President Donald Trump on Tuesday ordered an end to Hong Kong’s special status under U.S. law to punish China for what he called “oppressive actions” against the former British colony, prompting Beijing to warn of retaliatory sanctions.
Citing China’s decision to enact a new national security law for Hong Kong, Trump signed an executive order that he said would end the preferential economic treatment for the city. “No special privileges, no special economic treatment and no export of sensitive technologies,” he told a news conference.
China’s foreign ministry said on Wednesday Beijing will impose retaliatory sanctions against U.S. individuals and entities in response to the law targeting banks, though the statement released through state media did not reference the executive order. “Hong Kong affairs are purely China’s internal affairs and no foreign country has the right to interfere,” the ministry said.
U.S. relations with China have already been strained over the global coronavirus pandemic, China’s military buildup in the South China Sea, its treatment of Uighur Muslims and massive trade surpluses.
Trump’s handling of the coronavirus pandemic has raised doubts about whether he can win re-election on November 3 amid a surge of new infections. He has attempted to deflect blame onto China.
Asked if he planned to talk to Chinese President Xi Jinping, Trump said: “I have no plans to speak to him.”
Analysts say that completely ending Hong Kong’s special treatment could prove self-defeating for the United States. Hong Kong was the source of the largest bilateral U.S. goods trade surplus last year, at $26.1 billion, U.S. Census Bureau data shows.
According to the State Department, 85,000 U.S. citizens lived in Hong Kong in 2018 and more than 1,300 U.S. companies operate there, including nearly every major U.S. financial firm. The territory is a major destination for U.S. legal and accounting services.
The United States began eliminating Hong Kong’s special status under U.S. law in late June, halting defense exports and restricting the territory’s access to high-technology products as China prepared to enact the security legislation.
In May, Trump responded to China’s plans for the security law by saying he was initiating a process to eliminate the special economic treatment that has allowed Hong Kong to remain a global financial center.
He stopped short then of calling for an immediate end to privileges, but said the moves would affect the full range of U.S. agreements with Hong Kong, from an extradition treaty to export controls on dual-use technologies.
A U.S. official, speaking on condition of anonymity, said the administration was also preparing sanctions against Chinese officials and entities involved in the Hong Kong crackdown, including further U.S. travel bans and possible Treasury sanctions.
The timing remained unclear. The White House has previously threatened such sanctions but so far has only imposed restrictions on visas for an unspecified number of unnamed Chinese officials.