China threatens to retaliate over U.S. bill that could shutter Hong Kong trade offices

American lawmakers have passed a bipartisan bill that could eventually lead to the shuttering of Hong Kong’s U.S.-based trade offices, drawing strong condemnation from the Chinese-ruled city and Beijing. 

The legislation, the Hong Kong Economic and Trade Office Certification (HKETO) Act, was passed by the U.S. House of Representatives with overwhelming support on Tuesday.  

If it clears the Senate and is signed into law, HKETO would require the U.S. secretary of state to annually review the “privileges, exemptions and immunities” granted to Hong Kong’s Economic and Trade Offices.

And if the secretary of state determines an office to no longer enjoy a “high degree of autonomy” from the Chinese government or to pose other concerns, such as those related to national security, it will be required to terminate operations. 

Beijing strongly condemned the act’s passing on Wednesday, accusing the U.S. of politicizing normal economic cooperation and attempting to contain Hong Kong’s development. 

“China urges the U.S. to stop advancing that act to prevent further damage to the stability and growth of China-US relations. Otherwise, China will take strong and resolute countermeasures,” a government spokesperson said.

The remarks echoed a statement from the Hong Kong government that decried the U.S. for twisting facts, violating international laws and norms, and grossly interfering in the affairs of Hong Kong. 

Hong Kong has operated as a special administrative region of China since a handover from the British in 1997.

The city has 14 Economic and Trade Offices overseas, which work to advance the finance center’s economic and trade interests, as well as support overseas enterprises in expanding their Hong Kong business. 

However, proponents of HKETO have accused these offices of also operating as agents of the Hong Kong government and, by extension, Beijing. 

The accusations are representative of a breakdown in Washington and Hong Kong’s diplomatic relations since the passage of a Beijing-backed national security law in 2020, following a wave of pro-democracy protests and political dissent in the city.

The national security law, amongst other measures in Hong Kong, has seen Western governments accuse Beijing of undermining the city’s “one country, two systems” principle established by the handover.

In a hearing on Tuesday, the sponsor of HKETO, GOP Rep. Chris Smith, chair of the Congressional-Executive Commission on China, called the bill “a necessary next step in tangibly demonstrating our solidarity with the persecuted citizens of Hong Kong.”

“The United States should not be granting diplomatic privileges and immunities to a network of communist spies and propagandists,” he added. 

In March, the Hong Kong government implemented an additional security law, Article 23, which U.S. officials and analysts have argued could further erode Hong Kong’s autonomy and threaten U.S. businesses there.

The U.S. State Department said in a release last week that “businesses should be aware that the risks they face in the [People’s Republic of China] are now increasingly present in Hong Kong.”

The passing of HKETO comes in the midst of the House’s so-called ‘China Week,’ that will see the Republican-led House vote on a slew of legislation aimed at countering perceived military, economic, ideological, and technological threats posed by the Chinese Communist Party.