The Trump administration made it harder to export sensitive American technology to Hong Kong, escalating pressure on China as lawmakers in Beijing prepared to hand down a national security law that limits the former British colony’s autonomy.
The U.S. Commerce Secretary Wilbur Ross said in a statement Monday that the security legislation, which China’s top legislative body approved Tuesday, raised concerns about the transfer of key technology. The Commerce Department said it was suspending regulations allowing special treatment to Hong Kong over things including export license exceptions.
“With the Chinese Communist Party’s imposition of new security measures on Hong Kong, the risk that sensitive U.S. technology will be diverted to the People’s Liberation Army or Ministry of State Security has increased, all while undermining the territory’s autonomy,” Ross said, providing little detail on specific impacts. “Further actions to eliminate differential treatment are also being evaluated.”
Exports of sensitive technologies to Hong Kong have previously been treated differently from those to mainland China, where exporters have to apply for special licenses. Those policies were put in place after China agreed to preserve Hong Kong’s “high degree of autonomy” — including civil liberties, free markets and independent courts — for at least 50 years after resuming sovereignty over the city in 1997.
President Donald Trump said after the National People’s Congress first approved the drafting of the security legislation last month that the U.S. would begin the process of eliminating policy exemptions for Hong Kong, including export controls on dual-use technologies. Monday’s announcement likely sets up a tedious application process for companies.
Hong Kong Chief Executive Carrie Lam dismissed U.S. concerns that such sensitive items could make it to the mainland, saying the city had “a stringent trade-control mechanism.” She told reporters at a weekly news briefing that the move would have “minimal” impact.
“Sanctions will not scare us,” Lam said. “We are fully prepared and I believe China will also take countermeasures when needed.”
Hong Kong stocks were little affected by either the trade actions or China’s passage of the national security law, with traders waiting for details about the content of the legislation. The benchmark Hang Seng index rose as much as 1.2% before paring gains.
The U.S. move was the latest as relations with China continue to deteriorate over Hong Kong and other fronts. The president has attempted to blame the country for the spread of the coronavirus, part of his re-election effort against presumptive Democratic nominee Joe Biden, who has also escalated his criticism of China. Both nations’ warships and combat jets continue to track each other around the contested South China Sea and the Taiwan Strait.
“There’s no immediate ability to predict a specific negative impact on businesses,” Anna Ashton, a senior director of government affairs at the U.S-China Business Council, told Bloomberg Television. “We’re in the midst of a strategic rethink about the relationship between the U.S. and China. And it’s very difficult to know right in this moment exactly what that means for the business side of the relationship.”
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Source:: Time – World