From MarketWatch, May 30:
Secretary of State Mike Pompeo declared Hong Kong to be no longer autonomous from China Wednesday, a move that further increases tensions between Washington and Beijing and could pave the way for changes to U.S. policy toward Hong Kong that could have large ramifications for the global economy.
Pompeo is required by legislation passed last year to annually certify Hong Kong’s autonomy from mainland China, and that law also asserts that such autonomy is necessary to “justify treatment” under U.S. law that is “different to that accorded” mainland China.
It remains to be seen what policy changes, if any, will result from the declaration, but if the Trump administration does move to fully revoke special economic and legal privileges granted to Hong Kong since the territory came back under Chinese control, it could devastate the Hong Kong economy and hasten a division of the global economy into a U.S. economic sphere and a Chinese one, China experts say.
“The Hong Kong economy would basically be gone,” if the U.S. were to end all privileges afforded it by the United-States Hong Kong Policy Act of 1992, Diana Choyleva, chief economist at Enodo Economics told MarketWatch.
The 1992 law allows fore easier travel between U.S. and Hong Kong and exempts the region’s exports from most U.S. tariffs, while allowing companies based there to access “sensitive technologies” made by American firms, which face export restrictions to the mainland.
Most important, Choyleva said, is that the law mandates the free exchange of Hong Kong dollars for U.S. dollars. If the U.S. moves to restrict the Hong Kong Monetary Authority’s access to U.S. dollars, “that would be an extreme nuclear option” that could devastate the region’s banking and shipping and logistics sectors, while triggering widespread capital flight.....MUCH MORE
The impact such a move would have on the mainland Chinese economy would not be nearly as severe, said Leland Miller, chief executive officer of the China Beige Book, a firm that advises investors and corporate management on the Chinese economy. “The impact is overhyped. Most talking heads say that the Chinese can’t allow Hong Kong to lose its status as the pre-eminent financial center in Asia, but that’s not what I hear from China,” he said. ...
This is what Beijing wants, and if they can blame it on the U.S. all the better.
Back in November 2019's "Hong Kong’s Demise" we noted:
It appears that one of Beijing's options is to let Hong Kong die on the vine and wither away as a business center, with Shenzhen, Shanghai and even Hainan island assuming some of the various roles that Hong Kong has played over the years.
And if HK is no longer an entrepôt and the gateway to China it faces the possibility of becoming a colonial backwater but one that is so overbuilt it ends up as an urban hellscape. Imagine this:
Andy Yeung via DesignBoom:
but without the money that lubricates social intercourse....MORE
