US economic sanctions against Hong Kong an unrealistic last resort


By Yu Xiao

The National People’s Congress (NPC) has recently approved the national security laws for Hong Kong by an overwhelming majority. This is a legitimate move by China to improve its national security legislation and safeguard its core interests in accordance with international practices.
However, Western politicians, typified by U.S. Secretary of State Mike Pompeo, falsely claimed that Hong Kong “no longer enjoys a high degree of autonomy” as a result. U.S. President Donald Trump has also threatened to revoke Hong Kong’s favored trade status and impose sanctions on officials who “harm Hong Kong’s autonomy.”
From the introduction of the so-called “Hong Kong Human Rights and Democracy Act” by the U.S. last year, it is clear that “the revocation of Hong Kong’s favored trade status” is a last resort by the U.S. How much influence can the U.S. really exert by calling for tougher measures?
The U.S. talks indiscreetly about revoking Hong Kong’s preferential status as a separate customs and travel territory. However, is this status granted by the U.S., and can the U.S. take it away? On the contrary, it neither granted the status, nor can the U.S. unilaterally withdraw it. Looking back over history, long before its return to the motherland, Hong Kong was already a free port in the world and enjoyed a reputation as one of the “Four Little Dragons of Asia”.
As to Hong Kong’s preferential status as a separate customs and travel territory, Hong Kong’s Finance Secretary Chen Maobo explained that this is, in fact, a unique status conferred on Hong Kong by the Basic Law, which also authorizes Hong Kong to join the World Trade Organization under the name “Hong Kong, China”. The preferential status is clearly stated in the Basic Law and has nothing to do with the U.S.
Over the years, relying on the motherland and facing the world, Hong Kong has played the role of a “super contact” and enjoys a solid financial, economic and trade position in the international arena.
Hong Kong is strongly supported by China’s national development, and is widely recognized by the international community. Hong Kong’s financial sector has remained stable despite the movement against the extradition law. So how can Hong Kong be in danger of losing its position as the world’s leading international financial center based on the unilateral decision of one country? This is a joke!
Politicians in the U.S. often wield the “stick of sanctions” and engage in “long-distance jurisdiction.” Obviously, this is not effective: despite Pompeo and Trump’s threats to impose sanctions, there have been no significant fluctuations in Hong Kong’s stock, futures and monetary markets; the Hong Kong dollar is also very strong, and Hong Kong has not seen any large-scale capital outflows.
At the very least, if the United States really intends to revoke Hong Kong’s favored trade status, China has nothing to be afraid of, because the actual impact will be very limited. Goods produced locally in Hong Kong and exported to the U.S. market each year account for less than 2 percent of Hong Kong’s local manufacturing sector, and have a value of only HK $3.7 billion, accounting for less than 0.1 percent of Hong Kong’s total exports.
Indeed, the U.S. Chamber of Commerce has stressed that jeopardizing Hong Kong’s special status would be a “serious mistake”. In fact, Hong Kong was the source of the largest bilateral U.S. goods trade surplus last year and the sixth largest destination for U.S. direct investment.
In the context of economic globalization, is it possible to damage the interests of others without hurting yourself? If the U.S. insists on going its own way and wantonly sacrifices the interests of Hong Kong, it will certainly affect the economy of local communities in the U.S., and even the global economy.
–The Daily Mail-People’s Daily news exchange item