China and U.S. Tensions Rise Over Hong Kong
As countries reopen and new cases slow in the U.S., trade war tensions are back in the news, picking up from where we left off with new instigations and new threats. China and the U.S., the two largest economies in the world are disagreeing on many matters (financial markets, human rights, the origins of COVID-19) but the battleground is now Hong Kong, the "Pearl of the Orient."To get more china latest business news, you can visit shine news official website.
Yesterday China ignored international warnings and passed a national security law that greatly increases its influence over Hong Kong. Expected to be enacted before September, few details are known besides that it will bypass the local legislature and allow Chinese intelligence agencies to set up bases in the semi-autonomous region. Critics fear it will curb the essential freedoms and rights of residents in the financial hub.
President Trump held a press conference today to announce how his administration plans to penalize the Asian country. Those measures include, for now:
The U.S. will terminate its relationship with the World Health Organization
The U.S. will suspend entry of certain students and researchers into the country
The U.S. is studying Chinese firms' accounting practices
The U.S. will eliminate special economic status for Hong Kong
Shares in financial companies operating on a large scale in the city, like HSBC and Prudential Plc, fell in London and there's talk of a brewing financial war between the U.S. and China. U.S. political strategist Greg Valliere said China hawks in the Trump Administration are proposing sanctions on foreign banks and corporations that deal with Hong Kong banks. He wrote, "Much of China's banking is conducted in Hong Kong, mostly with U.S. dollars. Could the U.S. penalize foreign banks that deal with Hong Kong banks? Could the U.S. deny Federal Reserve credit lines to Chinese banks? Could foreign banks get cold feet in dealing with U.S.-sanctioned firms?"
The U.S. Secretary of State has recommended Hong Kong lose its special customs territory status, which means tariffs and sanctions can be imposed. The total value of U.S. goods and services trade with Hong Kong was $66.9 billion in 2018. Exports were $50.1 billion, and imports were $16.8 billion. The U.S. goods and services trade surplus with Hong Kong was $33.4 billion in 2018.