American concerns may limit tech exports to Hong Kong

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On November 14, the U.S.-China Economic and Security Review Commission (USCC) issued a report that cites “challenges to freedom of speech and assembly in Hong Kong”.

From banning the Hong Kong National Party and denying entry to Financial Times’ Mr Victor Mallet to the opening of the West Kowloon high-speed railway station that includes an enclave of Chinese rule in Hong Kong, the recent developments have worried Hong Kong’s second largest trading partner.

The USCC suggests reviewing U.S. special treatment to separate Hong Kong from China when exporting technology.

Prof Ho Lok Sang, Dean of Economics Faculty of Business at Chu Hai College of Higher Education, says the move could affect Hong Kong’s long-term competitiveness, as the global market may worry the U.S. could change its food or daily necessity export policies towards Hong Kong later on.

Politically speaking, the U.S. report might help stop the government and pro-Beijing politicians from pushing Article 23 ahead.

Article 23 of the Basic Law states that Hong Kong “shall enact laws on its own to prohibit any act of treason, secession, sedition [or] subversion against the [central government]”. Pro-democracy politicians have viewed Article 23 as a threat to civil liberties.

Mr Felix Cheung, from the pro-establishment Liberal Party, said he did not want to further aggravate the U.S. by pushing the law.

If Hong Kong becomes “just another Chinese city” after losing its special status, it does not just hurt the city but also China, Mr Bruce Lui, senior lecturer at the Journalism Department of HKBU, tells Harbour Times.

“China uses Hong Kong as a special connector to do businesses. A lot of the raw materials, drugs, gold and even weapons have been imported China through Hong Kong. The city is doing things for Beijing which it cannot do,” Mr Lui adds.

He argues that Hong Kong’s special status is more important now than ever.

“As the U.S.-China trade spat is going on, it is possible that China could be isolated on world trade. Then Hong Kong can come into play,” he says.

According to Mr Lui, Hong Kong remains the regional headquarters for 1,530 multinational companies. Losing the trust of foreign companies would hurt the city’s economy.

“If foreign companies don’t think there is still a free flow of information and a business-friendly environment in Hong Kong, they may not consider doing business here,” he adds.

“For example, if there is sensitive information about some state-owned enterprises, can it be made public in Hong Kong?”

Mr Matthew Wong, Assistant Professor of the Department of Social Sciences at the Education University of Hong Kong, shares Mr Lui’s view.

“Sometimes China uses the special status of Hong Kong to do things on its behalf. For example, some countries might have suspicions towards Chinese investments, but under Hong Kong companies they are possible. These avenues will limit Beijing’s moves as well,” says Mr Wong.

He also notes that whether Hong Kong will be seen differently from other Chinese cities is based on a lot of factors, including whether or not the level of freedom allowed in Hong Kong is higher than elsewhere in China.

In this sense, Mr Lui stresses that the chief executive is the key person to safeguard the “two systems”. “The government should not succumb to Beijing,” he says.

In response to the USCC report, the Hong Kong government says it “has all along been handling Hong Kong affairs strictly in accordance with the ‘one country, two systems’ principle, the Basic Law and the laws of Hong Kong.”

“Hong Kong is a separate customs territory and we remain committed to enforcing strategic trade controls. Hong Kong has, and will continue to maintain, close co-operation with the United States on the matter,” the government says in a statement.

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