Hong Kong May Be Weak Link for U.S. Technology, Senators Warn

Hong Kong May Be Weak Link for U.S. Technology, Senators Warn


By:  Daniel Flatley, Iain Marlow and Kevin Hamlin
Bloomberg

A bipartisan group of senators has told the Trump administration that they’re concerned about whether U.S. export controls are strong enough to prevent China from getting sensitive American technology through Hong Kong.

“We believe it is critical that the United States take appropriate measures to ensure China does not abuse Hong Kong’s special status under U.S. law to steal or otherwise acquire critical or sensitive U.S. equipment and technologies in support of its strategic objectives or to infringe on the rights of people in Mainland China, Hong Kong, and elsewhere,” the senators wrote in a letter to Secretary of Commerce Wilbur Ross and Secretary of State Michael Pompeo.

The move comes as more U.S. lawmakers question the special trading relationship with Hong Kong that underpins its economy as pro-democracy protests throw the financial hub into turmoil. While dual-use technology with consumer and military applications represent some 2 percent of U.S. exports to Hong Kong, restricting sales could potentially do irreparable harm to the city’s image as a safe hub for global business.

Thousands of protesters marched to the city’s U.S. consulate this weekend in an appeal to President Donald Trump. They support the passage of the U.S. Hong Kong Human Rights and Democracy Act, which is backed by prominent American lawmakers including House Speaker Nancy Pelosi and calls for annual assessments on whether the city is sufficiently autonomous from Beijing to continue its special trading status.

A U.S. government report said earlier this year that the city’s autonomy was “sufficient -- although diminished.”

Trump’s trade war with China is being waged in part over the issue of intellectual property theft as well as its drive for technological dominance. Members of Congress are adding objections to China’s use of technology to suppress dissent as pro-democracy protests rock Hong Kong.

A barricade set on fire by demonstrators burns at an entrance to Central Station, Sept. 8.
“The Chinese government has demonstrated its willingness to use both licit and illicit means to acquire and advance its development of technologies such as artificial intelligence, tools of mass surveillance, and advanced robotics, among others,” the senators write. “China is using these technologies not only to bolster its own industries, but also to advance its military capabilities and to infringe on the fundamental liberties of its citizens.”

The document is signed by Senators Jim Risch and Bob Menendez, the chairman and ranking member of the Senate Foreign Relations Committee, and Senators Mike Crapo and Sherrod Brown, the chairman and ranking member of the Senate Banking Committee. It is also signed by Republican Senators Cory Gardner, Marco Rubio, and Pat Toomey, and Democratic Senators Ed Markey, Ben Cardin and Jack Reed.

‘Absurd and Silly’

China Foreign Ministry spokeswoman Hua Chunying pushed back Wednesday, saying senators were trying to “whitewash those illegal and even terrorist practices in Hong Kong” and “demonize” the city’s police force. China has described the U.S. as a “black hand” behind the protest movement.

“It is the U.S. politicians who tolerate and connive with these violent protesters that encourages the violent activities in Hong Kong,” Hua told reporters in Beijing. “Any person who wants to play with fire in Hong Kong affairs will only get themselves burned. We advise certain people in the U.S. to stop such absurd and silly practices and withdraw their hand from Hong Kong.”

The U.S. senators say they are also concerned about the export of police equipment, such as tear gas, rubber bullets and batons, “which may be used to suppress legitimate civil dissent.”
Why Hong Kong’s Still Protesting and Where It May Go: QuickTake

The senators asked for a response by Oct. 1, pointing out that the “situation continues to become more critical by the day.”

Although bans on police or crowd suppression equipment might be largely symbolic, a threat to start dismantling aspects of Hong Kong’s unique trading relationship with the U.S. could eventually harm the city’s standing as a gateway between China and the world, said Mathew Wong, an associate professor at the Education University of Hong Kong.

“It will definitely put pressure on Hong Kong as a trading hub and a financial center, because much of the investment flow to and from Hong Kong is because of this special status,” he said. “If there is no such distinction anymore, I don’t think foreign capital would particularly choose Hong Kong -- it would just go to Shanghai or other places.”