July 14, 2020

U.S. Halts High-Tech Exports to Hong Kong Over Security Concerns

The effect of the new restrictions announced Monday appear to be relatively limited in scope, given the small volume of trade the United States does with Hong Kong. Hong Kong represented just 2.2 percent of American exports in 2018, with defense and high-technology items making up a sliver of that.

But the export limitations announced Monday could have larger implications for some multinational companies, including some semiconductor firms, who now will be barred from sending products or sharing certain high-tech information with the territory. Some multinational companies that chose Hong Kong as a base for doing business with China have begun considering moves to other locations, including Singapore.

The Trump administration has said it would end an extradition treaty with Hong Kong and curtail some other commercial relations as a result of China’s new security law. It said it would expel thousands of Chinese graduate students and researchers with ties to the Chinese military, and threatened to place sanctions on Chinese government officials and financial institutions involved in promulgating the security law.

But the Trump administration has stopped short of broader financial sanctions, which could be crippling for Chinese companies and the U.S.-China economic relationship, including President Trump’s Phase 1 trade deal.

In a statement, Wilbur Ross, the commerce secretary, said that China’s new security law undermined the territory’s autonomy and increased the risk that delicate American technology would be diverted to China’s military or security forces.

Article source: https://www.nytimes.com/2020/06/29/business/economy/us-halts-high-tech-exports-hong-kong.html

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