A senior administration official said developments over the last year in Hong Kong present operational, financial, legal, and reputational risks for multinational firms that necessitated the advisory, issued Friday by the State and Treasury, Homeland Security and Commerce departments.
The business advisory underscored how swiftly China’s push for more control over Hong Kong has brought an end to the “one country, two systems” approach that Beijing had promised when it took back control of the former British colony in 1997. That’s proved a death knell for the island’s independent judiciary, pugnacious media and lively protest movements.
“The situation in Hong Kong is deteriorating, and the Chinese government is not keeping its commitment that it made, how it would deal with Hong Kong,” President Joe Biden said Thursday, ahead of the advisory’s release.
Shortly before the advisory was issued, Beijing pledged a “firm response” to any action by Washington.
“We urge the U.S. side to stop interfering in the Hong Kong issue and China’s internal affairs in any form,” Chinese Foreign Ministry spokesman Zhao Lijian told a regular news briefing Friday in Beijing.
While the advisory doesn’t order companies to scale back investments or leave Hong Kong, Biden administration officials worry that major banks and other multinational businesses with headquarters in the city haven’t yet come to grips with just how much the landscape there has changed and how much risk they now face.
Seeking to make that clear, the U.S. advisory covers four main areas: China’s national security law, risks to data privacy, freedom of the press and sanctions that have been put in place by both sides.
Specifically, it warns of the Chinese government’s ability to gain access to data that foreign companies store in Hong Kong.
The advisory is the latest salvo in a competition that Biden has called one of the defining challenges of the century, and it signals a remarkable turnaround for a city which over decades became a financial hub on a par with London and New York.
It comes amid news that China plans to exempt companies going public in Hong Kong from first seeking the approval of the country’s cybersecurity regulator. Bloomberg