Hong Kong’s status as a global financial hub will have serious implications because of the rapidly deteriorating relationship between the United States and many other Western countries and China.
The singing of a presidential executive order by the US president Donald Trump to end the special status for Hong Kong accorded by the US is the latest blow to the city’s standing.
“Hong Kong will now be treated the same as mainland China,” Trump said in a speech at the White House.
The threat to end the special status for Hong Kong by the US was made several weeks ago when China was preparing to impose the controversial national security la in the semi-autonomous city that as handed over to Beijing by London in 1`997. At that time, China had promised autonomy for Hong Kong for 50 years. Critics have labelled the imposition of the new law as China’s ploy to undercuts political and legal freedoms in Hong Kong.
If the privileges that come with a special economy under US law are withdrawn, “there won’t be big differences between Hong Kong and other big Chinese cities like Beijing and Shanghai,” said Simon Lee, senior lecturer of international business at the Chinese University of Hong Kong. “Foreign companies will think whether they need to maintain their existing scale of operations in Hong Kong.”
In response to the US action, China urged the US to “stop interfering in any way in China’s internal affairs, including Hong Kong affairs”, according to a statement of the Chinese Foreign Ministry. It also urged the Trump administration to refrain from implementing its new law regarding Hong Kong.
The special status of Hong Kong since 1992 has allowed a different and more relaxed control of all goods that passed through the city compared to mainland China. For example, Hong Kong managed to avoid the tariffs imposed on China during the US-China trade war.
According to Iris Pang, chief economist of Greater China at ING, Hong Kong doesn’t do a huge amount of direct trade with the United States. He explained that the majority of goods exported from Hong Kong — about 99% — are essentially re-exports, which means that those goods passed through the territory from another country.
And the relations between the US and China does not seem to on a reconciliatory path any time soon. For example, Trump said that he was not interested in discussing a potential phase two trade deal with China because of the Cvodi-19 pandemic, he said in an interview with CBS News on Tuesday.
“I’m not interested right now in talking to China,” Trump said. “They hit us with the plague, so right now I’m not interested in talking to China about another deal.”
The new Chinese law imposed in Hong Kong has also caused a flutter among businesses. For example, a survey conducted by the American Chamber of Commerce in Hong Kong that published earlier this week noted that more than 68% of businesses said they were “more concerned” about the law and its impact compared to their concerns a month ago.
One respondent wrote that the legislation was “extremely broad and could be used for anything at all.”
This concern is being reflected in the actions off some companies. Announcements of temporarily stopping honouring government data requests about their Hong Kong users were made last week by tech companies including Facebook, Twitter, Google, Microsoft and Zoom. On the other hand, the Hong Kong market was quit completely by while TikTok, an app that is owned by Chinese company ByteDance but has significant US operations.
(Adapted from CNN.com)