HONG KONG (Reuters) - U.S. Secretary of State Mike Pompeo said Hong Kong no longer qualifies for its special status under U.S. law, unnerving investors worried about the risk to the Chinese-ruled city’s status as a global financial hub.
His comments came after Beijing’s proposal last week to directly impose national security legislation in China’s freest city, stoking global concerns over freedoms in the former British colony and reviving anti-government protests.
China’s National People’s Congress, or parliament, on Thursday approved the decision to go forward with the national security law that would tackle secession, subversion, terrorism and foreign interference. It is expected to be enacted before September.
Hong Kong’s special status has helped to keep the former British colony one of the world’s premier financial hubs since it reverted to Chinese rule in 1997.
Following is some comment on what people are saying about the latest developments in Hong Kong.
Rabobank research note:
“If the imposition of a Hong Kong national security law is approved by the National People’s Congress today we will almost certainly see U.S. sanctions against Chinese entities in Hong Kong ... These could make Hong Kong of no de facto use to Beijing as a capital conduit – and hence of little use at all ... Some say this no longer matters because China can just access (U.S. dollars) via other banking centres.
“Let’s put a fact-check marker on that, too, because is the U.S. really going to let China circumvent sanctions that easily? What just happened with Iran, for example?”
Benjamin Quinlan, CEO and managing partner at Quinlan and Associates:
“We expect the latest move to have considerable implications for the city, with the threat of higher tariffs, sanctions, as well as tougher investment and visa rules between Hong Kong and the U.S., including potential sanctions on businesses (particularly banks) operating in the city found to be supporting anyone in violation of the ‘one country, two systems’ model.
“Expect to see businesses and investors become even more skittish over the future over the city as an international financial hub. Being caught in the middle of a standoff between the U.S. and China, it’s another sad day for Hong Kong.”
Iris Pang, chief economist, Greater China at ING, based in Hong Kong:
“If they are targeting Hong Kong’s financial business (presumably) they’d think U.S. financial companies have a lot of dominance in Hong Kong. But this is not really the case anymore, since Chinese companies have gained market share.
“China will retaliate on this. It’s more the Chinese retaliation that I’m waiting for and worried about, because I don’t know how they will retaliate.”
Reporting by Noah Sin; Compiled by Anne Marie Roantree; Editing by Stephen Coates
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