Asia

China to impose anti-sanctions law on Hong Kong, reports say

HONG KONG (BLOOMBERG) – China’s top legislative body will take the first steps towards imposing an anti-sanctions law on Hong Kong, local media reported, a move that could create complications for multinationals caught in rising tensions between Washington and Beijing.

The National People’s Congress (NPC) Standing Committee will add the legislation to Hong Kong’s Basic Law next month, media including the South China Morning Post newspaper reported Wednesday (July 28), citing people they did not identify.

The state-run Xinhua News Agency said Tuesday that the body would consider adding national laws to the annexes of the charters of both Hong Kong and Macau during a closed-door session Aug 17 to 20, without specifying what legislation was under discussion.

The move follows the NPC’s passage of an anti-sanctions law last month that gives the Chinese government broad powers to seize assets from and deny visas to those who formulate or implement sanctions against the country.

It also empowers individuals and companies to sue “individuals and organisations” to seek compensation for discriminatory practices in Chinese courts.

While much depends on how strictly Beijing chooses to enforce the anti-sanctions legislation, the measure could create new headaches for thousands of foreign companies that operate in the two former colonies.

It could potentially create a situation in which firms are forced to choose between competing directives from the governments of the world’s two largest economies.

“It certainly would add to the complexity of doing business in Hong Kong,” Ms Tara Joseph, president of the American Chamber of Commerce in Hong Kong, said on Wednesday.

The US flagged the possibility that China could apply the anti-sanctions law in Hong Kong, when the Biden administration warned businesses earlier this month about the growing risks of operating in the city.

Chinese diplomats wrote an article last month in state-run Study Times saying that the sanctions legislation should be added to the charters of Hong Kong and Macau, even though it already applied there.

The anti-sanctions legislation is part of President Xi Jinping’s attempt to fight back against a widening range of US sanctions on Chinese officials and entities over the Beijing’s policies towards Hong Kong and Xinjiang.

Mr Xi’s responses have so far had little impact due to the US dollar’s dominance in the global financial system.

The addition of the sanctions law to Hong Kong’s charter would be the latest in a series of moves by China to directly legislate in the former British colony, which China promised a “high degree of autonomy”.

Since last year, the top legislative body has handed down a sweeping national security law and mandated an election overhaul that creates a system to exclude candidates deemed unpatriotic.

Senior Chinese officials have hinted that Beijing could further strengthen Hong Kong’s security laws.

Earlier this month, Mr Zhang Yong, deputy head of the NPC’s Legislative Affairs Commission, said that the Hong Kong national security law needed further work, adding that the NPC Standing Committee has authorisation to draft more legislation as needed, as several types of security offenses are not covered by the Hong Kong’s measures.

China’s own security law covers 11 types of crimes, Mr Zhang said, referring to legislation that covers spying, treason, defection and leaking state secrets.

In comparison, Hong Kong’s security law only covers four crimes: secession, subversion, colluding with foreign forces, and engaging in terrorist activities.

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