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Hong Kong protests

US and allies blast Hong Kong security law as China shrugs

State Department eyes response to 'change behavior' in Beijing

People's Liberation Army vessels at a naval base in Hong Kong.   © Reuters

NEW YORK -- The U.S., Australia, the U.K. and Canada expressed "deep concern" on Thursday over Beijing's approval of a national security law to be imposed in Hong Kong, a move seen as a major erosion to the city's autonomy.

"Hong Kong has flourished as a bastion of freedom," the countries said in a joint statement. "The international community has a significant and long-standing stake in Hong Kong's prosperity and stability."

The countries said the national security law "lies in direct conflict with its international obligations under the principles of the legally binding, U.N.-registered Sino-British Joint Declaration."

"The proposed law would undermine the 'one country, two systems' framework," the statement said. "It also raises the prospect of prosecution in Hong Kong for political crimes, and undermines existing commitments to protect the rights of Hong Kong people."

The statement called on Beijing to work with the government and people of Hong Kong to "find a mutually acceptable accommodation that will honor China's international obligations under the UN-filed Sino-British Joint Declaration."

The declaration, signed by Britain and China in 1984, laid the groundwork for China resuming control of Hong Kong in 1997. In it, Hong Kong was guaranteed a high degree of autonomy, including an independent judiciary and other freedoms, to last 50 years.

Earlier on Thursday, China's legislature, National People's Congress, voted to move forward with a law that would impose national security rules similar to those on the mainland in Hong Kong, bypassing the city's own legislative body. The approval came as protests erupted in the city and Washington warned against moving the law forward.

U.S. President Donald Trump has said his administration will respond "powerfully" by the end of the week, while his Secretary of State Mike Pompeo told Congress Wednesday that Hong Kong no longer has enough autonomy to warrant the special trade treatment it receives from the U.S.

Such privileges are afforded to the city by the United States-Hong Kong Policy Act of 1992.

An American law passed last year, the Hong Kong Human Rights and Democracy Act, mandates the State Department to conduct annual reviews of Hong Kong's autonomy in order for Congress to decide whether the unique treatment is still justified.

Trump will be able to suspend parts or all of Hong Kong's special treatment.

Dave Stilwell, assistant secretary of state, told reporters Thursday that the department is "designing our responses to be sure to help Beijing understand that as a nation of law, we will invoke the law."

"But at the same time, we will do our best to ensure the people of Hong Kong are not adversely affected," Stilwell said. He added that the measures, which could include visa and economic sanctions, will be targeted "to change behavior" in Beijing.

Given Washington's own interests and the interests of Hong Kong, a full repeal of the city's trade privileges -- or the so-called nuclear option -- "remains unlikely," according to analysts at the risk consultancy Eurasia Group. 

"U.S. companies are invested in Hong Kong as an access point for the region," the analysts, led by Jeffrey Wright, wrote in a Wednesday note. "Losing its special status would also hurt Hong Kong more than Beijing, further straining an already struggling economy while doing little long-term damage to Beijing's plans."

The most likely move in the near term would be extending tariffs on Chinese goods to Hong Kong exports, which will have a limited direct effect on the U.S. firms operating in the territory because of low volumes of goods exports, the note said.

"We expect sanctions to be tailored to avoid affecting financial institutions or Hong Kong's role as a financial hub, but deterioration of the situation is possible, so these are not out of the question," the analysts wrote.

Meanwhile, China's decision to move forward with the security bill despite pushback from both Hong Kong and the U.S. signals Beijing has calculated Washington's response to the extent it could afford.

"Now that Beijing is pushing the Hong Kong national security law forward, it is prepared for any response from Washington," the Chinese state-run Global Times said in a Wednesday editorial. 

Sanctions targeting individual officials' assets and visas will appear underwhelming, the article said.

"The ace in [Washington's] hand is nothing but the so-called decoupling," it continued. "If the financial war keeps escalating, the ultimate loser will be the U.S."

The U.S. response "will need to exceed Chinese expectations if it is to have an intended effect on future PRC behavior," Ryan Hass, a fellow at Washington think tank Brookings Institution and an Asia adviser under the Obama administration, said Thursday.

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