A man walks past an HSBC ad outside a branch of the bank in Hong Kong on Monday. HSBC says first half of 2020 profits plunged 69%. Photo: AFP / Anthony Wallace

Will Beijing extend its new Anti-Foreign Sanctions Law to Hong Kong? Commentators are buzzing about the potential impact the law’s implementation in the special administrative region would have on its financial and business hub status.

Tian Feilong, an associate professor at Beihang University’s Law School in Beijing and a director of the Chinese Association of Hong Kong and Macau Studies, told NowTV that Hong Kong should help implement the law by putting it into Annex III of the Basic Law or setting up a relevant law domestically.

Tian spoke as European and American companies said they were shocked and facing “irreconcilable” compliance issues because of the quick rollout of the law.

Tian said the law was aimed at putting pressure on China-based Western companies, which would pass the pressure on to their own countries. He said foreign countries would then become more cautious before imposing any sanctions on China in the future.

Tam Yiu-chung, the sole Hong Kong representative on the Standing Committee of the National People’s Congress (NPC), said the standing committee could pass a motion to include the law in Annex III. However, he believed it would take some time for Beijing to make a decision.

In 2019, the Donald Trump administration imposed several rounds of sanctions against Huawei Technologies for national security reasons. Last August, it sanctioned a dozen Hong Kong and Chinese officials who stand accused of undermining Hong Kong’s autonomy and freedoms.

In December, 14 vice-chairmen of the NPC standing committee were put on a US sanctions list, triggering Beijing to draft the Anti-Foreign Sanctions Law.

On Thursday, the law was passed by the NPC standing committee after a four-day meeting. Under the law, the State Council can launch countermeasures if any Chinese company or person is sanctioned. Mainland-based people or organizations cannot implement foreign sanctions imposed on any Chinese person or company in mainland China.

European Chamber president Joerg Wuttke said, “European companies in China are shocked by the lack of transparency and speed of this process”, in reference to the new law’s passage.

Former US president Donald Trump imposed a range of sanctions against China. Photo: AFP/Andrew Caballero-Reynolds

With the fresh rules prohibiting organizations from implementing what Beijing deems discriminatory and restrictive measures, “foreign firms remain very much stuck between a rock and a hard place,” he said.

American Chamber of Commerce chairman Greg Gilligan said the new law “presents potentially irreconcilable compliance problems for foreign companies.” Rushing through a new law without an opportunity for public comment will severely jeopardize foreign investor confidence in China’s legal system, he added.

Political commentator Shi Shan said on his YouTube channel that Beijing intentionally passed the law before the G7 Summit in the United Kingdom between Friday and Sunday as it was likely that the Western powers would join together to call for an investigation into the origin of the Covid-19 pandemic, including the possibility it leaked from a Wuhan laboratory.

Shi said China hoped that foreign countries would think twice before announcing any new sanctions. He also said if the anti-sanctions law was extended to Hong Kong and strictly implemented, it would cause a lot of trouble for commercial banks in the territory.

He said these banks would struggle about whether they should stop providing services to those individuals sanctioned by the US. Shi also said Hong Kong would lose its value as a financial hub for China if banks were forced to choose between leaving the city or cutting off their US dollar-related businesses.

Lau Siu-kai, vice president of the Chinese Association of Hong Kong and Macao Studies, said the central government would consider all factors including the “one country, two systems” principle and Hong Kong’s special situation before making a decision on whether the anti-sanctions law would be extended to the special administrative region.

Lau said it was hard to say whether Hong Kong should fully implement the new law, especially when it involved complicated matters such as financial sanctions.

HSBC is caught in the crossfire of US-China trade, tech and finance wars. Image: Agencies

On Tuesday, Hong Kong Chief Executive Carrie Lam said she welcomed Beijing’s decision to launch the anti-sanctions law. However, she did not say whether the law would be implemented in Hong Kong.

A softer, gentler China

On May 31, Chinese President Xi Jinping told a Communist Party meeting that all government departments should help build a trustworthy, friendly and respectful image for China and tell good stories about the country.

Some analysts speculate Beijing seeks to stop its so-called “wolf-warrior diplomacy”, a confrontational break with China’s traditional diplomacy, after the China-European Union Comprehensive Agreement on Investment stalled last month due to sanctions disputes.

However, Wu Qiang, a Beijing-based independent political commentator, said the launch of the anti-sanctions law seemed to contradict Beijing’s call for building a more friendly global image for China.

Wu said strict implementation of the law would put mainland-based foreigners and international companies in a dilemma when their Chinese business partners and clients were sanctioned by the West. He said such a move would be “suicidal” as it would accelerate decoupling between China and Western economies.

Wang Weibin, a spokesperson at China’s Ministry of Foreign Affairs, said the new law was set up to safeguard the country’s sovereignty, dignity and core benefits and oppose Western hegemonism and power politics. At the same time, Wang said people should not be over-worried that the new law would affect China’s relationship with other countries.

[With reporting from AFP]

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