The U.S. government has warned American companies that they faced potentially serious and escalating risks if they continued doing business in Hong Kong, as a result of China's continuing crackdown on freedoms and privacy there.
The warning came in the form of a nine-page "business advisory" – published jointly by the departments of State, Treasury, Commerce and Homeland Security – which was picked up by numerous media organizations, including Reuters, the BBC, CNBC and the Financial Times, and which coincided with the "sanctioning" of seven senior officials based in China's Hong Kong liaison office.
According to Reuters, it was the first time a U.S. administration had ever issued a business advisory in relation to Hong Kong, which is a "Special Administrative Region" of China, following its July 1997 "handover" by Britain. The advisory was issued a little more than a year after former president Donald Trump ordered an end to Hong Kong's special status under U.S. law, as what he said was meant to be a response to China's "opporessive actions" against Hong Kong.
In its advisory, the U.S. said American companies needed to be aware of the fact that their businesses in Hong Kong were subject to the jurisdiction's laws, including its recently-enacted national security law, under which foreign nationals, including one American, have already been arrested.
It also noted that companies doing business in Hong Kong risked having any of their data stored on servers there being accessed by China, and other "potential reputational, regulatory, financial and in certain cases legal risks associated with their Hong Kong operations."
The day before the business advisory was issued (July 15), President Biden told a news conference that the Chinese government had broken its commitent with respect to how it would handle Hong Kong after it regained the territory from the British 24 years ago.
Some time after this story was written, the South China Morning Post reported that Chinese leaders had responded to the U.S.'s business advisory, and the sanctioning of its officials, by threatening to "deal a 'head on' blow" to the U.S.
The American actions, a spokesperson in China's Hong Kong liaison office was quoted as saying, would "do nothing 'other than fuel our contempt and arouse our strong will to fight'."
AmCham: 'HK remains critical
and vibrant trade facilitator'
The American Chamber of Commerce in Hong Kong, meanwhile, responded immediately to the U.S. business advisory, with a statement stressing Hong Kong's continuing importance, in spite of the "increasingly complicated geopolitical environment," as "a critical and vibrant facilitator of trade and financial flow between the East and West," and said it saw the situation as making its own role representing American businesses in Hong Kong as possibly "more [important] than ever."
It added: "AmCham has just purchased a new site in Central Hong Kong to foster dialogue, allow businesses to network, to share ideas and espouse the values of transparency, free flow of information, rule of law and good governance."
In May, an AmCham Hong Kong survey of 24% of its members found that more than 40% said that they planned to or were considering leaving the jurisdiction, with most citing concerns over such issues as the new national security law, and the growing U.S.-China tensions generally. (See image from the survey results, left.)
However, 58% of those who participated in the survey at that time said they had "no plans to leave Hong Kong," according to a summary of the report's findings.
AmCham Hong Kong was founded in 1969 and currently has some 1,400 members, representing businesses in such sectors as financial services, law, logistics and real estate. The organization is said to be one of the largest American Chambers outside the U.S., in addition to being Hong Kong's largest international chamber, and is also said to be influential as well as actively engaged in a range of local and international public policy issues.
85,000 Americans in Hong Kong in 2020
According to a U.S. State Department "Bilateral Relations Fact Sheet" on Hong Kong, which is dated August 2020, there were estimated at that time to be "approximately 85,000 American residents in Hong Kong," as well as "more than 1,300 U.S. firms, including 726 regional operations."
The 2020 document noted that U.S. companies were increasingly viewing Hong Kong's business environment "with wariness, given the PRC's repressive actions in contravention of the autonomy and freedoms promised to the people under the 1984 Sino-British Joint Declaration," but that "many still value Hong Kong's low taxation proximity to the Chinese market, skilled workforce, and infrastructure."
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