Beijing delays vote on extending anti-sanctions law to Hong Kong

HONG KONG • China's top legislative body postponed a vote on a proposal to impose an anti-sanctions law on Hong Kong, delaying a move that could put global firms in the cross hairs of a conflict between the world's two largest economies.

The National People's Congress Standing Committee ended a closed-door session yesterday in Beijing without announcing the passage of a resolution adding the legislation to Hong Kong's charter.

Mr Tam Yiu Chung, a local delegate to the body, said the vote had been delayed pending further study, media outlets including Now TV said.

The additional review time would make the law more effective, he said, but did not mention when it would be passed.

The central government "hopes to listen to further views on the matter", the South China Morning Post newspaper reported separately, citing a person familiar with the matter.

The move puts on hold one source of concern for Hong Kong's financial markets, which have been battered by a wave of Chinese government crackdowns on sectors from technology to education.

The anti-sanctions law that China passed in June to retaliate against American sanctions gives the government broad powers to seize assets from entities that implement such measures.

"The government always knew it was a big blow, but they just don't want to deliver it now because of the ongoing regulatory changes they've been pushing out," said Assistant Professor Liu Dongshu, who specialises in Chinese politics at the City University of Hong Kong. "It will eventually pass. It's more of a political move."

The city's government said in a statement yesterday that China's legislature makes decisions on Hong Kong matters "based on the interests of the city", and that it supports those decisions.

Hong Kong's "status as an international financial centre is as robust as ever", it added.

The central government will send a delegation next week to introduce its latest five-year plan, said the statement, which did not mention the anti-sanctions law.

The United States flagged that China could apply its anti-sanctions law to Hong Kong when President Joe Biden's administration warned businesses about the growing risk of operating in the city.

In China, the reciprocal sanctions have yet to make an impact due to the US dollar's dominance in the global financial system.

While much about the legislation is left vague, if implemented robustly, it could force companies to navigate two contrary regulatory requirements, leading to a bifurcation of Chinese and US operations in Hong Kong, Mr Adam Smith, a former senior adviser in the US Treasury Department's sanctions unit, told Bloomberg TV on Tuesday.

"US sanctions are really the gold standard that companies around the world comply with almost by default," said Mr Smith, a trade compliance adviser with Gibson, Dunn & Crutcher.

"So companies in Hong Kong, especially because of the dollar peg, are very wary of getting it wrong," he added.

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A version of this article appeared in the print edition of The Straits Times on August 21, 2021, with the headline Beijing delays vote on extending anti-sanctions law to Hong Kong. Subscribe