Hong Kong no longer deserves special U.S. status, Pompeo says

People wearing face masks take part in a protest against the second reading of a controversial national anthem law in Hong Kong, China May 27, 2020. REUTERS/Tyrone Siu

WASHINGTON/HONG KONG (Reuters) – U.S. Secretary of State Mike Pompeo told Congress on Wednesday that Hong Kong no longer qualifies for its special status under U.S. law, potentially dealing a crushing blow to its status as a major financial hub.

China had undermined Hong Kong’s autonomy so fundamentally, Pompeo said, that he could not support its recertification for its special pre-1997 trading status.

China’s plan for new security legislation triggered protests in the territory, and it now falls to President Donald Trump to decide to end some, all or none of the U.S. economic privileges the territory enjoys.

While Pompeo made no recommendations in his statement, Trump has a long list of possible responses, including visa and economic sanctions, David Stilwell, the State Department’s assistant secretary for East Asia, told reporters.

People familiar with the matter told Reuters the Trump administration was considering suspending Hong Kong’s preferential tariff rates for exports to the United States as part of its response to China’s plan.

Trump could also opt for targeted sanctions against Chinese officials, government entities and businesses involved in enforcing the new legislation, according one of the sources, who spoke on condition of anonymity.

Trump, already at odds with Beijing over trade and the coronavirus pandemic, had said on Tuesday Washington was working on a strong response that would be announced before the end of the week.

China’s security proposal, unveiled last week, sparked the first large street demonstrations in Hong Kong for months. Firing tear gas, water cannon and pepper pellets, Hong Kong police made 360 arrests on Wednesday as thousands of people protested against the bill.

Late into the evening, protesters were still cramming sidewalks, chanting for full democracy and for Hong Kong to seek independence from China, saying this is now “the only way out”.

Pompeo said China’s plan to impose the new legislation was “only the latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedoms.

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