U.S. President Donald Trump announced a new round of attacks on China on Friday, including stripping Hong Kong's special privileges with the U.S., in response to China's efforts to stabilize the city with its national security law.
After U.S. Secretary of State Mike Pompeo issued the threat to Hong Kong's special status with the U.S. on Wednesday, Trump made the announcement at a White House news conference following China's newly passed national security legislation on its special administrative region which was returned to China in 1997.
"I am directing my administration to begin the process of eliminating policy that gives Hong Kong different and special treatment," Trump said. "This will affect the full range of agreements, from our extradition treaty to our export controls on dual-use technologies and more, with few exceptions," he detailed.
The special treatment of Hong Kong refers to what is offered by the Hong Kong Relations Act enacted by the U.S. Congress in 1992. The act allows the U.S. to continue to treat Hong Kong separately from the Chinese mainland for matters including trade.
Hours before Pompeo's announcement on Wednesday, Hong Kong's Chief Secretary Matthew Cheung told CNN in an interview that sanctions against Hong Kong would be "a double-edged sword."
"Any sanction will do nobody any good at all. Of course it will hurt Hong Kong, but it will doubly hurt the U.S.," he said, referring to the sizable trade surplus the U.S. enjoys with Hong Kong.
Hong Kong has been a key hub for U.S. business and the U.S. benefits from a safe, stable and prosperous Hong Kong, Zhao Lijian, Chinese Foreign Ministry spokesperson, said at a routine press briefing on Friday.
The U.S. has 85,000 citizens, more than 1,300 enterprises, about 300 regional headquarters and 400 regional offices in Hong Kong, and the U.S. has enjoyed a trade surplus as high as 297 billion U.S. dollars in the past ten years, Zhao said, noting that China welcomes the U.S. to achieve more success in Hong Kong but urges the U.S. to stop interfering in Hong Kong affairs and China's internal affairs.
Since the trade war between China and the U.S. started in 2018, the Trump administration has cancelled most trade privileges to Hong Kong, so Trump's new announcement will not make much difference to Hong Kong and the Chinese mainland in terms of trade, Ju Jiandong, Unigroup chair professor at the PBC School of Finance of Tsinghua University, told CGTN on Friday.
Hong Hao, chief China strategist of BOCOM International Holdings, shared this view. In a post on his Weibo account after Trump's Friday news conference, he said that the tariffs under section 301, which the U.S. applied to China in 2018, covered 3.4 billion U.S. dollars'-worth of exports from Hong Kong to the U.S. and the total of exports in 2017 was 6.9 billion U.S. dollars.
Therefore, the markets believed that there were no real (new) sanctions and did not respond to Trump's news conference on Friday, Hong said.
Wall Street finished trading mostly higher on Friday. The Dow closed down 0.1 percent at 25,383.11, while both the S&P 500 and the Nasdaq ended solidly higher, up 0.5 percent and 1.3 percent respectively.
Trump did not mention sanctions on the financial sector in Friday's speech but Hong Kong has been prepared for all possible eventualities.
"We have been preparing for all the different scenarios," Hong Kong Finance Secretary Paul Chan said in an interview with the Global Times on Friday before Trump's news conference.
"Our banking system remains robust, and it was not crushed by months-long social unrest last year. I've also been leading a working group to supervise abnormal market activities to prevent the short-selling of funds or Hong Kong dollars and other potential risks," Chan said.
Without the special treatments, the U.S. will apply strict tech exports restrictions on Hong Kong as it does on the Chinese mainland, but Chan said it has been always hard for Hong Kong to import state-of-the-art technologies and if not for the most advanced tech imports, it is easy for Hong Kong to find replacements in Japan and Europe.
He said that the Hong Kong SAR studied the tension between China and the U.S. since 2018, forecasting the conflict may expand to other fields, such as finance, "We've prepared for it," he noted.
(Cover: U.S. President Donald Trump makes an announcement about U.S. trade relations with Hong Kong as National Security Advisor Robert O'Brien (far L), Secretary of State Mike Pompeo (second L) and Treasury Secretary Steven Mnuchin (R) listen in the Rose Garden of the White House in Washington, D.C., U.S., May 29, 2020. /Reuters)