Some of the world’s largest shipping companies are discreetly shifting operations away from Hong Kong and removing vessels from its flag registry, while others are preparing contingency plans to follow suit, according to six industry executives.

The moves reflect growing concerns that, amid escalating tensions between Beijing and Washington, ships registered in Hong Kong could face U.S. sanctions or even be commandeered by Chinese authorities in a geopolitical crisis. Industry insiders cite Beijing’s intensified national security focus and the increasing U.S. scrutiny of China’s commercial fleet, particularly in a potential conflict over Taiwan, as key drivers of uncertainty.

Last month, the U.S. Trade Representative’s office proposed imposing steep port fees on Chinese shipping firms and vessels built in China, citing concerns over China’s dominance in global shipbuilding and maritime logistics. Additionally, Washington has warned American businesses of rising operational risks in Hong Kong, where U.S. sanctions already apply to officials involved in a security crackdown.

For over a century, Hong Kong has been a vital hub for global shipowners, providing essential financial, legal, and insurance services. In 2022, the city’s maritime and port industry contributed 4.2% to its GDP, and the Hong Kong flag remains the eighth most-used by ships worldwide, according to VesselsValue, a subsidiary of Veson Nautical.

However, interviews with two dozen industry figures, including shipping executives, insurers, and maritime lawyers, reveal a growing sense of risk. Many fear that commercial shipping could be caught in the crossfire of a U.S.-China dispute, given China’s broad emergency powers that could allow authorities to seize shipping assets if needed.

One shipping executive, speaking anonymously, summed up the dilemma:

“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.”

While the extent of shipowners’ concerns has not been widely reported before, the trend of reducing exposure to Hong Kong has accelerated in recent years. This shift coincides with Beijing’s heightened security measures in the city and the deepening rivalry between the world’s two largest economies.

As U.S.-China tensions continue to escalate, Hong Kong’s once-reliable status as a global maritime hub now faces an uncertain future.