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US-China tensions

China poised to impose anti-sanctions law on Hong Kong

City's multinationals face financial risk, caught in US-Beijing tug of war

China applying its anti-sanctions law to Hong Kong would impact financial institutions in the city that comply with U.S. sanctions.   © Reuters

HONG KONG -- China is preparing to apply an anti-sanctions law on Hong Kong, local news reports say, laying the groundwork to punish foreign financial groups in the territory that comply with Western sanctions.

The National People's Congress Standing Committee will add a national law to an annex to the constitutional documents of Hong Kong and Macao, each known as the Basic Law, during a four-day session set to start Aug. 17, according to a report by the official Xinhua News Agency. National laws do not apply in the two cities unless listed in the annexes, but the news report did not specify which law would be added.

Sing Tao Daily and other Hong Kong news outlets identified the legislation in question as China's anti-sanctions law, enacted last month and designed to counter the impact of sanctions imposed by foreign governments.

The law authorizes retaliation against individuals and groups involved in issuing and carrying out sanctions against China. The measures include denial of visas, deportation and seizure of assets located in China. Former U.S. Commerce Secretary Wilbur Ross has been one target of the anti-sanctions law.

Applying the legislation to Hong Kong could impact financial institutions in the city that comply with U.S. sanctions. China's law orders organizations and individuals not to cooperate with foreign sanctions, and it gives those harmed by the sanctions the right to sue for damages.

The U.S. responded to Beijing tightening its political grip on the territory by issuing sanctions against Chinese and Hong Kong officials. It is believed that Western financial institutions and Chinese state-owned banks have abided by the American sanctions.

Steve Vickers & Associates, a Hong Kong risk advisory firm, said, "Such a law (anti-sanctions law) will present businesses with an acute challenge in dealing with potentially incompatible U.S., and Chinese rules. Any further moves by the US to implement sanctions may therefore have unforeseen outcomes."

President Joe Biden's administration sent a written advisory to American businesses this month outlining the risks of doing business in Hong Kong. The text calls on the companies to abide by U.S. sanctions and cites the potential for retaliation by China.

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