Hong Kong

Hong Kong no longer has autonomy from China, Mike Pompeo says

US will end special trade relations with Hong Kong, which could seriously impact the territory’s economy

The US has announced it will no longer treat Hong Kong as autonomous for trade and economic purposes, as China prepares to impose a new security law that would drastically limit civil liberties in the territory.

The US decision could have a serious impact on the Hong Kong economy, which has been used by Beijing as a portal for dealings with the outside world – particularly if its financial sector is hit by sanctions as a result of the move.

Beijing is preparing to impose a highly restrictive anti-sedition law on Hong Kong on Thursday, bypassing its legislature, and threatening the freedoms granted its citizens under the “one country, two systems” policy.

In response, on Wednesday, Mike Pompeo, the secretary of state, announced that the US would no longer maintain special trade relations with Hong Kong or consider it an autonomous region, as it has done since the 1997 handover by the UK to China.

“No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” Pompeo said, announcing a move that could have serious consequences for Hong Kong’s finance industry.

“While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself,” the secretary of state said.

Experts said the impact of the US decision on Hong Kong and on China would depend to a great degree on how it was implemented. The end of preferential trade status would mean the imposition of the same tariffs that the US applies to Chinese products, but Hong Kong has a limited trade in goods with the US.

It could affect travel restrictions and its impact would be hugely amplified if Hong Kong banks were hit by potential new sanctions targeting people and entities held responsible for the violation of the territory’s autonomy.

“Ultimately we could see capital flight. We could see US businesses moving out of Hong Kong, expats leaving, and the end to Hong Kong as an international financial center as we know it,” Bonnie Glaser, the director of the China power project at the Centre for Strategic and International Studies, said.

“That may be a worst case picture, it may not be that bad but I think we have to consider that that is one possible outcome.”

Joshua Wong, a Hong Kong pro-democracy activist, urged global corporations to support the opposition to the security legislation.

“I ... urge US, European and Asia’s leaders to reconsider whether Hong Kong’s special trade status can still be held since, once the law is implemented, Hong Kong will be assimilated into China’s authoritarian regime, on both rule of law and human rights protections,” Wong wrote on Twitter.

Tensions over Hong Kong have combined with accusations over blame for the pandemic and military posturing across the Taiwan Strait and the South China Sea, to drive US-China relations to a dangerous new low.

Xi Jinping told military officers that in the wake of the coronavirus epidemic: “It is necessary to step up preparations for armed combat, to flexibly carry out actual combat military training, and to improve our military’s ability to perform military missions.”

At a separate meeting on the sidelines of the the National People’s Congress, the defence minister, General Wei Fenghe, said:“The US has intensified the suppression and containment of our side since the [coronavirus] outbreak, and the Sino-US strategic confrontation has entered a period of high risk.”

“We must strengthen our fighting spirit, be daring to fight and be good at fighting, and use fighting to promote stability.”