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United States President Donald Trump signed an order to end preferential treatment for Hong Kong as his administration takes an increasingly tough stance on China.
“Hong Kong will now be treated the same way as mainland China,” the president told reporters at the White House.
Trump said he had also signed bipartisan legislation to impose sanctions on Chinese officials cracking down on rights in Hong Kong.
The former British colony enjoys unique freedoms not seen in mainland China.
But many people on the ground fear that a new security law imposed by Beijing will end Hong Kong’s special status, agreed under a 1984 pact between China and the United Kingdom.
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The legislation, which prohibits criticism of the Chinese government, is the most radical change in Hong Kong’s political landscape since the United Kingdom returned it to China in 1997.
What did President Trump say?
Speaking at the Rose Garden, Trump said his executive order would end preferential treatment for Hong Kong.
“Without special privileges, without special economic treatment and without the export of sensitive technologies,” said the president, who announced for the first time in May that his administration would begin to cut the territory’s special status.
He also told reporters that he had signed the Hong Kong Autonomy Law, which was unanimously passed in Congress earlier this month.
“This law gives my administration powerful new tools to hold individuals and entities involved in the extinction of freedom in Hong Kong accountable,” Trump said at the press conference.
The president said when asked by a journalist that he had no plans to speak to Chinese President Xi Jinping.
He told reporters that “we hold China responsible for hiding the virus and releasing it in the world.”
The Trump administration itself is under scrutiny for its response to the coronavirus pandemic: The US has 3.4 million recorded cases, the highest in the world.
The president’s political speech rambled on in a protracted political attack on his Democratic presidential challenger, Joe Biden, from trade and immigration to police surveillance and climate change.
“So Joe Biden and President Obama freely allowed China to loot our factories, loot our communities and steal our most precious secrets,” said the president.
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Perception is reality
It wasn’t about if, but when.
Eliminating Hong Kong’s special status will mean that companies based there will now have to assess what this means to them.
Hong Kong is a re-export hub, which means that products passing through Hong Kong to the US but coming from elsewhere, such as China, for example, have avoided tariffs that the US has imposed on China.
Now that Hong Kong’s special status has disappeared, companies in mainland China can find another place to ship their products, which would see Hong Kong’s port and logistics companies suffer.
And what impact will this have on American companies and multinationals that use Hong Kong as a regional hub?
Well, as a business consultant told me, the structural reasons why a company would use Hong Kong as its hub are still there: low tax rates, good geographic location, currency convertibility.
But perception is reality, and if the perception is that doing business in Hong Kong has become much more burdensome, why not go to China or Singapore?
New Hong Kong security law
What is happening with the relations between the United States and China?
Ties between Washington and Beijing have been increasingly frayed in recent months.
With Trump facing an uphill battle for reelection in November, he and his Democratic challenger, Joe Biden, accused each other of being weak in China.
On Monday, the administration rejected China’s military build-up in the South China Sea, accusing it of intimidating its neighbors.
Last Friday, Trump told reporters on Air Force One that a “phase two” trade deal with China was in doubt due to his handling of the coronavirus.
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“The relationship with China has been severely damaged,” he said. “They could have stopped the plague, they could have stopped it, they didn’t stop it.”
The United States also officially withdrew last week from the World Health Organization, which Trump had accused of owing China a debt.
Last week, too, the Trump administration announced sanctions against Chinese politicians who it says are responsible for human rights violations against Muslim minorities in Xinjiang.
