Commentary on Political Economy

Wednesday 27 May 2020

U.S. Officially Declares That Hong Kong Is No Longer Autonomous

‘It is now clear that China is modeling Hong Kong after itself,’ said Secretary of State Mike Pompeo

Pro-democracy supporters scuffle with police at a rally in Hong Kong on Wednesday.

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WASHINGTON—The State Department determined that Hong Kong no longer has a high degree of autonomy from China, Secretary of State Mike Pompeo said Wednesday in a statement likely to unsettle the global financial center and certain to aggravate Beijing.
The determination, required under federal law, amounted to a U.S. condemnation of China’s announcement of plans to impose greater control over Hong Kong, a move which triggered renewed protests against Beijing. Mr. Pompeo’s decision also comes at a time of growing strains between Washington and Beijing over the worldwide Covid-19 pandemic, technology and a widening rivalry for global influence.
The State Department is required under the 1992 Hong Kong Policy Act to assess the extent of the former British territory’s autonomy from China. It certified to Congress on Wednesday that Hong Kong is no longer autonomous.
The decision opens the way for President Trump to take a range of possible measures, from revoking special arrangements on trade to imposing sanctions on individuals involved in suppressing civil liberties in the territory.
“This decision gives me no pleasure. But sound policy-making requires a recognition of reality,” Mr. Pompeo said. “It is now clear that China is modeling Hong Kong after itself.”

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In a live Q&A with WSJ’s Gerald F. Seib, Sen. Tom Cotton says China’s latest move to impose new national-security laws on Hong Kong could result in the territory’s special status being revoked. Photo: LIAU CHUNG-REN/ZUMA PRESS (Originally published May 23, 2020)
Hong Kong has operated one of the freest economies in the world, even in the 23 years since Beijing took control of the territory from Britain, granting it limited autonomy. The U.S. endorsement of Hong Kong’s special status has served as a seal of approval of the city’s role as a global financial center with Western-style rule of law. The new assessment is likely to diminish confidence among U.S. and other foreign businesses in Hong Kong.
The special status has permitted U.S. exports of advanced technology equipment to Hong Kong that may not be sold elsewhere in China. It also has provided U.S. support for Hong Kong’s separate representation on global bodies from the World Health Organization to the Asian Development Bank.
The U.S. action doesn’t change Hong Kong’s international status and representation in such organizations, but could begin to call into question whether those arrangements should continue.
Jude Blanchette, a China expert at the Center for Strategic and International Studies in Washington, said the Trump administration may adopt a menu approach and revoke some of the benefits Hong Kong has been granted under U.S. law, or it could move to wipe away all the special treatment measures at once.
“This is a gasoline bomb on an already rapidly deteriorating situation and again, it just shows there’s emerging flashpoints in this relationship which no one’s predicting,” Mr. Blanchette said. “For companies and investors, We just don’t know where a lot of these black swans are going to emerge from.”

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