Commentary on Political Economy

Saturday, 8 August 2020



The US president on Friday imposed restrictions on 11 Hong Kong and Chinese officials, including Carrie Lam, Hong Kong’s chief executive, and Luo Huining, mainland China’s top official in the city. The measures will freeze assets the individuals hold in the US and prevent them from doing business in the country.

The sanctions are the latest step in an escalating battle between China and the US after Beijing moved to impose a controversial national security law on the city following months of anti-government protests last year.

Mr Trump has already revoked Hong Kong’s special trade status, a designation that exempted the city from restrictions the US applies to mainland China, in a sign that Washington no longer views the territory as autonomous from Beijing.

Separately, Mr Trump on Friday barred US companies from working with two leading Chinese technology groups: WeChat, the messaging platform owned by Tencent; and ByteDance, the owner of TikTok, a video app that Microsoft is in talks to buy. He also recommended that Chinese companies be delisted from US stock markets unless Beijing is allowed proper access for American regulators to the businesses’ accounts.

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Edward Yau, Hong Kong’s commerce secretary, called the sanctions “unreasonable and barbarous”, and said they would ultimately backfire against US investment in the Asian financial hub.

Mr Luo, director of Beijing’s representative office in the city, said his inclusion on the list showed he had “done what he should have done” for China and Hong Kong. He added that he did not have “one cent of assets” overseas but could send $100 to the US for Mr Trump to freeze.

Hong Kong’s Securities and Futures Commission, the securities regulator, said it was “monitoring closely” what impact the sanctions would have on the city. It added that it would expect any response from financial businesses to be “necessary, fair, and have regard to the best interests of their clients and the integrity of the market”.

The SFC added that it was “not aware of any aspect of the new sanctions which would affect the way firms carry on their normal operations in Hong Kong”.

The Hong Kong monetary authority, the city’s de facto central bank, said in a letter to banks and Ms Lam that unilateral sanctions imposed by foreign governments had “no legal status” in the territory. It added that “boards and senior management of [authorised institutions] should have particular regard to the treat customers fairly principles”.

Financial institutions in Hong Kong have been grappling to understand the implications of the barrage of US restrictions. A senior city official told the Financial Times last month that members of the government were finding it increasingly difficult to bank with foreign lenders because of growing tensions between the US and China over the territory.

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