China Power | Diplomacy | East Asia

The US No Longer Considers Hong Kong Autonomous. What Does That Mean?

The announcement has huge ramifications, but its actual impact is not yet clear.

Shannon Tiezzi
The US No Longer Considers Hong Kong Autonomous. What Does That Mean?
Credit: Unsplash

On May 27, U.S. Secretary of State Mike Pompeo officially notified Congress that Hong Kong should no longer be considered autonomous – and thus does not warrant special treatment under U.S. law. The move threatens to overturn the many economic and legal agreements the United States has with Hong Kong separate from the central government in China.

Pompeo linked the bombshell announcement to the National People’s Congress Standing Committee (NPCSC) decision to craft its own national security legislation for Hong Kong. The NPC decision would bypass the special administrative region’s own legislative body to do so (although the decision also requires Hong Kong to pass its own legislation “as soon as possible”). The legislation would seek “to effectively prevent, stop, and punish any conduct that seriously endangers national security, such as separatism, subversion of state power, or organizing and carrying out terrorist activities, as well as activities by foreign and overseas forces that interfere in the affairs of [Hong Kong].” Another clause calls for Chinese state security organs – likely including the Ministry of State Security — to set up branches in Hong Kong. The prospect for this to overturn freedom of speech and expression in Hong Kong, as well as the rule of law, has sparked outrage and opposition in Hong Kong and abroad.

In his statement Wednesday, Pompeo slammed the move. “Beijing’s disastrous decision is only the latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedoms,” he said. He added, “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.”

“[T]his decision gives me no pleasure,” Pompeo continued. “But sound policy making requires a recognition of reality.”

The secretary’s announcement came one day before the full NPC is scheduled to vote on the NPCSC’s draft decision. The national security legislation called for by the current decision is still being drafted and likely would not be approved by the Standing Committee before August. As NPC Observer notes, it could take longer if the legislation is left open for public comment.

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China’s latest move came just as Pompeo was being required by U.S. legislation to make a formal judgment call on Hong Kong’s autonomy. The Hong Kong Human Rights and Democracy Act (HKHRDA), passed last year, requires the secretary of state to annually “issue a certification to Congress that… indicates whether Hong Kong continues to warrant treatment under United States law in the same manner as United States laws were applied to Hong Kong before July 1, 1997” – the date of Hong Kong’s handover to Chinese control.

The certification is supposed to be part of a larger annual report required as part of the 1992 U.S. Hong Kong Policy Act. As of this writing, the full report has not been publicly released; it generally comes out in the mid-to-late spring.

But the main conclusion was made clear Wednesday. “I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997,” Pompeo said in his statement.

Note the wording there: “Hong Kong does not continue to warrant” its existing special treatment does not equate to “Hong Kong will not receive” that treatment. Essentially, this is a shot fired across the bow – a serious warning, but one that does not immediately cause any damage.

The implication is that Hong Kong’s separate agreements and arrangements with the United States could be revoked, meaning Hong Kong, from the U.S. perspective, would be treated no differently from any other Chinese city. For example, Hong Kong would no longer be exempt – as it currently is – from the Trump administration’s tariffs on Chinese goods.

To cite another example, the United States has strict export controls on the sale of certain high-tech goods to China – controls that don’t apply to Hong Kong. The discrepancy had caused concern already in Washington. The HKHRDA requires the Departments of State, Commerce, and the Treasury to annually investigate whether and to what extent Hong Kong was being used as a loophole to circumvent U.S. export controls on China. Now Hong Kong could be subject to same export restrictions as the mainland.

It’s even possible that the United States could withdraw its support for Hong Kong holding a separate seat from the PRC in international organizations like the World Trade Organization and Asia-Pacific Economic Cooperation (APEC) forum.

None of these moves will automatically follow from Pompeo’s statement, however. The U.S. Congress will have a role to play in determining what the legal framework for Hong Kong will look like from here; given the ease of the HKHRDA’s passage (there was just one dissenting vote in the House and none in the Senate), and recent negative statements from members of Congress on the looming national security law, Beijing should be worried about that prospect. The Trump administration will also have a great deal of leeway to alter U.S. treatment of Hong Kong through executive order.

But any change in Hong Kong’s treatment will not be cost-free for the United States. Last year’s State Department report on Hong Kong noted the deep financial ties between the two:

More than 1,300 U.S. firms operated in the Special Administrative Region, with about 300 U.S. firms basing their Asian regional operations in the city… In 2018, the United States’ largest worldwide bilateral trade-in-goods surplus was with Hong Kong, at $31.1 billion. Exports totaled $37.4 billion and imports were $6.3 billion…

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Jeopardizing those business and financial ties would be a serious blow to Hong Kong and to China, which has long relied on Hong Kong as a proxy to the West. It would be immensely disruptive for U.S. businesses as well – and that’s not even counting the inevitable retaliation from China, particularly once the national security law gives it wide leeway to target “foreign forces” within Hong Kong. Beijing seems to have gambled that Washington wouldn’t dare to in revoke Hong Kong’s special treatment; now we have to see just how far the United States is willing to go.

As Brian Fong noted in a previous analysis of Washington’s options:

[T]he potential risk [of certifying Hong Kong is no longer autonomous]… hinges on whether Washington has the strategic determination and consistency to push ahead. This option will certainly set up Hong Kong as a battlefield for a U.S.-China showdown. Unless Washington has the strategic determination to consolidate Hong Kong’s autonomy by consistently leveraging its upper hand through the HKHRDA, adopting this option may only inject political instability into the territory.