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Secretary of State Mike Pompeo declared Wednesday that Hong Kong is no longer autonomous from China – a landmark decision that is likely to escalate already strained U.S.-Chinese relations and that could have serious economic consequences for the global financial hub.
"No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground," Pompeo said in a statement.
The White House will determine the next step, which could involve new sanctions on China, visa restrictions on government officials or nixing Hong Kong's special trade status.
"We’ll do our best to ensure the people of Hong Kong are not adversely affected," said David R. Stilwell, the Trump administration's assistant secretary of state for the Bureau of East Asian and Pacific Affairs.
"There’s a very long list of things that the president could do in response," Stilwell said. He declined to offer more specifics, but said the White House's actions would be "as targeted as possible" to avoid hurting Hong Kong while sending a clear message to China's authoritarian leaders.
Pompeo's assessment was sparked by the Chinese government's move to assert sweeping authority over Hong Kong and comes as tensions between the Trump administration and Beijing have dramatically escalated over the coronavirus outbreak.
Hu Xijin, the editor of a Chinese state-controlled media outlet, shot back at Pompeo over the Trump administration's assessment.
"Whether China's Hong Kong is autonomous, how could it possibly be up to the US to define?" Hu wrote on Twitter. He called Pompeo a "habitually lying Secretary of State."
Hong Kong was returned to China from British control as a semiautonomous territory in 1997 – on the condition that China maintained a "one country, two systems" framework guaranteeing freedoms not found on the mainland.
Chinese leader Xi Jinping is poised to push a national security law through his rubber-stamp legislature that would ban treason and other perceived offenses in Hong Kong – a move critics say is designed to stifle pro-democracy protests and put the territory firmly under China's rule.
"Hong Kong and its dynamic, enterprising, and free people have flourished for decades as a bastion of liberty, and this decision gives me no pleasure," Pompeo said. "While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself."
Pompeo was required to make the determination under a U.S. law that grants Hong Kong special trading status – including exemptions from certain tariffs and export controls that the United States imposes on China.
In a show of support for Hong Kong's autonomy and the democracy protesters, Congress passed bipartisan legislation last year requiring the State Department to annually reconsider the territory's special treatment, which has helped elevate the city to a global financial power.
Chinese officials were furious when President Donald Trump signed the bill into law last year. It's not clear whether the administration will move to strip Hong Kong of those economic perks.
Foreign policy experts said the decision could have far-reaching consequences.
"This is potentially massive," Michael Fuchs, a former deputy assistant secretary of state for East Asian and Pacific affairs in the Obama administration, tweeted Wednesday.
Fuchs, who is with the liberal Center for American Progress think tank, said the question is whether the United States "will impose sanctions or rescind certain trade arrangements with Hong Kong, which could fundamentally change US-China relations, Hong Kong's future, and the global economic system."
Mark Galasiewski, an investment analyst at Elliott Wave International, a financial forecasting firm, said the U.S. action is not likely to have more than a temporary impact on Hong Kong stocks because markets there have already plummeted in 2020.
The "one country, two systems" framework was intended to make sure that capitalist Hong Kong retained a measure of legal, economic and financial independence from socialist mainland China, but that autonomy has come under increasing attack as Beijing pushes to increase its control over Hong Kong. Hong Kong was rocked by almost six months of violent anti-China, pro-democracy protests last year after Beijing tried to impose an extradition law.
Although that law failed to pass, anti-China sentiment has increased, protests have proliferated and Beijing has continued to try to undermine Hong Kong's rights.
The new proposed Chinese national security law would ban "treason, secession, sedition and subversion" in Hong Kong.
Joshua Wong, a Hong Kong democracy activist, said China’s law would do severe damage to the territory’s business sector – leading to potential boycotts and other fallout.
In a thread posted on Twitter, Wong said Hong Kong’s autonomy – including its independent judiciary and relatively loose business regulations – have drawn financial investment, but that is in jeopardy. He called on the Trump administration, as well as European and Asian leaders, to reconsider Hong Kong’s special trade status.
“Hong Kong will be assimilated into China’s authoritarian regime, on both rule of law and human rights protections” if Xi’s national security law is passed, he said. “The proposed law is the stepping stone for (China’s) future intervention.”
The Trump administration's announcement comes after U.S. lawmakers proposed a bill to sanction any person with a role in violating "China’s obligations to Hong Kong under the (Sino-British) Joint Declaration and the Basic Law" – the formal terms under which Hong Kong was granted partial legal, economic and financial independence.
It's not clear what impact, if any, the action will have on a pending trade deal between the United States and China. "Phase 1" of the agreement was signed less than five months ago, and despite both sides adopting a harsher diplomatic tone, they have been coy about whether they intend to implement it.
Pompeo and Trump have accused China of misleading the USA and other countries about the novel coronavirus, which emerged in Wuhan before spreading across the globe. Beijing denied any suggestions it has not been transparent about its coronavirus outbreak.
The Council on Foreign Relations, a Washington-based think tank, warned in an analysis May 21 that "the risk of a military confrontation in the South China Sea involving the United States and China could rise significantly in the next eighteen months, particularly if their relationship continues to deteriorate as a result of ongoing trade frictions and recriminations over the novel coronavirus pandemic."
Hong Kong braces for turmoil: Stocks slide on risk of 'strong' Trump reaction
This article originally appeared on USA TODAY: US-China tensions: Pompeo declares Hong Kong no longer autonomous