U.S. Secretary of State Mike Pompeo on Wednesday told Congress that Hong Kong no longer retains autonomy from China, paving the way for sanctions from Washington that would strip the city of economic and trade privileges essential to its status as a global financial hub.
Beijing’s decision last week to “unilaterally and arbitrarily impose national security legislation” on the territory is only the “latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedoms and China’s own promises to the Hong Kong people under the Sino-British Joint Declaration, a U.N.-filed international treaty,” Pompeo said in a statement.null
“After careful study of developments over the reporting period, I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997,” he said.
“While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself,” the secretary added.
Pompeo’s testimony Wednesday comes one day before China’s legislature, the National People’s Congress, is expected to enact a new national security law covering Hong Kong, despite a resurgence of protests in the city and outcry from Washington.
U.S. President Donald Trump had said Tuesday that his administration would unveil measures in response to Beijing’s move by the end of the week.
The Trump administration has invoked the Hong Kong Human Rights and Democracy Act enacted last November. It requires the State Department to report to Congress at least annually on whether Hong Kong has retained the high degree of autonomy promised by Beijing under the “one country, two systems” framework, on which the territory’s unique status rests.
The act gives Washington two avenues for sanctions. One option is to target Communist Party officials accused of human rights violations with measures such as freezing of U.S. assets and cancellation of visas. These measures are easy to impose but largely symbolic, signaling firm opposition to actions that threaten democracy and the rule of law.
The other approach involves rethinking Hong Kong’s special status with regard to visas and trade policies, including its exclusion from tariffs and strict export controls imposed on mainland China — something Washington looks poised to do now.
Ending this special treatment likely would have little affect on trade in goods, but would hit trade in services such as logistics and travel, an analysis by Citigroup found. It also could close a loophole that has let high-tech products with potential military applications be imported by mainland Chinese companies through Hong Kong.
But such a move risks harming American interests.
The U.S. reported a $26 billion trade surplus with Hong Kong in 2019, its largest for any single economy. The country exports products such as electrical equipment there, though much of this goes on to other destinations. American investment banks use Hong Kong as a base for their Asian operations and station many personnel there.
Mainland China is likely to retaliate against any sanctions. Beijing will take any necessary countermeasures against foreign interference, Foreign Ministry spokesperson Zhao Lijian said Wednesday in response to Trump’s comments.