The US may be curtailing Hong Kong’s autonomy more than China
Hong Kong’s unique character has been damaged by Washington’s policy change and imposition of sanctions. This will only lead Hong Kong to turn more to the Greater Bay Area for its economic survival.
Thirty years on, if a chronicle of the Hong Kong special administrative region is to to be compiled, the year 2020 will no doubt go down in history as a watershed year in which Beijing’s enactment of a national security law for Hong Kong marked a turning point in the implementation of “one country, two systems”.
The Western media have commonly ascribed any perceived diminution of Hong Kong’s autonomy to actions taken by Beijing to enhance integration of Hong Kong with the rest of the nation, and legislation to strengthen national security has been the No 1 target of aspersion.
Scant attention has, however, been given to the damage to Hong Kong’s unique international character and status, qualities which underpin the highly treasured “two systems”, caused by the United States’ change of policy on Hong Kong and its imposition of a flurry of sanctions.
2020 is the pivotal year in which the US formally announced the termination of its special policy in support of Hong Kong, dating from the United States-Hong Kong Policy Act of 1992.
On May 27, after learning of Beijing’s plan to enact new national security legislation for Hong Kong, US Secretary of State Mike Pompeo declared to Congress that he could no longer certify Hong Kong as autonomous from China.
Irrespective of whether one agrees with that judgment or the US’ use of its power to issue such determinations, that announcement marked a turning point in US-Hong Kong relations which has far-reaching implications.
The US ratcheted up its rhetoric and measures against Hong Kong significantly after the enactment of the Hong Kong Autonomy Act and President Donald Trump’s signing of the executive order on “Hong Kong normalisation” on July 14. Under the executive order, the US determined that China’s enactment of a national security law for Hong Kong was the equivalent of a “national emergency”.
It follows that the US could, if it wished, invoke its sweeping powers under the International Emergency Economic Powers Act and the National Emergencies Act, among others, to impose a wide array of sanctions on Hong Kong.
On August 7, the US dropped a further bombshell by imposing sanctions on 11 Chinese officials, including seven from Hong Kong. Initially, it appeared that these sanctions would only inconvenience the officials identified by freezing their US assets or barring them and their immediate families from entering the US.
But these are only primary sanctions. If the US invokes its powers under the Hong Kong Autonomy Act to impose secondary sanctions on financial institutions transacting with the identified individuals, much greater harm could be done.
Under the Hong Kong Autonomy Act, the US Secretary of the Treasury is required to submit to Congress a report “that identifies any foreign financial institution that knowingly conducts a significant transaction with a foreign person identified” within 60 days of the State Department’s report. Experience shows that the US has flexibility in adhering to statutory timelines.
But the operative words in this provision, “knowingly” and “significant”, are riddled with uncertainty. Such a provision means that Hong Kong’s financial institutions which conduct business involving the US dollar-based financial system (and few do not) would have to brace themselves for more uncertainty and volatility in the months to come.
Most of the sanctions and punitive measures already imposed on Hong Kong by the US and its Five Eyes allies, other than those potentially in the financial area, have limited impact on the city.
The removal of Hong Kong’s special trading status and the relabelling requirement for Hong Kong-manufactured products inflict minimal damage, given the small volume of Hong Kong’s exports to the US (a modest HK$3.7 billion in 2019).
The suspension of the bilateral agreement on the transfer of fugitive offenders hurts the US more than Hong Kong, given that since its commencement, Hong Kong has surrendered 69 fugitives to the US while the US has sent us only 23.
China’s retaliatory decision to suspend Hong Kong’s bilateral agreement with the US on mutual legal assistance in criminal matters would hurt the US much more.
That is because the US and its allies have long relied on such arrangements to secure cooperation from Hong Kong in actions against money laundering, terrorist financing, drug trafficking, alien smuggling and other heinous transnational crimes.
There are other less high-profile measures that signal the end of an era, such as the suspension of training for the Hong Kong Police Force and other agencies.
The much more sensitive paramilitary training for the force’s Special Duties Unit had long been suspended by Britain and the US, in fact, soon after the changeover in 1997. This further curtailment of training is therefore largely symbolic.
While the suspension of the Fulbright exchange programme for Hong Kong is a disappointment to academics, it would weaken the US’ soft power more than the US’ putative enemies.
It is far from a foregone conclusion that US-Hong Kong relations have reached a point of no return. Business and financial ties, as well as people-to-people bonds, remain strong.
But if the US imposes more sanctions on Hong Kong, the city would be driven to rely on mainland China, especially the Greater Bay Area, more decidedly than ever for succour to its battered economy. US influence and leverage on Hong Kong would diminish.
