US Business in HK Shivers as Tensions Grow

AmCham objects as economic war against China heats up

Worried US businessmen in Hong Kong are objecting to US President Donald Trump’s revocation of Hong Kong’s special status in the middle of an escalating economic war between the US and China, especially after a fire-breathing speech by US Attorney General William Barr accusing China of launching an “economic blitzkrieg” to topple the US from its perch “as the world’s preeminent superpower.” The US government has also tightened restrictions on Chinese tech companies, particularly the telecoms giant Huawei.

On July 14, US President Donald Trump signed an executive order revoking the special trading status the US has provided Hong Kong since 1997, paving the way for the city to potentially lose US favorable trade policies not granted to the mainland. Trump’s action was spurred by Beijing’s imposing the national security law in a bid to quell dissent. Washington says the legislation has severely eroded the high level of autonomy Hong Kong was supposed to have under the “one country, two systems” compact agreed between the UK and China prior to the 1997 handover of the former crown colony.

In reaction to the growing tension, the American Chamber of Commerce in Hong Kong (AmCham), the leading American business group in the city, said that “We regret the revocation of Hong Kong’s special trade status with the United States under the United States-Hong Kong Policy Act, which we believe will hurt American businesses in Hong Kong. The Policy Act, in effect since 1997, supported Hong Kong’s crucial role in the global economy and protected US commercial interests in the Indo-Pacific region.”

The Policy Act preserved Hong Kong as a financial and strategic hub in the Indo-Pacific region for more than 1,300 American firms and 85,000 American citizens, AmCham said.

“We sincerely hope to see a return to a strong, open and constructive dialogue between the governments of Hong Kong and the United States,” AmCham urged.

However, the US government is not in the mood for dialogue with China, sending two aircraft carrier groups led by the USS George Washington and the USS Nimitz into the South China Sea with a B52 Stratofortress overhead in a massive show of force to counteract Beijing’s claims to virtually all of the islets and specks in the sea. Worried

In a speech at the Gerald R. Ford Presidential Museum on July 16, Barr warned that US corporate leaders risk being implicated under the US Foreign Agents Registration Act (FARA), if they are perceived to help Beijing extend its influence with the US government. FARA requires people acting as agents of foreign governments to publicly disclose those foreign relationships by registering with the US Department of Justice (DOJ).

“The Department of Justice has seen more and more (Chinese) officials and their proxies reaching out to corporate leaders and inveighing them to favor policies and actions favored by the Chinese Communist Party,” Barr said. “Privately pressuring or courting American corporate leaders to promote policies (or politicians) presents a significant threat, because hiding behind American voices allows the Chinese government to elevate its influence and put a “friendly face” on pro-regime policies,” Barr warned. 

“Pawns of Chinese influence”

Barr accused Hollywood of “kowtowing” to China and big US technology firms of being “pawns of Chinese influence.” He prodded Hollywood and US technology firms to join the US government’s crusade against China in a contest for global supremacy.

“The CCP (Chinese Communist Party) has launched an orchestrated campaign, across all of its many tentacles in Chinese government and society, to exploit the openness of our institutions in order to destroy them. To secure a world of freedom and prosperity for our children and grandchildren, the free world will need its own version of the whole-of-society approach, in which the public and private sectors maintain their essential separation but work together collaboratively to resist domination and to win the contest for the commanding heights of the global economy,” Barr said.

“Sadly, examples of American business bowing to Beijing are legion,” he added.

Hollywood regularly censors its movies to appease the Chinese government, Barr alleged. He cited the Marvel Studios blockbuster Dr. Strange, where the filmmakers changed the nationality of a major character known as the “Ancient One,” a Tibetan monk, from Tibetan to Celtic, presumably to avoid offending the Chinese government over Tibet.

Over the years, major US tech companies such as Google, Microsoft, Yahoo and Apple “have shown themselves all too willing to collaborate with the CCP,” Barr alleged. 

For example, Apple recently removed the news app Quartz from its app store in China, after the Chinese government complained about coverage of the Hong Kong democracy protests which have been going on since the middle of last year, Barr said. 

Tighter US restrictions on Chinese telecom companies

In a move aimed at Chinese telecommunication companies, the US Federal Communications Commission (FCC) announced on July 16 it is incorporating existing US network security laws into its regulations for supply chains.

“National security experts have warned that when companies are beholden to foreign governments with interests adverse to the United States, their products and services can threaten our country. This is certainly the case with the Chinese telecommunications equipment manufacturers Huawei and ZTE,” said FCC chairman Ajit Pai.

In April, the DOJ identified “substantial and unacceptable” national security and law enforcement risks associated with China Telecom, a leading Chinese state-owned telecommunication company, said US Assistant Attorney General for National Security John Demers in a speech at a conference in the US on July 16. Hence, the DOJ recommended that the FCC revoke the US licenses of China Telecom, said Demers. “The company’s operations also provided opportunities for P.R.C. state actors to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of U.S. communications.”

Chinese investments in the US plunged from a peak of US$45 billion in 2016 to US$5 billion in 2019, according to Rhodium Group, a US consultancy.

In the Sino-US rivalry, neither superpower will be willing to yield to the other, according to a recently published book, “China versus the US. Who will prevail?” by a retired Venezuelan diplomat Alfredo Toro Hardy. Although the US possesses overall technological superiority, China will be able to match or surpass the US in some key technologies, said Hardy’s book.

According to an AmCham survey conducted earlier in July, a significant majority of 68 percent were more concerned about the national security law than one month ago. AmCham polled 183 members across a wide range of industries including retail, trading and financial services.

One unnamed respondent said, “I am concerned about the reaction of US politicians to the NSL (national security law) rather than concerned about the law itself.”

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