US lawmakers urged the government Monday to rethink banking ties with Hong Kong, citing its “increasing role” in money laundering, sanctions evasions and reported funneling of banned technology to Russia.
Since Beijing imposed a sweeping national security law on the semi-autonomous Chinese city in 2020, “Hong Kong has shifted from a trusted global financial center to a critical player in the deepening authoritarian axis of the People’s Republic of China (PRC), Iran, Russia, and North Korea,” the US Select Committee on the Chinese Communist Party said in a letter to Treasury Secretary Janet Yellen.
The bipartisan committee called on Yellen to reevaluate Hong Kong’s unique trade privileges, which treat the financial hub as distinct from the rest of China.
The security law — put in place after huge democracy protests roiled the city — “effectively subjects Hong Kong to PRC control,” the lawmakers said.
“We must now question whether longstanding US policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate,” the letter said.
According to the committee, Hong Kong has become a leading player in shifting banned Western technology to Russia, creating front companies for purchasing barred Iranian oil, facilitating the trade of Russian-sourced gold and managing “ghost ships” that engage in illegal trade with North Korea.
It cited “recent research” estimating that “nearly 40 percent of goods shipped from Hong Kong to Russia in 2023” were on US and EU lists of banned goods, including semiconductors and other technology Moscow needs for its war in Ukraine.
After the British handover of Hong Kong to China in 1997, the city was promised semi-autonomy, including judicial independence, for 50 years under the “One Country, Two Systems” agreement.
But Washington has repeatedly warned the national security law — as well as a subsequent security law known as Article 23 — eroded that firewall, effectively silencing dissent in the city and curtailing the freedoms that allowed it to operate as a global financial center.
In September, the US State Department issued an advisory warning about “new and heightened risks” for businesses operating in Hong Kong because of Article 23.
China and Hong Kong have, however, maintained the laws were needed to restore order and protect the financial hub’s economy after the massive and at times violent democracy protests in 2019.
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