Fresh moves by China to override Hong Kong’s political autonomy have elicited bipartisan outrage on Capitol Hill with some lawmakers now pushing a bill that would require the eventual sanctioning of any Chinese bank that directly or indirectly enables the anti-democracy crackdown.
The Chinese Communist Party said last week that it will use the yearly meeting of its top political committee to bypass Hong Kong’s local legislature and enact a security law that would revoke many of the island territory’s political freedoms, criminalize “foreign interference,” and ban sedition and subversion.
Rubber-stamp passage of the measure by the National People’s Congress could happen as soon as this week though Hong Kong democracy activists on Tuesday said they think it might take months for the law to be implemented locally.
The CCP is moving to unilaterally impose the national security measure after years of unsuccessful attempts to use the local Hong Kong legislature to pass other anti-democracy measures. Each time Beijing did that, they were met with massive public protests, leading to the measures being withdrawn.
“This is a sign of weakness on the part of Beijing that it has to use the ‘nuclear weapon’ in the face of persistent protest from Hong Kong,” said Ching Kwan Lee, a visiting sociology professor at the Hong Kong University of Science and Technology, in a Tuesday Facebook Live briefing organized by the Washington-based Hong Kong Democracy Council.
Alarmed by Beijing’s efforts to finally force the security measure through, Sens. Chris Van Hollen, D-Md., and Patrick J. Toomey, R-Pa., announced they were introducing a bipartisan bill that would mandate sanctions on foreign individuals complicit in the erosion of Hong Kong’s political autonomy and impose secondary sanctions on those foreign banks that conduct significant financial transactions with them.
“This is legislation that we have been working on as we watched the rising crackdown on China on the autonomy of Hong Kong,” said Van Hollen in a Tuesday press call with Toomey about their new bill. “With the most recent pronouncements by the Chinese government, the timing of this is more important than ever.”
Lee said Beijing is using brinkmanship tactics with its announcement of the coming adoption of the national security law, knowing it is putting at risk Hong Kong’s special trade status with the United States.
China may be betting that the United States under President Donald Trump has less of an appetite for risk while its economy continues to plummet because of the impacts of the coronavirus pandemic, she suggested.
“It really shows that Beijing is willing to go to great lengths in asserting itself vis-a-vis the U.S.” she said. “The reason why Beijing feels the need …has to do with the outsize political influence of Hong Kong on the mainland itself. It is small and it’s kind of peripheral geographically but if you know how mainland citizens think about Hong Kong, they look up to Hong Kong.”
Total trade between the United States and Hong Kong in 2018 was $43.8 billion with a trade surplus of $31.1 billion for the United States — the largest U.S. trade surplus that year, according to a January issue brief by the Congressional Research Service.
The 41-page Toomey-Van Hollen bill authorizes the imposition of sanctions on foreign individuals the first time they are included in an annual list of individuals found to be subverting Hong Kong’s autonomy. But the second time their names are found on the list, which the legislation requires the State Department to issue, they must be sanctioned. Sanctions are to take the form of property seizures and visa bans.
“We want to make sure we are squeezing those individuals who are the heart of those decisions to deprive the people of Hong Kong of their rights,” Van Hollen said.
Foreign banks that the State Department determines have conducted significant transactions with Chinese officials involved in undermining Hong Kong’s autonomy are to be subjected to a range of financial sanctions that the president can choose from.
But the second year those banks are included on the list, they are to be subjected to every sanction that the bill outlines, including denial of access to loans from an American financial institution, prohibitions on being a “primary dealer in United States Government debt instruments” and cutting off access entirely to the U.S. financial system.
Toomey acknowledged that the banking sanctions provisions are a marked escalation in the sanctions authorities that Congress has previously supported.
“It’s also my hope that this might, at least to some degree, dissuade some of the potentially worst implications,” the second-term Republican senator said. “China is obviously a huge and incredibly complex society…The government is certainly subject to political pressure and when the business interests and the financial interests realize that this tool can be deployed, I think there is going to be a whole new level of pressure on the government not to trigger this kind of response.”
Van Hollen agreed: “The key piece of ammunition here is the banking provisions. We want to make sure that the government of China understands that this is serious, that the prospects of this happening are very real and that there will be strong pressure in the United States to implement it if the Communist Party moves forward with the proposed [Hong Kong] legislation.”
The bill does grant the president the power to waive, for national security reasons, having to impose the sanctions on banks and foreign individuals. But it also lays out an expedited process for Congress to pass a joint resolution to override the president’s use of that waiver authority.
“I think of the congressional backstop as just a reassertion of our Article 1 responsibilities,” Toomey said. “It’s not about a particular administration.”
Considering the amount of advantageous trade that takes place between the United States and Hong Kong, concerns have been raised that Trump, who generally has not seemed bothered by China’s anti-democracy crackdown on Hong Kong — a major Asian financial center — may look for opportunities not to revoke its special trade status as otherwise required by Congress.
Under the international agreement known as the Joint Declaration that saw the United Kingdom relinquish Hong Kong back to Chinese control in 1997, the island territory of roughly 7.5 million people was to enjoy control over its domestic affairs until 2047 though Beijing would control its foreign and defense policies.
Support for maintaining Hong Kong’s political liberties is one of the few policy issues to still enjoy virtually unanimous support on Capitol Hill. Last November, Congress cleared a measure that requires the State Department to annually certify the former British colony is sufficiently autonomous from mainland China to warrant continued special treatment on trade and other matters under the 1992 U.S.-Hong Kong Policy Act.
If Secretary of State Mike Pompeo decides not to make that certification, it would trigger a process that could result in the loss of some or all of Hong Kong’ special trade privileges with the United States. Foggy Bottom has yet to make its first certification as required under the 2019 law but Pompeo last week indicated that Beijing’s recent moves did not bode well for the certification.
“Any decision impinging on Hong Kong’s autonomy and freedoms as guaranteed under the Sino-British Joint Declaration and the Basic Law would inevitably impact our assessment of One Country, Two Systems and the status of the territory,” Pompeo said in a statement Thursday.
The 2019 law also requires the White House to sanction any foreign individuals “undermining fundamental freedoms and autonomy in Hong Kong.”
“Now is the time for the U.S. government to consider imposing sanctions,” said Joshua Wong, a prominent leader of the Hong Kong democracy movement during the Facebook Live briefing on Tuesday. He specifically called for sanctions on the export of sensitive dual-use technology to Hong Kong.
Benny Tai, another leader of the 2014 Umbrella movement, who was convicted and imprisoned for his democracy activism and is currently out on bail, said Washington needed to go further than simply imposing unilateral sanctions on China.
“I think the U.S. should take the lead to organize joint sanctions with the other countries in the free world,” the University of Hong Kong law professor said. “So China knows it is now playing a game with the whole world and the consequences will be much more serious than it originally calculated.”
Tai went on to list the United Kingdom, Australia, New Zealand, Canada, South Korea and the European Union as other countries and political blocs that he would like to penalize China for its actions toward Hong Kong.