[Hong Kong version of the National Security Law] The beginning and end of the United States ’deprivation of special treatment in Hong Kong and its impact

Analyze comments

Written by: Wu Di

2020-05-29 18:00

The "Hong Kong version of the National Security Law" of global concern was finally approved by the National People's Congress of China on May 28. This concerns both Hong Kong and China. Against the background of the unprecedented international confrontation between China and the United States, as the "number one target" of the "Hong Kong version of the National Security Law", the United States government has repeatedly stated that "there will be a strong response". What kind of impact it will bring to Hong Kong and even China has aroused the concern of all walks of life.

The day before the Chinese National People's Congress voted, US Secretary of State Mike Pompeo announced on Twitter in high-profile that he had already stated to the US Congress that day, "There is no reasonable person who can indicate that Hong Kong still enjoys a high degree of autonomy from China" (No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China) and believes that "Hong Kong does not ensure that it will continue to obtain the special treatment granted to it by the United States before July 1997 in accordance with US law" (Hong Kong does not continue to warrant treatment under United States laws in the same manner as US laws were applied to Hong Kong before July 1997).

Like Pompeo's consistent style, he has a lot of room for his position. However, the follow-up action of Washington is not decided by the State Council. It is decided by the US Congress through legislative procedures or by President Donald Trump through a presidential executive order. Regarding this, US President Donald Trump said after the National People's Congress of China passed the "Hong Kong version of the National Security Law", he would discuss what we're doing with respect to China on May 29th. ) Hold a press conference.

Today, I reported to Congress that Hong Kong is no longer autonomous from China, given facts on the ground. The United States stands with the people of Hong Kong.

In the end, Trump will discuss which "measures against China" are still unknown, and whether the White House will adopt and take measures against China is yet to be announced, but from the perspective of Hong Kong and the whole country, one of the core topics is undoubtedly Is it that the White House will terminate the "special treatment" that the United States implements in accordance with the United States-Hong Kong Policy Act and Hong Kong, which is different from mainland China.

In "special treatment", the main points currently mentioned by various circles include bilateral agreements, freely convertible currencies, and visa approval. But what is most concerned about is the "independent customs zone." On May 27th, Reuters and other media quoted sources as reporting that the US government is considering suspending special tariff treatment for Hong Kong ’s exports to the United States, as part of Beijing ’s plan to implement the "Port National Security Act," meaning that Washington may be treating Hong Kong Exports are subject to the same tariffs as those in Mainland China.

↓↓↓ The "Hong Kong version of the National Security Law" has attracted various parties to debate. If you want to know the status of the representatives in various places, you can click on the picture to understand:

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Independent customs zone status is not granted by the United States

So, how did the formation of the separate customs zone in Hong Kong come about? This needs to be said from 35 years ago-Hong Kong ’s status as a separate customs territory was not granted by the United States, but was formally confirmed on the GATT (General Agreement on Tariffs and Trade, WTO predecessor) multilateral occasions in 1985.

According to Article 26, paragraph 5, paragraph C, of ​​GATT, to make a separate customs territory a separate party, only the sovereign state is required to make the declaration. In 1985, the British knew that China was going to negotiate to join GATT, and therefore decided that it was necessary to start the procedure in advance to enable Hong Kong to join the multilateral trading system as a separate customs zone as a separate customs zone.

The British side also informed China at that time. When the two countries reached a consensus, the United Kingdom declared Hong Kong as a separate customs territory and became a separate contracting party. The Chinese government also stated that after the return of Hong Kong, it will continue to be a separate customs territory and enjoy complete autonomy in tariffs and trade policies. Since 1986, Hong Kong will no longer be represented by the United Kingdom at the GATT multilateral meeting, but will stand alone; after the WTO replaced GATT in 1994, Hong Kong continued to participate as an independent customs territory and a separate party; then in 1997, Hong Kong ’s sovereign handover, and China joined the WTO in 2001, and China continues to allow Hong Kong to retain its relevant status.

On May 28, the closing day of the National People's Congress of China, the conference voted on the "Hong Kong version of the National Security Law." The result was 2,878 votes in favor, 1 against, and 6 abstentions. One person did not press the voting device and the majority passed. (Carlos Garcia Rawlins / Reuters)

In 1992, the United States formulated the "U.S.-Hong Kong Policy Law" on the U.S.-Hong Kong arrangement after the sovereignty handover of Hong Kong in 1997, which came into effect on October 5 of that year. Subchapter 1, section 5712-3 of the first subchapter of the Act (Subchapter 1, section 5712-3) makes it very clear, "The United States should respect the status of Hong Kong ’s independent customs territory and WTO members, regardless of whether the People ’s Republic of China joins the World Trade Organization and No "(The United States should respect Hong Kong's status as a separate customs territory, and as a WTO member country, whether or not the People's Republic of China participates in the World Trade Organization), that is, the status of Hong Kong's independent customs territory, and The status of independent members in the WTO is determined by its sovereign state, not by the United States.

