Overnight China formally approved a plan to impose security law into Hong Kong. This will place further strain on an already fractured and deteriorating relationship between the world’s two largest economies (US & China). Canada has also found itself in a difficult position in the extradition proceedings to the US of Meng Wanzhou, CFO of Huawei Technologies.
Beijing’s overnight move enables it to impose its own restrictions on the once owned British colony after Beijing lost patience with Hong Kong’s ability to deal with the protests we saw last year. Hong Kong’s mini-constitution, which enables it to draw up its own laws was agreed to as part of the hand-over from Britain to China.
Beijing’s move would enable China to end any protests, leaving protesters concerned that the two system structure will come to an end. It is a concern shared by the west.
Full details have yet to emerge but the US response has been strong. US secretary of State, Mike Pompeo updates congress annually on whether Hong Kong is autonomous from China. This year he declared it was no longer, suggesting it would be treated the same as China. This includes the tariffs imposed under the recent trade dispute.
China is adamant that this will not impact foreign business, although it is worth noting that Hong Kong’s importance to china has changed – at handover, it was valued at 20% of GDP and now it is 3% of China GDP.
Beijing’s move would be considered a threat to global financial center in Asia and a gateway to China. This story will continue to evolve.