Hong Kong’s financial sector could soon find itself back in the middle of an uncomfortable tug of war between China and the United States over Beijing’s imposition of a controversial national security law for the city in late June.
The Trump administration is facing a deadline on Monday to identify, in a report to the US Congress, individuals who facilitated the “erosion” of Beijing’s obligations under the Basic Law. Critics argue the sweeping powers under the national security law impinge on long-held freedoms guaranteed in the city’s mini-constitution.
Trump issued an executive order on July 14 ending Hong Kong’s special economic status, while the US government enacted the Hong Kong Autonomy Act to punish officials accused of curbing the city’s autonomy, as well as the financial institutions that do business with them. The State Department has 90 days to designate them, after which banks will have 12 months to end all business relations.
HSBC, Standard Chartered, and other financial institutions in Hong Kong will be watching the report closely as they could potentially face sanctions themselves. Under the Act, US officials are required later this year to name financial institutions who engaged in “significant transactions” with anyone named in the report.