Washington warns of “growing risks” for businesses in Hong Kong



Published on

Jul 18, 2021

The United States issued a warning Friday to American companies about the existence of “growing risks” for their operations in Hong Kong, after the implementation of restrictions by Beijing targeting this historic financial center.

A ferry to Hong Kong – AFP

Companies should “be aware of potential reputational, regulatory, financial, and in some legal cases, risks associated with their operations in Hong Kong,” the warning said.

“Beijing has damaged Hong Kong’s reputation for transparent governance and respect for individual freedoms, and has broken its promise to keep Hong Kong’s high degree of autonomy unchanged for 50 years,” said the foreign minister. American Antony Blinken in a statement. “Today we send a clear message that the United States stands resolutely with the Hong Kong people,” added the secretary of state.

The document acknowledges that Hong Kong, a former British colony ceded back to China in 1997, “retains a lot of economic differences” from the rest of China, including stronger intellectual property protections. However, he highlights a changing climate with the new national security law, highlighting in particular the arrest of an American citizen, John Clancey, a renowned human rights lawyer.

An increased risk also exists for private data according to Washington which denotes a lack of transparency and access to information, taking for example the closure of a popular newspaper, the‘Apple Daily, considered a thorn in the side of the authorities.

“Lift a rock”

The warning further asserts that companies were more likely to incur US sanctions put in place in response to US concerns about the human rights situation.

Dozens of people, such as media mogul Jimmy Lai, as well as elected officials and pro-democracy activists, have been charged in the name of the new national security law which notably prohibits subversion. Beijing imposed this law in June 2020 after large-scale protests demanding the safeguard of fundamental rights promised in Hong Kong before the 1997 handover.

The United States has already imposed sanctions on several Chinese officials including the highest official in Hong Kong, pro-Beijing Carrie Lam. The director of China’s Hong Kong and Macao Affairs Bureau, Xia Baolong, said on Friday that sanctions would only “provoke our anger.” “You would do nothing but lift a boulder to drop it heavily on your feet,” he said. “The long river of history has proven countless times that victory must belong to the unyielding Chinese people!” Mr. Xia said in a speech.

Growing tensions

Thanks to its business-friendly regulations, respect for the rule of law, and its proximity to China’s vast domestic market, Hong Kong has become one of the world’s major trading hubs.

Since the implementation of the new national security law, an increasing number of international companies have announced their intention to leave Hong Kong, or to reduce their presence there as employees. A poll by the American Chamber of Commerce in Hong Kong, an independent business organization, says 42% of its members are considering leaving the city or are already planning to do so.

Sino-US relations have deteriorated sharply in recent years, with Beijing increasingly asserting its power inside and outside its borders. But a State Department official said on Friday that the United States “will continue to explore possibilities” of meetings with Chinese representatives, as long as the talks are “substantial and constructive for our purposes.”

The statement comes as the number two in American diplomacy Wendy Sherman is about to tour Asia, even though the State Department has not announced a stopover in China.

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