperson said, “Being in Hong Kong positions us close to China’s 40% share of global dry bulk import/export activity and close to Asia’s strong economic and industrial growth regions,” but confirmed ongoing risk assessments.