That’s a good question, and it depends on how this line is implemented: “It shall also establish a sound legal system in the HKSAR to maintain national security.”

Under the Basic Law, Hong Kong has it’s own legal system, so there is no constitutionally acceptable way Beijing can “establish” new legal system to it’s liking. Perhaps the law is simply a threat, and they won’t take action, but if it is fully implemented, it means the end of the current legal system’s autonomy.

The vagueness of this law is a good example of how the PRC’s legal system is very open-ended compared to other countries, and allows for arbitrary action from China’s rulers.

> But as I understand it, the "2 systems" has to do with economic and political governance

What part of "having laws forced by China" is separate political governance?

I think GP comment about communist parties is not really what the heart of the matter is here: business owners are probably not excited to deal with the opaqueness of the mainland China legal system since it's apparently prone to disappear booksellers over the border and force confessions out of them.

That said, maybe the exodus is overhyped: a lot of businesses are already dealing with the mainland government and certainly that's where a lot of them see where the money is, so they might just be forced to play by these new rules whether they like it or not.