White House to warn US companies about Hong Kong risks

Saleha Mohsin, Nick Wadhams and Jennifer Jacobs
Bloomberg

The U.S. will warn American companies this week of the increasing risks of operating in Hong Kong, three people familiar with the matter said, as Washington seeks to ramp up pressure over Beijing’s crackdown on the financial center.

Risks include the Chinese government’s ability to gain access to data that foreign companies store in Hong Kong, two of the people confirmed. The warning, first reported by the Financial Times, will come in the form of a business advisory,’ the people said.

Such a warning from President Joe Biden’s administration would underscore how Washington’s concerns about the former British colony have escalated since Beijing launched a crackdown on local democracy demonstrations in 2019.

Wendy Sherman.

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Deputy Secretary of State Wendy Sherman plans to travel to to Beijing in the end of July, according to two people familiar with her plans.

A new law that allows Beijing to retaliate against anyone complying with anti-China sanctions is also among the U.S. concerns, the people said. The White House declined to comment on the matter.

The Chinese Foreign Ministry reaffirmed its opposition to what it views as U.S. interference in Hong Kong’s affairs Tuesday when asked about the report. Ministry spokesman Zhao Lijian told reporters that the city had been more stable under the security law.

The move would follow a Trump administration decision last year to roll back special trade privileges granted to Hong Kong in recognition of China’s promise to ensure its “high degree of autonomy” from Beijing.

The move comes as White House officials are discussing proposals for a digital trade agreement covering Indo-Pacific economies, according to people familiar with the plans.

Details of the potential trade agreement – part of a Biden administration effort to check China’s influence in the region – are still being drafted, but the pact could potentially include countries such as Australia, Canada, Chile, Japan, Malaysia, New Zealand and Singapore, according to one of the people, who asked not to be identified because the process isn’t public.

Tensions with China are increasing as the Biden administration tries to unite the U.S. and Europe to address Beijing’s human rights record. China on Tuesday denounced Treasury Secretary Janet Yellen’s appeal for a “united front” against China.

“China strongly deplores and rejects Treasury Secretary Yellen’s remarks,” Zhao said.

In a visit to Brussels earlier this week, Yellen hearkened back to the partnership and “rules-based international order” constructed after World War II – before calling out three countries she said imperiled that order.

“Together, we need to counter threats to the principles of openness, fair competition, transparency and accountability,” Yellen said in remarks she’s scheduled to deliver to EU finance ministers Monday.

“These challenges include China’s unfair economic practices, malign behavior, and human rights abuses; the Lukashenka regime’s ongoing abuses in Belarus; and Russia’s continued and growing malign behavior,” she said in some of her most pointed criticisms to date of Moscow and Beijing.