Explainer: How ending Hong Kong's 'special status' could affect USA companies

Daniel Fowler
May 23, 2020

In an explainer document, government official Wang Chen reiterated Beijing's long-held desire to implement laws targeting "treason, secession, sedition, subversion against the Central People's Government, or theft of state secrets".

"The United States condemns the. proposal to unilaterally and arbitrarily impose national security legislation on Hong Kong", Pompeo said in a statement.

It comes after months of pro-democracy demonstrations a year ago that at times descended into violence between police and protesters.

The United States reacted swiftly to China's announcement, with State Department spokeswoman Morgan Ortagus warning that imposing such a law on Hong Kong would be "highly destabilising, and would be met with strong condemnation from the United States and the global community".

Dennis Kwok, a pro-democracy lawmaker in Hong Kong, told a US-based audience on Friday that the territory's opposition forces appreciated USA efforts and urged continued vigilance, voicing fear for police crackdowns in the coming days.

The stock selloff was widespread in Hong Kong, with more than two-thirds of the Hang Seng index's 50 members setting new four-week lows on Friday.

The announcement drew sharp criticism from the USA, which has threatened to withdraw preferential trade status for Hong Kong, and seems likely to prompt more protests in the short run.

Market heavyweight HSBC lost 6.9 percent and BOC Hong Kong shed 7.8 percent, while insurance giant AIA was down more than nine percent and China Life dropped 6.8 percent. That is why Beijing wants to silence us, and that is why the world should do their best to save us, before it is all too late. One of which was a bill that would have allowed Hong Kong residents to be extradited to mainland China to stand trial.

"There is now another way of ensuring that Hong Kong will have the necessary legislation and the safeguards in place for national security", she said.

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A US revocation of Hong Kong's special status would be viewed by Beijing as interfering with its sovereignty, and China has previously threatened to "take strong countermeasures".

The surprise move by the Communist Party also risks exacerbating tensions with the USA, and destabilizing global markets still reeling from economic fallout of the coronavirus pandemic.

"This is nearly like a nuclear option, which once you use it, everyone will get hurt, and it will be very hard to build Hong Kong back up again", Kwok told the conservative Heritage Foundation by videoconference. We believe that the citizens of Hong Kong, just like all people around the world, should have the right to exercise these freedoms.

It has observed a "one country, two systems" policy since Britain returned sovereignty in 1997, which has allowed it certain freedoms the rest of China does not have.

Beijing's proposed legislation follows repeated warnings from China's leaders that they would no longer tolerate dissent in Hong Kong, which endured seven months of massive pro-democracy protests a year ago.

The Democratic Alliance for the Betterment and Progress of Hong Kong - the largest pro-establishment group in Hong Kong - said it welcomes and fully supports the proposal. This year, under cover of COVID, there've been a wave of arrests of prominent lawmakers and activists, more protesters being jailed.

Instead, it has chosen what he called a "worse option" by proposing the NPC enact a national security law for the city. "I find it hard to believe this will not trigger either a massive peaceful and orderly demonstration or more vocal and aggressive protests or, indeed, most probably, a combination of both".

Hong Kong has been allowed a limited form of autonomy since returning from British to Chinese rule in 1997, with those unique freedoms enshrined under a "One Country, Two Systems" handover agreement. This is against the Basic Law, no doubt about it.

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