Biden says U.S. to warn enterprise on deteriorating Hong Kong
US President Joe Biden said his administration would issue a warning warning US companies of the risks of doing business in Hong Kong, “what could happen” as China tightens its control over the island.
“The situation in Hong Kong is worsening and the Chinese government is not keeping its promises how it would deal with Hong Kong,” said Biden on Thursday at a press conference in the White House together with German Chancellor Angela Merkel.
“It’s more of an indication of what can happen in Hong Kong,” added Biden. “It’s that simple and so complicated.”
The notice is expected to be published on Friday. It will underscore how quickly China’s drive for greater control over Hong Kong has ended the “one country, two systems” approach that Beijing promised when it resumed oversight of the former British colony in 1997.
This has proven to be a death knell for the independent judiciary, the militant media and the island’s lively protest movements.
While the advice won’t instruct companies to cut investments or leave Hong Kong, Biden government officials fear that major banks and other multinational corporations headquartered in the city have yet to understand how much the landscape has changed there how much risk they have now.
The key message in the government’s “business advisory” will be that Hong Kong’s once-independent legal system is now essentially as vulnerable to state interference as mainland China, where the ruling Communist Party, according to people familiar with the law, is almost complete Has control. who asked not to be identified when discussing the document before it was public.
Finance capital
The advice does not require any specific action by the banks, companies and investors who have made Hong Kong one of the world’s financial metropolises alongside London and New York. Instead, it aims to underscore the threats – legal, financial, and other – that the US is facing as Beijing consolidates its influence.
While businesses are becoming increasingly uncomfortable with the city’s changing landscape, experts and advisors say that change in Hong Kong has been so rapid that many still have not adequately addressed the inherent dangers. At the same time, they argue that the situation may not be as bad as the US is saying, and they don’t expect massive exits.
“Non-Chinese companies should recognize that Hong Kong offers both unique business opportunities and new risks,” said Kurt Tong, partner at Asia Group. “There is no certainty in numbers, but neither should companies join a rush to get out.”
According to the public, the advice will warn companies of the potential impact of Hong Kong’s national security law, imposed on the city of Beijing, which prohibits collusion with foreign forces or anything construed as undermining the authority of the central government. Data that foreign companies store in Hong Kong could also be at risk, it said.
So far, many financial institutions have actually increased the setting.
Citigroup Inc. announced in May that it plans to hire more than 1,000 professionals in its Hong Kong wealth management business over the next five years to accelerate its expansion amid an increasingly heated search for talent in the region. Goldman Sachs Group Inc. hires 320 people in China and Hong Kong as China opens its $ 54 trillion financial market completely to overseas brokers and asset managers.
US President Joe Biden will hold a press conference with Chancellor Angela Merkel at the White House in Washington on Thursday. | CNP / ABOUT BLOOMBERG
Even without making specific demands, the US advice will mark an astonishing turnaround for a city that is still home to the largest banks in the world and has been an entry point in China for decades as its development accelerated from the 1980s onwards.
China’s “one country, two systems” approach to Hong Kong was already under pressure before massive anti-government protests erupted in 2019. Under President Xi Jinping, Beijing quickly sought to silence independent voices, arrest the protesters’ leaders, and introduce a national security law that will allow people charged with crimes to be extradited to China and force the closure of Apple Daily, one of them high profile media company that is critical of corruption and the Communist Party.
Geopolitical tensions are nothing new to companies doing business in China. But an anti-foreign sanctions law passed by the Chinese parliament in June will put multinational corporations in a difficult position by forcing companies to weigh compliance with US sanctions against Chinese companies against the risk, that China punishes them for it.
“Chinese counterparties are nervous about agreeing to foreign sanctions,” said Adam Smith, a former senior advisor in the Treasury Department’s sanctions division and now a partner at Gibson, Dunn & Crutcher. “It creates an ‘us versus them’ scenario for multinational corporations.”
Friday’s deliberation will mark another step in the far more pessimistic tone of the Biden administration towards Hong Kong in the months since the Trump administration withdrew the city’s special trade privileges, saying that the former British colony’s “high level of autonomy” has been eliminated quickly eroded.
China’s dismantling of Hong Kong’s freedoms – and the US response – has been a driving force behind the deterioration in relations between the world’s two largest economies. Starting under President Donald Trump, Beijing and Washington were increasingly at odds over issues such as trade, technology, the origins of the COVID-19 pandemic and human rights.
After reports of the deliberation first surfaced earlier this week, China’s State Department reiterated its opposition to US interference in Hong Kong affairs. Ministry spokesman Zhao Lijian told reporters that the city has been more stable under the security law.
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