Ironically, US support for Hong Kong’s autonomy by way of sanctions and a new “normalisation” policy could end up pushing Hong Kong deeper into the bosom of China.
The Western media have commonly ascribed any perceived diminution of Hong Kong’s autonomy to actions taken by Beijing to enhance integration of Hong Kong with the rest of the nation, and legislation to strengthen national security has been the No 1 target of aspersion.
Scant attention has, however, been given to the damage to Hong Kong’s unique international character and status, qualities which underpin the highly treasured “two systems”, caused by the United States’ change of policy on Hong Kong and its imposition of a flurry of sanctions.
2020 is the pivotal year in which the US formally announced the termination of its special policy in support of Hong Kong, dating from the United States-Hong Kong Policy Act of 1992.
On May 27, after learning of Beijing’s plan to enact new national security legislation for Hong Kong, US Secretary of State Mike Pompeo declared to Congress that he could no longer certify Hong Kong as autonomous from China.
Irrespective of whether one agrees with that judgment or the US’ use of its power to issue such determinations, that announcement marked a turning point in US-Hong Kong relations which has far-reaching implications.
The US ratcheted up its rhetoric and measures against Hong Kong significantly after the enactment of the Hong Kong Autonomy Act and President Donald Trump’s signing of the executive order on “Hong Kong normalisation” on July 14. Under the executive order, the US determined that China’s enactment of a national security law for Hong Kong was the equivalent of a “national emergency”.
It follows that the US could, if it wished, invoke its sweeping powers under the International Emergency Economic Powers Act and the National Emergencies Act, among others, to impose a wide array of sanctions on Hong Kong.
On August 7, the US dropped a further bombshell by imposing sanctions on 11 Chinese officials, including seven from Hong Kong. Initially, it appeared that these sanctions would only inconvenience the officials identified by freezing their US assets or barring them and their immediate families from entering the US.
But these are only primary sanctions. If the US invokes its powers under the Hong Kong Autonomy Act to impose secondary sanctions on financial institutions transacting with the identified individuals, much greater harm could be done.
Under the Hong Kong Autonomy Act, the US Secretary of the Treasury is required to submit to Congress a report “that identifies any foreign financial institution that knowingly conducts a significant transaction with a foreign person identified” within 60 days of the State Department’s report. Experience shows that the US has flexibility in adhering to statutory timelines.
But the operative words in this provision, “knowingly” and “significant”, are riddled with uncertainty. Such a provision means that Hong Kong’s financial institutions which conduct business involving the US dollar-based financial system (and few do not) would have to brace themselves for more uncertainty and volatility in the months to come.
Most of the sanctions and punitive measures already imposed on Hong Kong by the US and its Five Eyes allies, other than those potentially in the financial area, have limited impact on the city.
The removal of Hong Kong’s special trading status and the relabelling requirement for Hong Kong-manufactured products inflict minimal damage, given the small volume of Hong Kong’s exports to the US (a modest HK$3.7 billion in 2019).
The suspension of the bilateral agreement on the transfer of fugitive offenders hurts the US more than Hong Kong, given that since its commencement, Hong Kong has surrendered 69 fugitives to the US while the US has sent us only 23.
China’s retaliatory decision to suspend Hong Kong’s bilateral agreement with the US on mutual legal assistance in criminal matters would hurt the US much more.
That is because the US and its allies have long relied on such arrangements to secure cooperation from Hong Kong in actions against money laundering, terrorist financing, drug trafficking, alien smuggling and other heinous transnational crimes.
There are other less high-profile measures that signal the end of an era, such as the suspension of training for the Hong Kong Police Force and other agencies.
The much more sensitive paramilitary training for the force’s Special Duties Unit had long been suspended by Britain and the US, in fact, soon after the changeover in 1997. This further curtailment of training is therefore largely symbolic.
While the suspension of the Fulbright exchange programme for Hong Kong is a disappointment to academics, it would weaken the US’ soft power more than the US’ putative enemies.
It is far from a foregone conclusion that US-Hong Kong relations have reached a point of no return. Business and financial ties, as well as people-to-people bonds, remain strong.
But if the US imposes more sanctions on Hong Kong, the city would be driven to rely on mainland China, especially the Greater Bay Area, more decidedly than ever for succour to its battered economy. US influence and leverage on Hong Kong would diminish.
Ironically, US support for Hong Kong’s autonomy by way of sanctions and a new “normalisation” policy could end up pushing Hong Kong deeper into the bosom of China.