Biden warns US companies about risks of operating in Hong Kong

Joe Biden’s administration is set to warn U.S. companies of the growing risks of operating in Hong Kong as China exerts increased control over the financial hub.

According to three people familiar with the plan, the State Department will report concerns this week over a range of threats, including China’s ability to obtain data that foreign companies are storing in Hong Kong.

He will also point out the risk of a new law allowing Beijing to impose sanctions on anyone allowing the application of foreign sanctions against Chinese groups and officials.

The move, which sources said would likely come on Friday, is the first time the United States has issued a trade advisory regarding Hong Kong.

One of those familiar with the matter said there had been rifts within the administration, with some officials fearing the warning would discourage U.S. companies from operating in a critical financial center. But more hawkish officials have successfully argued that U.S. businesses need to better understand the nature of the risks.

The warning will mention recent events such as the forced shutdown of Apple Daily, the pro-democracy tabloid newspaper owned by Jimmy Lai. The US president could also impose more sanctions on Chinese officials in Hong Kong, according to a person familiar with the talks.

In addition, the White House is considering a policy that will allow Hong Kong citizens in the United States to stay after their visas have expired if they face potential political persecution in Hong Kong.

But this measure is debated and should not be part of the package of actions that will be announced this week.

The warning will reverberate through the large US business community in Hong Kong. The city’s American Chamber of Commerce has more than 1,200 members and 282 American companies established their regional headquarters here in 2020.

U.S. companies were pissed off by the passage of a national security law a year ago, in part because it would allow Beijing to access data stored on servers in Hong Kong. More recently, companies have raised concerns about the possibility of China enforcing the counter-sanctions law, which allows the seizure of assets, in Hong Kong.

While a decision on whether or not to grant Hong Kong citizens asylum in the United States has not been finalized, such a development would anger Beijing, which is hostile to foreign governments such as the United States. United and Canada offering shelter to those fleeing political persecution.

Beijing hasn’t stopped Hong Kong residents from signing up for the UK’s National (Overseas) Visa Program, but it has made it more difficult for those who do to redeem their retirement savings.

The White House and the State Department declined to comment on impending actions regarding Hong Kong.

On Tuesday, the Biden administration updated a warning the Trump administration issued on Xinjiang last year. The business advisory highlighted the legal risks American companies face unless they ensure their supply chains do not use forced labor in Xinjiang.

He also warned companies that they risked criminal and civil prosecution if they carried out activities that helped China monitor Xinjiang.

The decision was prompted in part by the view that companies were not taking the issue seriously enough.

“The purpose of the notice is to emphasize [that] if you don’t leave these supply chains, you run the risk of breaking US law, ”a US official told the Financial Times. “The business community. . . should be aware of the reputational, economic and legal risk of their involvement with entities involved in human rights violations.

China’s Foreign Ministry said the US measures were “typical double standards” and that the use of Xinjiang as leverage was “doomed to failure.”

To pursue Demetri Sebastopulo and Primrose Riordan on Twitter