Hong Kong has long occupied a peculiar place in the international economic order. It’s not an independent country, but can enter trade agreements with other states on its own. It sets its own taxes, and has its own currency. Though it’s part of China, tariffs and customs controls applied on Chinese goods don’t apply to Hong Kong.
But Hong Kong’s special status is now facing its most urgent crisis yet. Following Beijing’s announcement last week that it would bypass all of Hong Kong’s legislative procedures and unilaterally enact a sweeping national security law by fiat, countries are re-evaluating whether the city should continue enjoying its special trade privileges, or be treated as just another mainland Chinese city.
In a statement yesterday, US secretary of state Mike Pompeo declared that Hong Kong can no longer be deemed to have a high degree of autonomy from China. This designation underpins US-Hong Kong relations, as Washington has legislated that the city must remain “sufficiently autonomous” to justify special treatment from the US. On Tuesday (May 26), president Donald Trump said he would announce a strong response to Beijing’s actions over Hong Kong this week, adding that it’s “hard to see how Hong Kong can remain a financial hub if China takes over.” US senators have already introduced a bill that would impose sanctions on Chinese officials and firms who violate freedoms in Hong Kong.
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