The US government is getting ready to issue a warning to American businesses about the dangers of doing business in Hong Kong.
US President Joe Biden confirmed on Thursday that his administration plans to issue an advisory to businesses soon, warning them of a “deteriorating” situation in Chinese territory, as reported in various media outlets this week.
“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,” Biden told reporters at the White House on Thursday, referring to Beijing’s promise to keep the city’s semi-autonomous status for the next 50 years after Britain handed it over in 1997.
Without disclosing more details, Biden described the announcement as “more of an advisory as to what may happen with Hong Kong,” and experts believe it won’t go much further than that.
This isn’t the first time Washington has expressed concern about Hong Kong, which has changed dramatically since pro-democracy, anti-government protests erupted in the city in 2019. Last year, China retaliated against Hong Kong by enacting a broad national security law, signaling that Beijing is tightening its grip on the territory. The law has raised concerns about the city’s future as a global business hub.
Following the passage of that law, former President Donald Trump terminated the US’ special relationship with Hong Kong, which had previously exempted the city from tariffs and other benefits.
Last year, the US government sanctioned a number of officials, including Hong Kong Chief Executive Carrie Lam, who later claimed that the restrictions forced her to stockpile cash because she was cut off from the global banking system.
According to Brock Silvers, chief investment officer of Hong Kong-based Adamas Asset Management, Biden’s business advice “probably won’t pack an immediate punch.” He added that “few US companies currently operating in Hong Kong will be surprised at its content or otherwise unaware of Hong Kong’s growing risks.”
However, according to Silvers, it reflects a “increasingly contentious” relationship between China and the US. Relations between the two countries have been deteriorating for years, with disagreements ranging from Hong Kong and Xinjiang to Big Data, trade, and foreign investment.
For a long time, American companies have been treading carefully in Hong Kong, as the line between operating there and mainland China blurs.
VF Corp (VFC), a clothing and footwear company, announced in January that it would relocate its Asia operations out of Hong Kong, relocating its supply hub to Singapore and establishing additional services in Malaysia. The company relocated its brand operations to Shanghai. Meanwhile, the New York Times (NYT) relocated its Asia digital news operation from Hong Kong to Seoul.
Big Tech companies have also expressed reservations, with Facebook (FB), Google (GOOGL), and Twitter (TWTR) halting their reviews of requests from the city government for user data.