The United States can ignore WTO regulations

Therefore, Hong Kong will only lose its status as an independent customs territory and separate contracting party in the WTO under two circumstances.

First, the Chinese government, as a sovereign government, cancels Hong Kong's status as a separate customs territory. Judging from China's position and actions, the central government has no motivation and reason to do so.

Second, the reform and opening up process in mainland China has been further promoted, Hong Kong and the mainland have further expanded economic and trade exchanges, and the negotiations on the economic and trade partnership between the land and port have been infinitely expanded, making the economic and trade relationship between the land and port closer to the point where it is difficult to distinguish boundaries. District and WTO separate parties.

However, in the real world, international regulations themselves are not binding. It can only be implemented if power is willing to respect international laws and protect the law. If the power itself violates international laws and regulations, the international community has no method of restraint other than condemnation.

Hong Kong version of the National Security Law: The White House economic adviser Kudlow pointed out on May 28 that Washington may need to treat Hong Kong as the mainland of China when dealing with trade and other financial affairs. The picture shows him attending the meeting at the White House on May 18. (Reuters)

Therefore, even if the status of Hong Kong ’s separate customs territory is protected by WTO, and even multilateral institutions such as the International Monetary Organization (IMF) and the World Bank (World Bank), if a trading partner does not unilaterally recognize it, Hong Kong ’s independent status is being implemented Will be reduced.

This is what may happen today.

Impact on Hong Kong's economy and status as an international financial center

So, if the Trump administration adopts a "strong response", such as treating Hong Kong commodities with tariff standards for Chinese commodities, how will it affect the Hong Kong economy and the status of Hong Kong's international financial center?

Perhaps the economic outlook of Hong Kong can be evaluated from three indicators: the property market, the stock market, and the foreign exchange market. In terms of the property market, Hong Kong has a large demand for rigid housing. With the current land grant policy unchanged, the supply situation in Hong Kong will not be in short supply. With both of these, the property market is subject to fluctuations, and there is no possibility of a crash.

After US Secretary of State Pompeo issued a statement, Washington's next action against China will be determined by US President Trump. The picture shows Trump (right) and Pompeo attending a press conference on the New Coronary Pneumonia Outbreak at the White House on March 20. (AP)

In the stock market, according to the market profile published by the Hong Kong Stock Exchange, taking April 2020 as an example, among the 2,477 listed companies in Hong Kong, there are 1,258 mainland companies, whose total market value accounts for 75.8% of the total market value of Hong Kong stocks, and the turnover accounts for The transaction value was 81.2%. Relevant US measures will not have a serious impact on this situation. Instead, considering the current situation in China and the United States, US stocks and Chinese stocks continue to withstand various political pressures, and the overall situation is good for Hong Kong stocks.

In terms of foreign exchange markets, the Hong Kong government's foreign exchange reserves of more than US $ 440 billion and the central government's foreign exchange reserves of 3.09 trillion are sufficient to deal with the possible ups and downs. It is worth mentioning that Subchapter 1, section 5712-3, the first sub-chapter of the United States-Hong Kong Policy Act, Section 5713, wrote that the United States should continue to allow the free exchange of US dollars and Hong Kong dollars (The United States should continue to allow the United States dollar to be freely exchanged with the Hong Kong dollar). There is public concern that the United States may take steps in this regard. However, the US dollar is the root of the US financial superiority, and ensuring the free circulation of the US dollar is the core interest of the US dollar. So unless the United States "sanctions Hong Kong" by prohibiting the free conversion of the US dollar and the Korean won, otherwise the situation in the foreign exchange market is not worth considering.

In the event that none of these three indicators will cause problems, the economic impact of the US's China approach on Hong Kong is not worth worrying about — by contrast, it is the deep-rooted economic structural problems of Hong Kong itself that are necessary Radical moment.

Beijing's implementation of the "Hong Kong version of the National Security Law" has caused controversy. The picture shows that on May 24, demonstrators in Hong Kong launched a march to protest Beijing's implementation of the "Hong Kong version of the National Security Law." During this period, the banner of "Recover Hong Kong, Revolution of the Times" was held high. (Reuters)

As for the status of Hong Kong as an international financial center, it is even less cause for concern. Finance is the least political in all fields. Where there is income, where is the capital going?

Since the beginning of the Opium War, Hong Kong has played the role of "the window into China from the outside world." The foundation of Hong Kong's status as an international financial center is nothing more than three points: one is close to the mainland, the other can enter the mainland, and the third financial system is different from the mainland. Today, looking at the world, only Hong Kong meets these three premises (there is also Macau, but Macau is too small, and there is no framework for accepting international capital).

Therefore, as long as China maintains the socialist system for one day, the capitalist system as the mainstream in the international day, and the attractiveness of international capital to the mainland market for one day, and the continuous implementation of one country, two systems, Hong Kong ’s status as an international financial center will not be shaken.

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