United States halts high-tech exports to Hong Kong over security concerns

WASHINGTON – The Trump administration on Monday imposed new restrictions on US exports of defense equipment and certain high-tech products to Hong Kong, in response to a new Chinese law aimed at tightening Beijing’s control over the territory.

The administration determined in late May that Hong Kong no longer had significant autonomy under Chinese rule, and promised to begin stripping Hong Kong’s privileged status with the United States if Beijing continued to crack down on civil liberties in Hong Kong.

Chinese lawmakers are ready to pass a national security law as early as this week that could dramatically curb protests and other criticism of the Chinese government, violating an agreement Hong Kong has made, which China ceded to Britain in 1842 and left from being a British Colony in 1997, autonomous in many ways.

In separate statements on Monday, the State Department said it would end exports of US military equipment to Hong Kong, while the Commerce Department said Hong Kong would now be subject to the same types of controls on certain technology exports that apply. to China. Those controls prevent American companies from selling certain types of high-tech, sensitive products that could threaten national security to China, Russia, and other countries considered a security risk.

The effect of the new restrictions announced on Monday appears to be relatively limited in scope, given the small volume of trade the United States conducts with Hong Kong. Hong Kong accounted for just 2.2 percent of U.S. exports in 2018, with defense and high-tech items accounting for a small portion of that.

But the export limitations announced Monday could have greater implications for some multinational companies, including some semiconductor companies, who are now prohibited from shipping products or sharing certain high-tech information with the territory. Some multinational companies that chose Hong Kong as the base for doing business with China have started to flee to other places, including Singapore.

The Trump administration has said it would end an extradition treaty with Hong Kong and cut some other trade relations as a result of China’s new security law. She said she would expel thousands of Chinese graduate students and researchers linked to the Chinese military and threatened to impose sanctions on Chinese government officials and financial institutions involved in enacting the security law.

But the Trump administration did not come up with broader financial sanctions, which could be crippling for Chinese companies and the economic relationship between the United States and China, including President Trump’s Phase 1 trade deal.

In a statement, Wilbur Ross, the trade secretary, said China’s new security law undermines the territory’s autonomy and increases the risk that delicate American technology will be diverted to China’s military or security forces.

Ross said “other actions to remove Hong Kong differential treatment” are also being evaluated. “

“We urge Beijing to immediately reverse course and deliver on the promises it has made to the people of Hong Kong and the world,” he added.

“We don’t like taking this step,” said Mike Pompeo, secretary of state, in a separate statement. “But since Beijing now treats Hong Kong as ‘One country, one system’, we must too.”