The United States and China appear to be on a collision course over the future of Hong Kong, a center of global capitalism and symbol of resistance to the Chinese Communist Party. Relations between the two nations are at their worst in decades, and disputes have flared over trade, national security and the origins of the coronavirus.
President Trump’s foreign policy aides are discussing actions that would be among the harshest punishments taken against China over the past three years. The actions could have far-reaching consequences for global commerce and transform how Chinese and foreign companies operate, as well as upend the lives of many of Hong Kong’s 7.5 million residents, who have been under enormous pressure from years of political crackdowns.
Hong Kong has been a financial and commercial hub since late last century. China relies on the bustling city of ports and skyscrapers on the edge of the South China Sea for transactions with other countries. Many Chinese and foreign firms use Hong Kong as an international or regional base, and members of elite Communist Party families or executives with ties to them do business and own property there. Many companies also raise capital by listing on the Hong Kong Stock Exchange.
Mr. Pompeo has said the security law would be a “death knell” for Hong Kong, which has had liberties under a semiautonomous system of governance that do not exist in mainland China, including freedoms of speech, the press and assembly, as well as an independent judiciary.
In recent days, protesters in Hong Kong have taken to the streets to voice outrage at the proposed law, only to be beaten back by police officers clad in riot gear and firing tear gas.
American diplomats said they called on Wednesday for a virtual meeting of the United Nations Security Council to discuss Hong Kong, but China blocked the move.
If it proceeds with punishments, the Trump administration could impose the same tariffs on exports from Hong Kong that it puts on goods from mainland China, said officials with knowledge of the discussions. Other trade restrictions that apply to China, including bans or limits on what American companies can sell to Chinese companies because of national security or human rights concerns, may be imposed on Hong Kong as well.
Some of Mr. Trump’s advisers are discussing visa bans on Chinese officials who enact the law.
“I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997,” Mr. Pompeo said Wednesday. “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.”
“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,” he added. “But sound policymaking requires a recognition of reality. 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.”
Mr. Pompeo is the most vocal of a group of national security officials who advocate tough policies on China. Some of Mr. Trump’s top economic advisers prefer a more conciliatory approach to dealing with China, the world’s second-largest economy, and will likely urge caution. American corporate executives have said the administration should act with care.
Mr. Trump has rarely made any strong comments on the situation in Hong Kong, and he has praised Xi Jinping, the president of China, throughout his time in office, even insisting that they have a strong friendship. Mr. Trump has also been eager to promote a trade agreement he signed with China in January as an economic win for the United States. He wants to avoid jeopardizing that deal, even though Beijing is not meeting purchasing quotas mandated by it.
The president is keen to boost the U.S. economy, which has fallen into recession during the pandemic, ahead of the November presidential election.
But on Tuesday, when asked by reporters about China’s proposed national security law, Mr. Trump said he planned to act this week. “I think you’ll find it very interesting,” he said, adding that his response would come “very powerfully.”
The certification by the State Department is a recommendation on policy and does not itself catalyze actions immediately. American officials, including Mr. Trump, will now weigh what steps to take.
The United States is likely to choose specific areas in which to break off cooperation first with Hong Kong, including trade and law enforcement.
The president would need to issue an executive order to end the special relationship entirely, according to people familiar with the discussions. One possibility is for the United States to take piecemeal action over the next year before ending the special status if China does not change course, they said.
“We’re not hopeful that Beijing will reverse itself, but that is an option,” David R. Stilwell, assistant secretary of state for East Asia and the Pacific, said of the Chinese government’s push on the national security law.
Britain handed Hong Kong to China in 1997, after the two nations reached an agreement on the colony 13 years earlier. In 1992, the United States passed a law that said the American government would treat a Beijing-ruled Hong Kong under the same conditions it had applied to the British colony.
In November, after months of pro-democracy protests and crackdowns by the police in Hong Kong, Mr. Trump signed into law a bipartisan bill requiring the State Department to provide an annual certification to Congress to help determine whether to continue the special relationship with Hong Kong.
