Post by Admin on May 30, 2020 20:58:20 GMT
Mike Pompeo announced on Wednesday that Hong Kong was no longer sufficiently autonomous from mainland China — an assessment that could threaten the city’s trading relationship with the U.S. and deal a blow to both American and Chinese companies operating there.
The news comes following Beijing’s decision late last week to draw up a national security law for Hong Kong. The move came after Hong Kong’s Legislative Council failed in its obligations to enact such a law since the former British colony was handed back to China in 1997. Critics say, however, that the Chinese government’s bypassing of the local legislature undermines the “high degree” of autonomy promised to Hong Kong when China resumed sovereignty over the territory of 7.4 million.
“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” Pompeo said in a statement.
That autonomy matters because Hong Kong’s trading privileges with Washington depend on it. It’s up to the White House to decide what action it will take following Pompeo’s assessment, but options include tariffs, visa restrictions, export controls and freezing the U.S. assets of Hong Kong and Chinese officials deemed to be aiding Beijing in its encroachment on Hong Kong’s freedoms.
Officials made clear that the move is not intended to target Hong Kong citizens. The U.S. will try “to ensure the people of Hong Kong are not adversely affected to the best we can,” David R. Stilwell, assistant secretary for East Asian and Pacific affairs, said during a media teleconference on May 27.
Businesses, however, are nervous. Almost 300 U.S. companies base their regional headquarters in Hong Kong and more than 1,300 have operations in the city — from 3M to Goldman Sachs to the insurer AIG. There are also an estimated 85,000 U.S. citizens living in Hong Kong.
An American Chamber of Commerce spokesperson spoke last week of a “fear factor developing in the business community.” Business confidence was already shaken by the six months of often violent protests sparked last year by a contentious extradition bill, in the wake of which some companies started making plans to shift their operations. Now experts say that Beijing’s growing control over Hong Kong, and potential trade restrictions by Washington, could further diminish business confidence and compromise Hong Kong’s importance as an international business center.
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“Businesses will inevitably change their perceptions of Hong Kong as a gateway to China that is protected by rule of law,” says Benjamin Quinlan, CEO and managing partner of strategy consultancy Quinlan and Associates, who also sits on the board of a fintech association.
“If you remove [Hong Kong’s special status], there will be foreign companies that say ‘we’ll just enter China directly, I’ve got no one-up going via Hong Kong,’ or they’ll just exit China completely,” he tells TIME. “It doesn’t bode well for Hong Kong’s position as a global financial hub.”
The news comes following Beijing’s decision late last week to draw up a national security law for Hong Kong. The move came after Hong Kong’s Legislative Council failed in its obligations to enact such a law since the former British colony was handed back to China in 1997. Critics say, however, that the Chinese government’s bypassing of the local legislature undermines the “high degree” of autonomy promised to Hong Kong when China resumed sovereignty over the territory of 7.4 million.
“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” Pompeo said in a statement.
That autonomy matters because Hong Kong’s trading privileges with Washington depend on it. It’s up to the White House to decide what action it will take following Pompeo’s assessment, but options include tariffs, visa restrictions, export controls and freezing the U.S. assets of Hong Kong and Chinese officials deemed to be aiding Beijing in its encroachment on Hong Kong’s freedoms.
Officials made clear that the move is not intended to target Hong Kong citizens. The U.S. will try “to ensure the people of Hong Kong are not adversely affected to the best we can,” David R. Stilwell, assistant secretary for East Asian and Pacific affairs, said during a media teleconference on May 27.
Businesses, however, are nervous. Almost 300 U.S. companies base their regional headquarters in Hong Kong and more than 1,300 have operations in the city — from 3M to Goldman Sachs to the insurer AIG. There are also an estimated 85,000 U.S. citizens living in Hong Kong.
An American Chamber of Commerce spokesperson spoke last week of a “fear factor developing in the business community.” Business confidence was already shaken by the six months of often violent protests sparked last year by a contentious extradition bill, in the wake of which some companies started making plans to shift their operations. Now experts say that Beijing’s growing control over Hong Kong, and potential trade restrictions by Washington, could further diminish business confidence and compromise Hong Kong’s importance as an international business center.
China Approves Hong Kong Security Legislation, Defying Trump
Lawmakers Ejected From Hong Kong Debate on Anthem Bill
“Businesses will inevitably change their perceptions of Hong Kong as a gateway to China that is protected by rule of law,” says Benjamin Quinlan, CEO and managing partner of strategy consultancy Quinlan and Associates, who also sits on the board of a fintech association.
“If you remove [Hong Kong’s special status], there will be foreign companies that say ‘we’ll just enter China directly, I’ve got no one-up going via Hong Kong,’ or they’ll just exit China completely,” he tells TIME. “It doesn’t bode well for Hong Kong’s position as a global financial hub.”