ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Hong Kong protests

Hong Kong rights bill a double-edged sword for city and US business

House expedites process and sends Senate's bill to the president's desk

Protesters in Hong Kong: The U.S. Senate's bill supporting the pro-democracy protests could have unintended economic consequences.   © Reuters

HONG KONG/WASHINGTON -- The U.S. House of Representatives on Wednesday passed the Senate version of a bill supporting democracy in Hong Kong, expediting a process and sending the measure to the desk of President Donald Trump.

The legislation targets the city's preferred status under American law and carries consequences for its economy, role as a financial hub and the U.S. companies operating there.

It is meant to discourage Beijing from interfering in the anti-government protests that have roiled Hong Kong for months. But if the bill's provisions are actually carried out -- a prospect that remains unclear -- the impact may not be confined to China, observers said.

The House took action a day after the Senate passed the bill, sending a warning to China regarding human rights. President Trump is expected to sign the measure into law, some U.S. media reports say.

The issue now confronts Trump as his administration is engaging in delicate trade talks with Beijing and as the president himself is the subject of impeachment hearings in the House.

The House passed the Senate's version of the bill, 417-1. Last month it passed its own version of the legislation, but rather than put the two measures through a lengthy reconciliation process, it decided to move on the Senate's bill.

The American Chamber of Commerce in Hong Kong expressed concern Wednesday about "possible unintended, counterproductive consequences of the bill," particularly "the sections addressing export controls and sanctions."

The legislation could also affect the handling of sensitive technology with potential military applications, a person familiar with the situation said.

If enacted, the Hong Kong Human Rights and Democracy Act would require the secretary of state to certify annually that Hong Kong still merits separate treatment from mainland China under U.S. law.

Hong Kong has enjoyed this treatment since its 1997 handover from the U.K. The criteria to be considered in such a review include the "one country, two systems" arrangement that guarantees the territory a high degree of autonomy.

Should Washington conclude that Beijing no longer respects this principle, it could scrap the special status under which the city is granted lower tariffs and looser visa requirements than the mainland. The bill also allows for freezing assets or revoking visas of individuals believed to be involved in human rights violations in Hong Kong.

Gavekal, a Hong Kong-based research firm, warned that the bill could deal a blow to the city's status as an international financial center.

A total of 1,344 American companies operate in the territory, including investment banks and trading houses. Of these, 278 use it as the headquarters for their Chinese or Asian operations.

Should the legislation pass, businesses may take it as a signal that Washington considers Hong Kong to be just another Chinese city, and reconsider maintaining offices there.

Ending Hong Kong's preferential tariff status would have a limited impact.

The territory booked $45.6 billion in exports to the U.S. last year, but only 1% actually originated in Hong Kong, with the rest passing through from elsewhere. Goods made in mainland China and shipped through Hong Kong are already treated as Chinese more often than not for tariff purposes.

"If there is an effect, it will be on the finance and services sectors," said Minoru Nogimori of the Japan Research Institute.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media