That certification depends on a judgment by department officials of whether China was ceding enough autonomy to Hong Kong.
Susan Shirk, a former State Department official now at the University of California, San Diego, said that given the mandate from Congress, Mr. Pompeo had no choice on his assessment “once Beijing blatantly overruled the Hong Kong legislature with a new law that integrates Hong Kong” into the Chinese security state.
“Of course, the big losers will be the people of Hong Kong, not the politicians in Beijing or Washington who produced this predicament,” she added.
Mr. Pompeo’s announcement is certain to draw condemnation from Beijing, where the government is holding its annual legislative session this week. Officials announced details of the proposed law Friday, at the start of the session.
“If anyone insists on harming China’s interests, China is determined to take all necessary countermeasures,” Zhao Lijian, a Chinese Foreign Ministry spokesman, said at a news conference earlier Wednesday in Beijing. “The national security law for Hong Kong is purely China’s internal affair that allows no foreign interference.”
Some American business executives are advising the Trump administration to tread carefully on changing the relationship with Hong Kong.
The U.S. Chamber of Commerce, which represents American companies in Hong Kong, said in a statement Tuesday that it was “deeply concerned” about the proposed national security law. It asked the Chinese government to “peacefully de-escalate” the situation and preserve the semi-autonomy of the “one country, two systems” framework that, under the 1984 treaty between Beijing and London, is supposed to exist until 2047.
“We likewise urge the Trump administration to continue to prioritize the maintenance of a positive and constructive relationship between the United States and Hong Kong,” the group said.
It added that “far-reaching changes” to Hong Kong’s status “in economic and trade matters would have serious implications for Hong Kong and for U.S. business, particularly those with business operations located there who exercise a positive influence in favor of Hong Kong’s core values.”
Julian Ku, a law professor at Hofstra University, said the Trump administration had flexibility on which options to exercise.
“I would expect the president would act on some agreements, but not on others,” Mr. Ku said. For example, he noted, the administration might terminate the extradition treaty with Hong Kong, since the national security law makes fair adjudication less credible, or it could put Hong Kong under the same controls that limit American technology exports to China.
“But he might leave the visa waiver treatment that Hong Kong residents currently receive when coming to the U.S. alone for now,” he said.
Mark Williams, the chief Asia economist at Capital Economics, said Mr. Trump’s tariffs on imports from mainland China — which are paid by American companies — would not automatically extend to Hong Kong despite the new State Department assessment. But the cumulative effect of various actions would erode Hong Kong’s status as an international business center, Mr. Williams wrote in a note to clients.
“The irony is that in punishing Hong Kong, we wind up martyring it rather than saving it,” said Daniel Russel, an assistant secretary of state for East Asia and the Pacific in the Obama administration. As for diplomacy between Washington and Beijing, he said: “The brake pads in the relationship have worn very, very thin. And it’s hard to see this confrontation going anywhere except escalation.”
In Congress, Senator Marco Rubio, Republican of Florida and a sponsor of the bill on Hong Kong that passed last fall, cheered Mr. Pompeo’s announcement.
“For years, the Chinese government and Communist Party have walked back on its commitment to ensure autonomy and freedom for Hong Kong,” Mr. Rubio said. “We cannot let Beijing profit from breaking the Sino-British Joint Declaration and trying to crush the spirit of Hong Kong’s people.”
On another front, the State Department plans to expand the list of Chinese state-run news organizations operating in the United States on which it has imposed new restrictions, including foreign employee quotas, American officials said. And the agency is watching to see if China will retaliate against American journalists in Hong Kong for the administration’s most recent round of visa restrictions against Chinese journalists. In March, China expelled American journalists from three news organizations, including The New York Times.
Michael Crowley and Ana Swanson contributed reporting from Washington, and Keith Bradsher from Beijing.