Washington warns American companies not to do business in Hong Kong

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US President Joe Biden confirmed reports on Thursday in different media Sockets this week that his government plans to shortly issue a notice to companies warning them of a “deteriorating” situation on Chinese territory.

“The situation in Hong Kong is worsening and the Chinese government is not keeping its promise on how to deal with Hong Kong,” Biden told reporters at the White House on Thursday, referring to Beijing’s promise to keep the city at halftime. Autonomous status for 50 years after its surrender from Great Britain in 1997.

Biden described the announcement as “more of an indication of what might happen to Hong Kong” without giving any further details, and experts believe it won’t go much further than reporting the rising risks.

This won’t be the first time Washington has urged caution over Hong Kong, which has changed significantly since the city’s pro-democracy and anti-government protests in 2019. China went tough on Hong Kong last year by passing a comprehensive national security law that signaled that Beijing is taking on ever tighter controls. The law raises questions about the future of the city as an international economic center.

After the passage of this law, the former President became Donald Trump withdraw the United States’ special relationship with Hong Kong, which has exempted the city from certain tariffs in the past, among other things.
The U.S. government also sanctioned several officials last year, including Hong Kong’s chief executive Carrie Lam, who later said she was forced to store cash because the restrictions cut them off from the global banking system. (Reuters Reported Thursday that Washington is preparing to impose financial sanctions on “a number of Chinese officials” over Hong Kong, citing two anonymous sources. CNN Business has approached the U.S. Department of State for comment.)

Biden’s corporate advisory service “is unlikely to have an immediate impact,” said Brock Silvers, chief investment officer for Hong Kong-based Adamas Asset Management. He added that “few US companies currently operating in Hong Kong will be surprised by the content or unaware of Hong Kong’s growing risks.”

But Silvers said it was a “increasingly controversialRelationship between China and the United States. Relations have been eroding for years as the two countries collide on everything from Hong Kong and Xinjiang to big data, trade and foreign investment.

American companies have also been proceeding cautiously in Hong Kong for some time as the distinction between there and mainland China is fading.

Clothing and footwear companies VF Corp (VFC) announced in January that it would relocate its Asian operations from Hong Kong, relocate its delivery center to Singapore, and establish other services in Malaysia. It relocated the brand operations to Shanghai. The New York Times (NYT), meanwhile, has postponed its digital news operations for Asia from Hong Kong to Seoul.
Big tech players have also expressed reservations: Facebook (FB), Google (GoogL) and Twitter (TWTR) have suspended the verification of requests for user data on the part of the city administration.
Last month, the President of the American Chamber of Commerce in Hong Kong declared the demise of the city’s pro-democracy tabloid Apple daily a “shot across the bow” after its journalists were arrested and millions in assets were frozen. The authorities cited violations of the new national security law as the reason for cracking down on the publication.
“It’s not just the Apple Daily shutdown,” said AmCham Hong Kong’s President Tara Joseph said CNN Business back then. “It is the new normal and change that Hong Kong is going through from its time as a post-British colony to a time when it is more and more an integral part of China.”
The Hong Kong government has allayed such concerns. Lam told reporters last month not to accuse the Hong Kong authorities of “using the national security law as a tool to suppress the media or stifle freedom of expression.” Officials have also defended the city’s status as a major financial center, with Hong Kong’s China Liaison Office recently saying the business environment had stabilized.

The upcoming announcement by the Biden administration is a “declaration of the obvious,” said William Reinsch, trade expert at the Center for Strategic and International Studies, who was president of the National Foreign Trade Council for 15 years.

“‘One country, two systems‘is dead,’ he said, referring to the rule that has granted Hong Kong political and legal freedoms not available in mainland China for more than 20 years.

“This essentially makes it a warning to US companies that the risk of [in Hong Kong] has grown significantly, enabling the government to say, “We told you” when something bad happens. And it will, “added Reinsch.



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