Biden to warn US firms of risks of operating in Hong Kong: FT

Bloomberg

The US will warn American companies this week of the increasing risks of operating in Hong Kong, the Financial Times (FT) reported, as Washington seeks to ramp up pressure over Beijing’s crackdown on the
financial center.
The risks include the Chinese government’s ability to gain access to data that foreign companies store in Hong Kong, the FT said on Tuesday, citing three people familiar with the matter it didn’t identify. A new law that allows Beijing to retaliate against anyone complying with anti-China sanctions is also among the US concerns, the newspaper said.
The decision was driven in part by the view that companies weren’t taking the issue
seriously enough, the FT said.
Separately, the US will update a warning that the Trump administration issued on Xinjiang last year, the FT said, citing five people it didn’t identify.
The benchmark Hang Seng Index was little changed after the report.
Such a warning from the Biden administration would underscore how Washington’s concerns about the former British colony have escalated since Beijing launched a crackdown on local democracy demonstrations in 2019. It would follow a Trump administration decision last year to roll back special trade privileges granted to Hong Kong in recognition of China’s promise to ensure its “high degree of autonomy” from Beijing.
The Chinese Foreign Ministry reaffirmed its opposition to what it views as US interference in Hong Kong’s affairs Tuesday when asked about the report. Ministry spokesman Zhao Lijian told reporters that the city had been more stable under the
security law.
For multinational companies, the broadening struggle between the US and China for influence in Asia has fueled concerns that they might become collateral damage.
More recently last month, China’s top legislative body asserted sweeping powers to seize assets and block business transactions in a new law intended to allow President Xi Jinping to hit back against sanctions by the US and its allies.
The legislation followed the powerful national security law introduced in Hong Kong last year aimed at, among other things, banning “collusion with foreign and external forces.”
The US has since warned individuals about travelling to Hong Kong, including a State Department advisory asserting that the security law “could subject US citizens who have been publicly critical of the PRC to a heightened risk of arrest, detention, expulsion or prosecution.”
Hong Kong’s government has disputed claims that the security law has damaged the city’s business environment, citing the continued strength of local markets and an abundance of multinational companies. Chief Executive Carrie Lam, who was among local officials sanctioned by the Trump administration, last week cited favourable statements by foreign business groups about the city’s outlook as evidence that Western complaints about the security law were overblown.
The American Chamber of Commerce in Hong Kong couldn’t immediately comment on the FT report. An AmCham report released in May showed more than 40% of members surveyed by the lobby group said they might leave the city, underscoring the business community’s concerns over issues in the city including the security law.
At the time, AmCham Hong Kong President Tara Joseph said the group was committed to remaining “for the long haul,” adding that many businesses will have “strong opportunities to thrive in the future” despite the concerns about brain drain.