The biggest international business group in Hong Kong warned on Friday that the United States’ decision to revoke the city’s preferential trading status would damage American firms there.
The American Chamber of Commerce in Hong Kong (AmCham) broke its silence two days after US President Donald Trump signed an executive order ending the special treatment granted under the United States-Hong Kong Policy Act of 1992.
“It will hurt American businesses in Hong Kong,” AmCham said.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
The US now treated Hong Kong the same as mainland China, Trump declared as he confirmed this week the retaliatory move against Beijing’s decision to impose a national security law on the city, legislation he deemed undermined its autonomy under the “one country, two systems” principle.
Under the termination of privileges, about 12 million Hong Kong SAR passport holders no longer have preferential treatment over those with mainland Chinese passports when entering the US; tariffs levied on made-in-China exports are also imposed on those made in Hong Kong; and city imports of US military and defence equipment cease.
Other measures include increased barriers to Hong Kong importing American hi-tech goods and the cancellation of a US-backed student exchange programme.
AmCham said the policy act which took effect in 1997 helped the city play a crucial role in the global economy and protected US commercial interests in the Indo-Pacific region.
There are more than 1,300 American firms and 85,000 American citizens in Hong Kong.
“A thriving American business community in Hong Kong shapes Chinese and regional institutions and perspectives by modelling best business practices and the values of an open and competitive marketplace for goods and ideas,” it said.
“American businesses in Hong Kong have stressed the significance of fostering regional stability through exchanges between the United States and Hong Kong. Without the policy act this goal becomes much more difficult to achieve.”
On the day of the executive order, Trump also signed off a law to penalise mainland Chinese and local officials deemed to have trampled on Hongkongers’ rights.
The Hong Kong Autonomy Act will allow sanctions against individuals said to have undermined the city’s autonomy with the passage of the controversial national security law last month, and also punishes banks doing business with them.
Meanwhile, Standard Chartered Bank Greater China senior economist Kelvin Lau Kin-heng said he believed Hong Kong still maintained its competitive edge even without the preferential treatment.
“Hong Kong still offers free flow of capital, rule of law, a talented pool of people, and a simple and low tax regime,” he said.
But he conceded that the US claim that Hong Kong was no longer “sufficiently autonomous” would have ramifications for the city’s reputation as a global financial hub.
Lau predicted that Hong Kong, which already serves Beijing as the primary gateway between China and international financial markets, could even have a bigger role to play during escalating US-China tensions.
He said the stock exchange in the city could provide an alternative fundraising platform for larger mainland firms that listed in overseas stock markets.
Lau forecast Hong Kong’s gross domestic product will shrink 7.2 per cent this year from 2019 as the Covid-19 pandemic continues to plague the city.
But he warned that political uncertainty arising from the national security law would prevail for some time, compounded by the Legislative Council elections in September.
Rebel City: Hong Kong’s Year of Water and Fire is a new book of essays that chronicles the political confrontation that has gripped the city since June 2019. Edited by the South China Morning Post's Zuraidah Ibrahim and Jeffie Lam, the book draws on work from the Post's newsrooms across Hong Kong, Beijing, Washington and Singapore, with unmatched insights into all sides of the conflict. Buy directly from SCMP today and get a 15% discount (regular price HKD$198). It is available at major bookshops worldwide or online through Amazon, Kobo, Google Books, and eBooks.com.
More from South China Morning Post:
- Trump’s executive order revoking Hong Kong’s special status: what is it and who will be affected?
- Hong Kong Autonomy Act: US tariffs, sanctions, export bans ‘all on the table’ after Donald Trump signs law
- National security law: who are the Hong Kong officials with US assets that may be affected by Trump’s sanctions?
- Battered by Covid-19 and trade war, Hong Kong’s exporters brace for impact as US strips city of trade privileges