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‘Another Chinese city?’: Review Hong Kong’s status as a separate customs area for tech exports, urges US report

The US Department of Commerce should review its export control policy for civilian technology with military applications, according to a report released on Wednesday which concluded that Hong Kong was moving closer to becoming “more like any other Chinese city.”

The annual report of the US US-China Economic and Security Review Commission cited a “troubling trend” of declining freedoms and political autonomy in Hong Kong, which it attributed to interference by the central government. The Hong Kong government has countered that it has upheld the principles of One Country, Two Systems.

xi jinping usa china

Xi Jinping. File photo: Wikicommons.

“In light of China’s increasing reach into Hong Kong, some observers argue that the territory is losing the unique characteristics and legal protections that make it important to US interests,” the Commission said. “Over the long term, these trends could diminish Hong Kong’s standing as a global business centre.”

The US report advised the department to review its policy for so-called “dual-use technology,” meaning products and goods normally used for civilian purposes but which may have military applications, owing to these findings.

The report also said that freedom of speech and assembly in Hong Kong was under threat, citing the visa denial of FT journalist Victor Mallet and the ban of the pro-independence Hong Kong National Party. Other incidents mentioned included the disqualification of candidates, Hong Kong’s refusal to hand over a fugitive, and its failing to allow for US Navy vessels to enter Hong Kong.

“Beijing emphasised the CCP’s [Chinese Communist Party’s] control over the territory, leading to further curbs on Hong Kong’s promised ‘high degree of autonomy’ and freedoms guaranteed under the ‘one country, two systems’ policy and the Basic Law,” the Commission added.

The report said members of Congress should meet with Hong Kong officials, pro-democracy legislators, civil society, and business representatives in the territory and when they visit the United States.

“In meetings with Hong Kong and Chinese officials, they should raise concerns about Beijing’s adherence to the ‘one country, two systems’ policy and China’s promise to allow Hong Kong a ‘high degree of autonomy.’ They should also continue to express support for freedom of expression and rule of law in Hong Kong,” it said.

The Hong Kong government issued a statement in response to the report on Wednesday, which said that it had fully upheld the One Country, Two Systems principle and will continue to cooperate with the US on trade.

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The Foreign Correspondents’ Club. Photo: HKFP.

“The HKSAR Government expresses regret over the biased conclusions and unfounded accusations made in the report,” the statement read. “The HKSAR Government reiterates that foreign legislatures should not interfere in any form in the internal affairs of the HKSAR.”

The Commission’s report last year said that the One Country, Two Systems framework has been “called into question” by Beijing’s increasing pressure.

However, last year’s report did not recommend any review of US policy, only that Congress re-authorise a reporting requirement under the United States-Hong Kong Policy Act 1992, where the US will continue to seek reports on the status of One Country, Two Systems in Hong Kong.

‘No sense of crisis’

Pro-democracy lawmaker James To said on Wednesday the Hong Kong government’s response was “just like the Chinese Ministry of Foreign Affairs” and did not take the report seriously.

James To

James To. File Photo: inmediahk.net.

“It seems like [Chief Executive] Carrie Lam feels very secure… She says that the US will suffer more than Hong Kong does [in a trade war]. If she thinks that way, then she doesn’t have a sense of crisis and Hong Kong is in danger,” To said.

To said the Hong Kong government should send an impact assessment to the central government concerning the implementation of One Country, Two Systems.

However, To added that he opposed punitive measures from the US: “The past two years had a significant impact on One Country, Two Systems, but not to the point where they should cancel Hong Kong’s special status under the United States-Hong Kong Policy Act.”

Charles Mok

Charles Mok. Photo: inmediahk.net.

IT sector lawmaker Charles Mok added that the report’s recommendation might affect a wide range of technologies, including information security, artificial intelligence, fintech and more.

Mok said that the recommendation, if implemented, would significantly curtail Hong Kong’s ambitions of being an emerging tech hub.

“We see in recent years that mainland companies face a lot of restrictions in the United States. If homegrown Hong Kong businesses and investors also face similar restrictions, it would greatly impact the industry,” he said.

Pro-Beijing lawmaker Felix Chung, leader of the pro-business Liberal Party, said the Hong Kong government cannot be relaxed about the situation.

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Felix Chung. Photo: HKFP/Catherine Lai.

“They should send someone to Washington as soon as possible, or speak to the US Consul General and the American Chamber of Commerce to persuade them or explain to them,” he said. “If the US treats Hong Kong as another Chinese city, we can say that Hong Kong is finished.”

Pro-Beijing lawmaker Holden Chow called the report “prejudiced and misjudged,” and said it was wrong for the US to reach its conclusion based on the ban of the Hong Kong National Party.

“If [the US] changes its policy, it is not only Hong Kong that gets hurt, the US will also get hurt,” Chow said. “It would also give people the impression that the US is using Hong Kong as a bargaining chip in its trade war with China.”

'Another Chinese city?': Review Hong Kong's status as a separate customs area for tech exports, urges US report