Linking the US’s favourable treatment of the city to its continued autonomy comes at crunch period in bilateral talks to defuse bruising trade war, says John Ruwitch
US president Donald Trump has signed into law US congressional bills that back protesters in Hong Kong and threaten China with possible sanctions on human rights, prompting China’s foreign ministry to warn of “firm counter measures.”
Mass protests for more democracy and autonomy have rocked the former British colony and 5,800 people have been arrested since June, with the escalating violence raising fears that China will ratchet up its response.
The Hong Kong Human Rights and Democracy Act, which the US Senate and House passed last week, puts the special treatment Hong Kong enjoys under US law under tighter scrutiny, linking it to the extent of the territory’s autonomy from Beijing.
A second bill, which Trump also signed, bans the export to the Hong Kong police of crowd-control munitions, such as teargas, pepper spray, rubber bullets, and stun guns.
Britain returned Hong Kong to China in 1997, and the territory was promised a “high degree of autonomy” for 50 years. Among the key drivers of the protests in Hong Kong is the widespread perception that Beijing has been steadily encroaching on that promised autonomy.
The Hong Kong Human Rights and Democracy Act requires the US State Department to certify at least once a year that Hong Kong retains enough autonomy to justify the favourable US trading terms that have helped it maintain its position as a world financial centre.
Officials responsible for human rights violations in Hong Kong could also be subject to sanctions, including visa bans and asset freezes.
While many see the laws as symbolic, they have the potential to upend relations between the United States and Hong Kong.
China’s promise of “high degree of autonomy” for Hong Kong has formed the basis of the territory’s special status under US law.
China has denounced the legislation as gross interference and violation of international law, and, on Thursday, labelled the United States the “biggest black hand” behind the unrest in Hong Kong.
The legislation comes at a time when Beijing and Washington are inching toward a “phase one” agreement to begin to defuse a bruising trade war that Trump has made a top priority.
Beijing has signalled that it wants to keep the Hong Kong issue out of the trade war discussions, but the new laws will exacerbate tensions in the bilateral relationship.
Separately, some analysts say any move to end Hong Kong’s special treatment could prove self-defeating for the United States, which has benefitted from the business-friendly conditions in the territory.
If Hong Kong becomes just another Chinese port, this could hurt not just the city and China, but foreign businesses, too, and companies that rely on the territory’s role as a middleman, or for trans-shipping, would likely take their business elsewhere.
From a business perspective, one of the most important elements of Hong Kong’s special status has been that it is considered a separate customs and trading zone from China.
That has meant, for instance, that trade-war tariffs don’t apply to exports from Hong Kong.
According to the US State Department, 85,000 US citizens lived in Hong Kong in 2018 and more than 1,300 US companies operate there, including nearly every major US financial firm.
The territory is a major destination for US legal and accounting services and, in 2018, the largest US bilateral trade-in-goods surplus was with Hong Kong, at $31.1bn (€28.3bn).
Trade between Hong Kong and the United States was estimated to be worth $67.3bn in 2018, with the United States running a $33.8bn surplus, its biggest with any country or territory, according to the Office of the US Trade Representative.
The American Chamber of Commerce in Hong Kong has said that anything that changes the status of the territory “would have a chilling effect, not only on US trade and investment in Hong Kong, but would send negative signals internationally about Hong Kong’s trusted position in the global economy.”