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When Hong Kong’s democracy protesters waved American flags last November to thank the U.S. government for passing the Hong Kong Human Rights and Democracy Act, they knew the bill was a double-edged sword: It requires the United States to assess annually whether Hong Kong has enough autonomy to continue receiving preferential trade benefits. This punishes China for encroaching on Hong Kong and breaking its promise to give the territory a “high degree of autonomy” for 50 years.
But the U.S. stripping Hong Kong of its special economic status will also hurt the businesses and people of Hong Kong. Companies would likely leave the international financial hub, driving up unemployment. Still, democracy activists like Joshua Wong hoped U.S. action would cause Beijing to count the high cost of stripping Hong Kong of its freedoms, such as clamping down on remembrances of the Tiananmen Square massacre or outlawing insults to the Chinese national anthem.
“For decades, Hong Kong has facilitated the influx of global capital and otherwise unavailable goods (e.g. high-tech products) into China,” Wong tweeted last week. “Leaders in Beijing continue the reap the benefits of this arrangement while our freedoms deteriorate. They can’t have it both ways.”
On May 28 the rubber-stamping National People’s Congress approved plans for a national security law in Hong Kong that would criminalize what it considers subversion and secession (for instance, a court sentenced Pastor Wang Yi of Chengdu’s Early Rain Covenant Church to nine years in prison on charges of subversion of state power). The law would allow Beijing to set up security forces in Hong Kong to clamp down on pro-democracy activists and protesters.
In response, President Donald Trump announced “Hong Kong is no longer sufficiently autonomous to warrant the special treatment that we have afforded the territory since the handover.” This means the United States will place the same trade restrictions, law enforcement, and travel requirements on Hong Kong as it currently does with mainland China.
Trump also noted Hong Kong and Chinese officials responsible for the national security law would face sanctions.
China allowed Hong Kong to retain its autonomy after its handover from Britain in 1997 so it could remain an international financial hub and a conduit between China and the rest of the world. Between 2010 and 2018, 73 percent of initial public offerings for mainland Chinese companies took place in Hong Kong, according to the Financial Times. Removing Hong Kong’s special status would “hurt China many times more than it’s going to hurt Hong Kong,” Kyle Bass, chief investment officer for Hayman Capital Management, told The Washington Post.
But Beijing claims otherwise since cities like Shanghai and Shenzhen have developed their own financial infrastructure. “This hegemonic act of attempting to interfere in Hong Kong affairs and grossly interfere in China’s internal affairs will not frighten the Chinese people and is doomed to fail,” an editorial in the Communist Party’s People’s Daily said.
Some in Hong Kong worry the territory is becoming the collateral damage of the China-U.S. feud. “This looks like a new Cold War, and Hong Kong is being made a new Berlin,” pro-democracy lawmaker Claudia Mo told The New York Times. “We are caught right in the middle of it.”
The United States, the United Kingdom, Australia, and Canada issued a joint statement on May 28 condemning China’s new law. It said Beijing’s move to impose the law rather than going through Hong Kong lawmakers “dramatically erode[s] Hong Kong’s autonomy and the system that made it so prosperous.” It also said the law would undermine the “one country, two systems” framework and “raise the prospect of prosecution in Hong Kong for political crimes.”
The United Kingdom said if China imposed the law, it would offer a path to citizenship to British National Overseas passport holders in Hong Kong as well as their children and dependents, totaling nearly 3 million people.
The United States also called for the U.N. Security Council to hold a digital meeting to discuss Hong Kong. But Beijing vetoed the meeting, which requires all 15 members to agree to the video conference call.
“For years, the Chinese government and Communist Party have walked back on its commitment to ensure autonomy and freedom for Hong Kong,” said Sen. Marco Rubio, R-Fla., co-chair of the bipartisan Congressional-Executive Commission on China. “We cannot let Beijing profit from breaking the Sino-British Joint Declaration and trying to crush the spirit of Hong Kong’s people.”