Commentary on Political Economy

Tuesday, 14 July 2020


Trump signs Hong Kong act clearing way for sanctions on Chinese officials

Donald Trump walks to the White House rose garden where he announced the signing of the Hong Kong Autonomy Act © AP
Donald Trump on Tuesday signed legislation that gave his administration more power to impose sanctions on Chinese officials in retaliation for a draconian national security law that Beijing imposed on Hong Kong.
Mr Trump said the Hong Kong Autonomy Act provided “powerful new tools to hold responsible the individuals and the entities involved in extinguishing Hong Kong’s freedom”. He also signed an order rescinding special trade and economic privileges for the Asian financial centre.
The moves came weeks after China imposed a harsh anti-subversion law on Hong Kong to stamp out the pro-democracy movement in the former British colony.
Mr Trump said it was the latest in a series of moves that would dent the autonomy of Hong Kong and would threaten the city’s position as a competitive financial hub. “Hong Kong in my opinion . . . will no longer be able to compete with free markets,” he said at a news conference at the White House. “We’re going to do a lot more business because . . . we just lost one competitor.”
China's foreign ministry said on Wednesday that it strongly opposed the measures and would impose countermeasures, including retaliatory sanctions on US individuals and entities without specifying. It urged the US to “correct its mistakes” and stop interfering in an issue it says is an internal China affair. Beijing said on Tuesday it would impose sanctions on Lockheed Martin, the US weapons manufacturer, over arms sales to Taiwan.
Chris Van Hollen, a Democratic senator who co-sponsored the Hong Kong act, said the law “made clear to China that it cannot continue its assault on freedom and human rights in Hong Kong without severe repercussions”.
Hong Kong will now be treated the same as mainland China, no special privileges, no special economic treatment, and no export of sensitive technologies
President Donald Trump
While the Trump administration last week placed sanctions on Chinese officials over human rights abuses against Muslim Uighurs in Xinjiang, it has not yet imposed any penalties on Chinese Communist party cadres involved in Hong Kong policy.
“Now that the president has signed our . . . act into law, he must impose the sanctions included in our bill,” Mr Van Hollen added. “That is the only way to ensure that those involved in the crackdown on Hong Kong will feel the full consequences of their actions.”
The law gives the administration 90 days to identify mainland Chinese or Hong Kong officials who have helped Beijing contravene the Basic Law — the territory’s mini constitution — or the Sino-British joint declaration that paved the way for the Hong Kong to be handed over to China in 1997.
The Trump administration must then inform Congress if any “foreign financial institution” has knowingly conducted transactions with those officials. Within one year of compiling the list of names, Mr Trump must impose sanctions on the designated individuals and the financial entities. 
Mr Van Hollen and Pat Toomey, a Republican senator who co-sponsored the law, said it would “impose mandatory secondary sanctions on banks that do business with the entities in violation of the Basic Law”.
The order also rescinds the special privileges that Hong Kong has enjoyed in the areas of security, foreign policy and economics.
It gives US government agencies 15 days to implement changes that will result in Hong Kong being treated as mainland China. It will limit the export of sensitive technology to Hong Kong, bar the US from training its police, and tear up an extradition treaty with the former British colony.
It will also make it harder for Hong Kong citizens to get visas to the US, and will also mean US citizens will no longer get visa-free travel to Hong Kong.
The White House clarified that there was no provision that would impact currency trading after a top Republican senator suggested the move would affect the foreign exchange market. “There is no provision that states the US dollar will no longer be freely exchanged with the HK dollar,” said Judd Deere, a White House spokesperson.
“The executive order the president signed today means Hong Kong will now be treated like, and subject to the restrictions of, any other city in the People’s Republic of China,” said James Risch, Republican chairman of the Senate foreign relations committee. “It is unfortunate, but necessary, for the president to use these measures in response to the alarming actions taken by the Chinese Communist party.”
US-China relations have hit their lowest levels in decades as Beijing and Washington fight over a wide range of issues, including trade, human rights, espionage and the spread of the coronavirus pandemic.
Mr Trump described relations as “severely damaged” last week and Wang Yi, the Chinese foreign minister, described ties between the countries were at their lowest level since diplomatic relations were established four decades ago — a remarkable statement given the sharp deterioration in the aftermath of the Tiananmen Square massacre in 1989.
The US in recent months has imposed a slew of sanctions and visa restrictions on Chinese officials. The White House on Monday also took a tougher stance on maritime disputes in the South China Sea.
China has retaliated to US moves by imposing sanctions on a state department official and three lawmakers, including Marco Rubio and Ted Cruz, two Republican senators. 

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