16.07.2021 – 19:32
The Biden administration on Friday warned U.S. companies that they face serious and escalating risks operating in Hong Kong as the Chinese government increasingly cracks down on freedoms in the financial center.
The US released a “Business consulting” regarding threats ranging from China’s ability to gain access to data stored on servers in Hong Kong to a new Chinese law allowing sanctions to be imposed on anyone who helps foreign nations enforce sanctions against companies and officials Chinese.
The councilor warned that the recently adopted anti-sanctions law “Does not make a clear distinction between mainland China, Hong Kong and Macau”, suggesting that US companies in Hong Kong face increased risks.
He also expressed concern about the national security law Beijing passed in Hong Kong last year to target political dissent, stressing that a U.S. citizen had been arrested under the law.
“This new legal landscape. . . “It can negatively affect businesses and individuals operating in Hong Kong.” said the counselor. “They need to be aware of the potential reputational, regulatory, financial and in some cases legal risks associated with their operations in Hong Kong.”
US President Joe Biden also imposed sanctions on seven senior Chinese officials serving in Beijing’s Hong Kong representative office.
The moves, which were first reported by the Financial Times, are the latest attempt to dismiss China for its increasingly draconian moves against the pro-democracy movement in the former British colony.
It is the first time a US administration has issued business advice regarding Hong Kong.
“In the face of Beijing’s decisions over the past year that have stifled the democratic aspirations of the people of Hong Kong, we are taking action.”, said Antony Blinken, US Secretary of State. “Today we send a clear message that the United States stands firm with Hong Kong.”
Kurt Tong, a China expert at Asia Group who was the U.S. consul general in Hong Kong until 2019, said the move was a “Mix of denouncing political rhetoric aimed at China” and consular advice for businesses.
“Non-Chinese firms in Hong Kong will make their decisions as they balance the city’s unique business opportunities with their best assessments of increased legal and operational and reputable risks.” he said. “Right now, most foreign investors seem to see the benefits of Hong Kong as greater than the risks.”
Tong said the main concern for many foreign firms in Hong Kong focused on whether the judiciary would remain independent.
Sino-US relations have continued to spiral down, following the first high-level meeting between the Biden administration and China in Alaska, which erupted into a fierce public row.
Beijing has since violated the US by refusing to give Wendy Sherman, the US deputy secretary of state, a meeting with her counterpart during a proposed meeting in Tianjin in late July. Instead, China offered a meeting with a fifth-ranking foreign ministry official, which was rejected by the Biden administration. US officials stress that a meeting could still happen if China changes course and offers a proper counterpart.
But the combination of business warning and sanctions will probably complicate the talks. China reacted angrily in March when the US sanctioned Chinese officials shortly before the Alaska summit, the first and only high-level talks between nations since Biden took office.
Biden has taken a much tougher stance on China than most experts had expected. He has blamed China for its aggressive military activity near Taiwan, the erosion of freedoms in Hong Kong, its coercive economic behavior and the alleged Uighur genocide in Xinjiang.
The deteriorating relationship has worried the business community, which was hoping Biden would get a slightly softer tone. The possibility of consulting was not well received by US business in Hong Kong, with concerns that it could spark a backlash against US companies operating in the city.
The American Chamber of Commerce in Hong Kong said in response to the adviser that it was “Well aware” for geopolitical risks.
“Hong Kong remains a critical and vibrant facilitator of trade and financial flows between East and West.” said the room. “It has an internationally recognized system of commercial law, it has a more open and sophisticated digital infrastructure than many of its Asian counterparts.”
Translated and adapted for Konica.al by Financial Times