Date
15 December 2018
Hong Kong accounts for the biggest trade surplus that the United States enjoys with any economy. Photo: Bloomberg
Hong Kong accounts for the biggest trade surplus that the United States enjoys with any economy. Photo: Bloomberg

Hong Kong still plays a unique role in US-China relations

The United States-China Economic and Security Review Commission (USCC), which monitors national security and economic issues between the two countries, has suggested that Washington review whether Hong Kong should continue to be treated separately from mainland China.

If the USCC recommendation is adopted, it would entail a lengthy process; but even so, the possibility has raised widespread concerns in local political and business circles.

Under the United States–Hong Kong Policy Act, or known as Hong Kong Policy Act, the US continues to treat Hong Kong separately from China after the 1997 handover on matters concerning trade and economic matters.  This has enabled Hong Kong to join international organizations such as the World Trade Organization, Asia-Pacific Economic Cooperation and International Olympic Committee independently.

If Hong Kong loses its special status and becomes just another Chinese city, the widely accepted view is that it would be a disaster for the city. However, I believe such a concern is a bit overblown.

For starters, the USCC, which is made of experts and scholars, only provides policy advice for the US Congress, and it has no real powers.

According to its website, the USCC has already published more than 30 reports this year alone, covering a wide range of topics such as Belt and Road, 5G telecommunications, Sino-EU relations, agricultural policy, artificial intelligence, Internet of Things, the online gaming industry, etc. But most of the time, Congress hasn’t taken any concrete actions in response to those reports.

The part about Hong Kong in the nearly 500-page report represents less than 5 percent of the entire content. It remains unclear whether the Congress will seriously consider the proposal.

As Chief Executive Carrie Lam Cheng Yuet-ngor pointed out, as a trade partner of the US, Hong Kong accounts for the biggest trade surplus that the US enjoys with any economy.

Meanwhile, not a few American companies have set up their regional headquarters in the city. And as such, any changes to the US trade policy on Hong Kong would also affect America’s economic interests.

Hong Kong also serves as a key base for US activities in the Far East, and as such, the city still has strategic value for Washington.

In an emergency situation, Hong Kong could act as an intermediate window, just like what happened in the 1950s when the US imposed an export ban on China.

Given all these, Washington is unlikely to take any move against Hong Kong without careful deliberation.

Still, the report shows that Americans are taking note of the changes in the city after the handover, such as its diminishing autonomy in recent years. This raises the possibility that the US Congress or the president may eventually be under pressure to modify the special treatment accorded Hong Kong.

This article appeared in the Hong Kong Economic Journal on Nov 20

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RT/CG

Hong Kong Economic Journal columnist

EJI Weekly Newsletter

Please click here to unsubscribe