www.zerohedge.com
China’s latest US sanctions countermeasures focusing on Hong Kong and Macau said to be under preparation look to be the furthest reaching in terms of outright barring any foreign entity that complies with Washington.
The new laws for Hong Kong and Macau would proactively prevent foreign entities and individuals from complying with US-led sanctions by barring them, according to a new Wall Street Journal report Wednesday.
It follows the mainland’s “antiforeign sanctions law” unveiled in June, which precisely bars foreign companies that seek to conform with European and US anti-China sanctions, which Beijing at the time framed as ‘safeguarding’ Chinese businesses and entities.
According to details presented in the WSJ report:
China’s official Xinhua News Agency reported on Tuesday that the country’s legislature was scheduled to add provisions to the mini-constitutions of Hong Kong and Macau during a four-day session beginning Aug. 17, though it didn’t specify what changes would be made.
The introduction of the law in the two Chinese territories, especially in the financial hub of Hong Kong, could leave many companies and their employees caught in the middle as China and the U.S. clash over the future of the former British colony.
It effectively enables the Chinese and HK governments to sanction all who comply with US/EU sanctions by drawing a bright red line, forcing entities to choose whether to comply to Washington’s side or Beijing’s side.
It will create an impossible “damned if you do, damned if you don’t” dilemma for many…
If true, it means banks in Hong Kong will really have to choose whether to implement foreign sanctions – Carrie Lam will soon have her bank accounts back?
— Kris Cheng (@krislc) July 27, 2021
One prominent lawyer and economic sanctions expert was cited in the report as pointing out the dilemma which such a law in arguably the world’s foremost financial hub would create:
“The real conflict, which is what people are really concerned with, are cases where companies are obliged to follow a sanction and there is a prohibition against complying with it in Hong Kong,” said Nicholas Turner, a lawyer at Steptoe & Johnson LLP.
While such legislation would obviously be hugely disruptive and wrought with deep uncertainty for Western companies that have long been in Hong Kong and Macau, the irony remains that Beijing is to some degree mimicking Washington’s own longtime tactics.
The US currently often seeks to punish third party entities or countries for direct or even indirect dealings with a sanctioned regime – the recent cases of Venezuela and Iran being foremost examples, or even European companies which worked on the Russia-to-Germany Nord Stream 2 pipeline.
