HK banks may soon need to choose between US and China

Hong Kong-based banks and financial institutions could soon be caught in a legal web of conflicting US and Chinese laws if Beijing moves as expected to impose its new anti-sanctions law on Hong Kong next month.

The National People’s Congress’ (NPC) standing committee will hold a meeting between August 17 and 20 to discuss and pass a motion that will put more national laws into the Annex III of the Basic Law in Hong Kong and Macau, Xinhua reported on Tuesday evening.

The Xinhua report did not disclose specific details of which laws would be included but several Hong Kong media citing unnamed sources said that Beijing plans to implement its newly-passed Anti-Foreign Sanctions Law in Hong Kong.

The law provides a legal framework for China to retaliate against foreign sanctions targeting its companies and individuals, and effectively makes it illegal to enforce foreign including US sanctions in China.

The announcement came after US Deputy Secretary of State Wendy Sherman held a six-hour meeting with Chinese Foreign Minister Wang Yi and Vice Foreign Minister Xie Feng in Tianjin on Monday. During the meeting, Xie criticized the US government for using various means to demonize China and suppress its development.

“US policy seems to be demanding cooperation when it wants something from China; decoupling, cutting off supplies, blockading or sanctioning China when it believes it has an advantage; and resorting to conflict and confrontation at all costs,” Xie said. “It seems that the US only thinks about addressing its own concerns, getting the results it wants and advancing its own interests. Do bad things and get good results. How is that ever possible?”

Xie said China had proposed two lists to the US including an “error correction list” and a list of key cases of concern to China. He said the US must lift visa restrictions on Chinese students and Chinese Communist Party members, as well as sanctions on Chinese officials and institutions.

Wang, for his part, stated three “red lines” for China-US relations, saying that the US must not challenge, slander or even attempt to subvert the path and system of socialism with Chinese characteristics, attempt to obstruct or interrupt China’s development process or infringe upon China’s state sovereign or damage the country’s territorial integrity.

Sherman said she had a “frank and open” discussion with Wang on a range of issues, including Beijing’s crackdown in Hong Kong, the ongoing “genocide” and crimes against humanity in Xinjiang and abuses in Tibet. She said she also raised concerns about Beijing’s conduct in cyberspace, across the Taiwan Strait and in the East and South China Seas.

Sherman said the US intended to continue to strengthen its competitive hand vis-a-vis China but would not seek conflict with it.