01/06/20

HONG KONG: Flagship industries including finance to suffer first from United States sanctions threat, minister warns.

As published on scmp.com, Friday 29 May, 2020.

Hong Kong’s financial and legal industries are likely to be among the first to suffer from the threat of United States sanctions, its commerce minister has said, as the city government continues to warn Washington against damaging their economic ties.

Edward Yau Tang-wah, the Secretary for Commerce and Economic Development, on Friday said professional services on both sides reaped the rewards of the close relationship, which is at risk after the US took a step towards potentially downgrading the city’s special trading status.

“Any changes [to those relations] proposed by one side, such as the economic suppression of Hong Kong, will harm the mutual benefit felt by both sides,” he said.

The Hong Kong government on Thursday hit back at US Secretary of State Mike Pompeo’s declaration the city was no longer suitably autonomous from China, warning that sanctions were a double-edged sword that would harm the interests of Hong Kong as well as Washington.

Echoing those sentiments to reporters at the Legislative Council the following day, Yau said: “It is hypocritical to say that on the one hand you stand by or support the people of Hong Kong, but what the US government is trying to do … intends to harm Hong Kong’s interests.

“It is also self kidding to say that it would only harm one side of the equation.”

Pompeo said the national security law that Beijing planned for Hong Kong would undermine the latter’s autonomy, and he threatened to rescind the preferential treatment it enjoyed under the United States-Hong Kong Policy Act of 1992.

The US is Hong Kong’s second-largest trading partner after mainland China. About 1,300 American companies are based in the city.

Yau pointed out that while Hong Kong-US trade had been robust, the trade war between China and the US had taken its toll.

The US’ trade surplus with Hong Kong is the biggest among all its trading partners, at US$26.4 billion last year, but down 16 per cent from a year earlier.

Hours after Pompeo’s declaration on Hong Kong, the national security law moved a step closer when the National People’s Congress, China’s top legislature, approved its resolution.

The law would outlaw secession, subversion, terrorism and conspiring with foreign influences in the city.

Yau rejected the American argument that Hong Kong had lost autonomy.

“We take exception to the US policy recently announced by the secretary of state towards Hong Kong because it gives no regard to Hong Kong’s constant upholding of ‘one country, two systems’,” he said, referring to the governing principle in the city.

“We have explained very clearly why the national security law is needed largely to plug the loophole in our constitutional arrangement.”

Chief Executive Carrie Lam Cheng Yuet-ngor, in a letter to Hong Kong residents published on Friday, said the current legal system and enforcement mechanisms were inadequate for the city to guarantee national security.

She said the legislation would “restore stability in Hong Kong, better protect the legitimate rights and freedoms of Hong Kong people and contribute to [the city’s] long-term prosperity”.

Yau also commented on Thursday’s announcement of a management review of public broadcaster RTHK, saying the Commerce and Economic Development Bureau was responsible for monitoring its performance as a government department.

“The work by both sides is done according to the charter. The task force is also set up according to the charter to review [RTHK’s] performance,” Yau said, referring to the document outlining the broadcaster’s public mission.

The government move was seen by the RTHK staff union and critics as an attempt to erode the station’s editorial independence, following government criticism of some of its programming.

Director of Broadcasting Leung Ka-wing, who is head of RTHK, said he would fully cooperate with the review led by civil servants, but noted he had not been invited to join the team.

When asked, Leung said he did not feel any pressure to leave the broadcaster.