Stance on the US’ Decision to Suspend Hong Kong’s Special Trade Status Go back »

2020-06-30 | All chapters

The ‘one country, two systems’ framework governing the relationship between Mainland China and the Hong Kong Special Administrative Region (SAR) underpins the current and future success of ‘Asia’s World City’. The European business community has leaned heavily on Hong Kong as a centre for business in large part because of the high degree of autonomy granted by this arrangement. Without the resulting rule of law, individual liberties, independent judiciary, high level of transparency and the free flow of talent, goods and capital, the allure of this important city will be greatly diminished.

The European business community therefore has significant interest in maintaining the unique level of autonomy in the SAR. Steps taken by either the local authorities or the central government in Beijing that undermine the integrity of the ‘one country, two systems’ model would damage business confidence, not only for European companies present in the SAR, but also those in Mainland China.

The US’ decision to suspend Hong Kong’s special trade status—taken as a direct response to its belief that it has already lost its autonomy from the mainland—is not likely to have an immediate, direct impact on Hong Kong, due to manufacturing for export occupying a small portion of its economy relative to services. However, the potential for further escalation of this action could have more serious implications, particularly if it is expanded as part of the growing tech-war, and the potential for a financial-war, between the US and China.

It is concerning that this move will further ratchet up tensions between the US and China at a time when greater cooperation is needed, with the global economy still struggling to get back on its feet, and for now places Hong Kong at the centre of this conflict.

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