US may restrict capital flows through HK: Mnuchin

WASHINGTON • US Treasury Secretary Steven Mnuchin said on Thursday that he is working on various capital markets' responses to China's Hong Kong security legislation, including some measures that could restrict capital flows through the territory.

Speaking to reporters on a video call, Mr Mnuchin said his primary focus in the United States' response to China's Hong Kong clampdown is through the President's Working Group on Capital Markets, an inter-agency group of US financial regulators.

President Donald Trump last week ordered the Treasury-led group to recommend within 60 days actions to protect US investors from Chinese companies' failure to adhere to his country's accounting standards and disclosure rules.

Asked if the Treasury was considering measures that could restrict flows of US capital through the Hong Kong market, he said: "We are - I don't want to prejudge what the report will be, but we will come back with a variety of recommendations."

He added that the President's Working Group will examine accounting issues related to Chinese companies and will produce a thorough report "that strikes the right balance between protecting our capital markets and dealing with this situation as well".

China's plans for the national security legislation, which erodes Hong Kong's autonomy, prompted Mr Trump to begin the withdrawal of Hong Kong's special treatment under US law.

The issue, along with the coronavirus pandemic, is among several that have worsened tensions between the world's two largest economies since they signed a sweeping trade deal in January.

Mr Mnuchin said he expects China to meet its obligations under the phase one deal, which calls for a US$200 billion (S$278 billion) increase in Chinese purchases of American goods over two years and improved protection for US intellectual property.

"As of now, we believe they are in the process of meeting their obligations but we're keeping a close watch on that," Mr Mnuchin added.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 13, 2020, with the headline 'US may restrict capital flows through HK: Mnuchin'. Print Edition | Subscribe