Trump ends Hong Kong’s special status with US to punish China

President Donald Trump ordered an end to Hong Kong’s special status with the U.S. and signed legislation that would sanction Chinese officials responsible for cracking down on political dissent in the city, the latest escalation in tensions between the world’s largest economies.

“No administration has been tougher on China than this administration,” Trump said Tuesday at the White House.

Speaking in the Rose Garden, Trump announced the two moves before veering into a winding attack on his Democratic opponent, Joe Biden, portraying him as having been cozy with China during his time as vice president. He went on to blast Biden on everything from climate policy to criminal justice and immigration—delivering a predominantly political speech from a podium traditionally reserved for policy.

Trump also said he had no plans to speak with Chinese President Xi Jinping, deviating from his pattern of criticizing Beijing while tempering it with warmth and respect for Xi.

Trump approved the legislation on Tuesday after spending weeks blaming Beijing for the coronavirus pandemic and criticizing its handling of Hong Kong and treatment of minority groups in western China. The president has faced widespread criticism over his response to the virus, with cases once again surging as businesses reopen.

Under the United States-Hong Kong Policy Act of 1992, the U.S. treats Hong Kong, a semi-autonomous part of China with its own legal and economic system, differently than the Chinese mainland in trade, commerce and other areas.

Trump said that the executive order he signed earlier in the day meant Hong Kong would now be treated the same as mainland China. The White House said the order would revoke special treatment for Hong Kong passport holders and ends Hong Kong’s benefits of U.S. exports.

But neither the president nor the White House offered specifics about how his order would affect certain major sectors, such as Hong Kong’s financial industry.

The bipartisan legislation that Trump also signed comes in response to the Chinese government’s new national security law for the former British colony, which critics say is aimed at quashing political protests and stifling dissent. People found guilty under the law could, in some cases, face life imprisonment.

Targeting Banks

The legislation would penalize banks doing business with Chinese officials involved in the national security law the country is seeking to impose on Hong Kong. It’s the latest in a series of efforts designed to pressure China amid tensions over the spread of the coronavirus, implementation of a trade pact finalized earlier this year, and efforts to tighten control over Hong Kong.

The trade agreement has become a cornerstone of Trump’s re-election bid. But the “phase one” pact, which took effect in mid-February, is falling short on a number of fronts, including Beijing’s promises of large agriculture and energy purchases. The Trump administration so far has been hesitant to ramp up the pressure or back away from the deal altogether, even as the rhetoric on both sides heats up.

Last week, Trump said a “phase two” trade deal with China—once expected to be under discussion by now—isn’t under consideration, saying the relationship between Washington and Beijing has deteriorated too much.

”Right now, I’m not interested in talking to China about another deal,” Trump said Tuesday in an interview with CBS News.

The legislation would require the State Department to report to Congress every year about officials who seek to undermine the “one country, two systems” model that applies to the special administrative region. It also gives the president the power to seize the assets of and block entry to the U.S. for those individuals.

Under the legislation, banks are granted a kind of year-long grace period to stop doing business with entities and individuals the State Department determines to be “primary offenders” when it comes to undermining Hong Kong’s autonomy.

After that period, the Treasury Department can impose a variety of penalties on those institutions, including barring top executives from entering the U.S. and restricting the ability to engage in U.S. dollar-denominated transactions, according to Pat Toomey, a Pennsylvania Republican who co-sponsored the legislation.

Neither Trump nor the White House specified which Chinese officials might be sanctioned under the new law.

Hong Kong Announcement

Trump announced last month that he would end preferential treatment for Hong Kong, and signed legislation aimed at punishing Chinese officials for oppression of Uighurs and members of other Muslim minority groups.

The tougher stance toward Beijing represents a pivot for Trump, who largely avoided human rights-related interventions as he was negotiating the first phase of his trade deal. On Monday, the U.S. president said the deal was still “intact” because China was purchasing the promised agricultural products. But Trump also expressed frustration with the country over the spread of the coronavirus, which originated in Wuhan.

“What they did to the world should not be forgotten,” Trump said.