Business

Biden to warn US business over Hong Kong

The Biden administration will on Friday warn US companies that they face serious and escalating risks operating in Hong Kong, as the Chinese government increasingly cracks down on freedoms in the financial hub.

The US will issue a “business advisory” about threats ranging from China’s ability to gain access to corporate data stored on servers in Hong Kong to a new Chinese law that imposes sanctions on people or institutions that help foreign nations enforce sanctions against Chinese companies and officials.

US president Joe Biden is also expected to impose sanctions on several Chinese officials in Hong Kong. The moves, which were first reported by the Financial Times, are the latest effort to push back against China over its increasingly draconian steps against the pro-democracy movement in the former British colony.

It will also mark the first time that a US administration has issued a business advisory in relation to Hong Kong.

Sino-US relations have continued to spiral downwards following the first top-level meeting between the countries in Alaska, which erupted into an acrimonious public spat.

Beijing has since snubbed the US by refusing to grant Wendy Sherman, US deputy secretary of state, a meeting with her counterpart during a proposed meeting in Tianjin at the end of July. China instead offered a meeting with the fifth-ranking foreign ministry official, which was rejected by the Biden administration. US officials stress that a meeting may still happen if China reverses course and offers up her appropriate counterpart.

But the combination of the business advisory and sanctions will probably complicate talks. China reacted angrily in March when the US imposed sanctions on Chinese officials just ahead of the Alaska meeting, which was the first and only high-level meeting between the countries since Biden took office.

Biden has taken a much tougher line on China than most experts had expected. He has rebuked China for its aggressive military activity near Taiwan, the erosion of freedoms in Hong Kong, its coercive economic behaviour around the world and alleged genocide of Uyghurs in Xinjiang.

The deterioration in relations has sparked concern in the business community, which had hoped Biden would strike a less hawkish hone towards Beijing than his predecessor, Donald Trump.

The prospect of the business advisory has not been well received by the US business community in Hong Kong, with concerns that it could foster backlash against American companies operating in the city.

“US business in Hong Kong want engagement and dialogue and less mud-slinging,” said one person involved with US multinationals.

Multinationals in Hong Kong with offices in mainland China, where data privacy and national security laws are tough and vague, say they understand the risks even as Hong Kong becomes more integrated with the mainland.

“This is to serve a political purpose in Washington. They [companies] will wait for this to work its way through the system and then we can all try and forget about it,” said the person.

Follow on Twitter: Demetri Sevastopulo




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