Pursuant to section 301 of the United States-Hong Kong Policy Act of 1992, as amended (the “Act”), the Department submits this report on recent developments in Hong Kong from May 2018 through March 2019.
Key Findings
The United States continues to have deep economic and cultural interests in Hong Kong. Cooperation between the U.S. government (USG) and the Hong Kong government remains broad and effective in many areas, providing significant benefits to the U.S. economy and homeland security. During the period covered by this report, the Chinese mainland central government implemented or instigated a number of actions that appeared inconsistent with China’s commitments in the Basic Law, and in the Sino-British Joint Declaration of 1984, to allow Hong Kong to exercise a high degree of autonomy. The tempo of mainland central government intervention in Hong Kong affairs — and actions by the Hong Kong government consistent with mainland direction — increased, accelerating negative trends seen in previous periods. As a general matter, Hong Kong maintains a sufficient — although diminished — degree of autonomy under the “one country, two systems” framework to justify continued special treatment by the United States for bilateral agreements and programs per the Act.
Context of U.S.-Hong Kong Relations
U.S.-Hong Kong relations are based upon the continued substantial maintenance of the “one country, two systems” framework, as established in the basic law of the Hong Kong Special Administrative Region of the People’s Republic of China, as enacted by the National People’s Congress. The Act establishes the policy of the USG to treat Hong Kong as a non-sovereign entity distinct from China for the purposes of U.S. domestic law, based on the principles of the 1984 Sino-British Joint Declaration.
Significant economic, legal, and commercial differences continued to exist between the Hong Kong Special Administrative Region and mainland China during the period covered by this report. Hong Kong practiced free and open trade, with negligible tariff or non-tariff barriers. The Hong Kong economy was free from state direction and, for example, was ranked by the Heritage Foundation as the world’s most free for a 25th consecutive year. The World Bank ranked Hong Kong in fourth place in its ease-of-doing-business index for 2018. The Hong Kong legal system continued to be based on common-law traditions. Judges were independent and final judgments respected and enforceable. Property rights were well protected in law and practice. Hong Kong maintained its own currency, pegged to the U.S. dollar. The Hong Kong Monetary Authority set monetary policy autonomously from the People’s Bank of China. Hong Kong was not subject to the mainland cybersecurity law, and persons in Hong Kong could access internet content not available in the mainland, including content offered by U.S. media and technology firms. Hong Kong maintained customs, immigration, and law enforcement authorities distinct from those of the mainland central government, whose agents were not authorized to operate in Hong Kong except in specified instances discussed later in this report. Mainland operatives reportedly monitored some political activists, NGOs, and academics who criticized the Chinese central government’s policies. Hong Kong kept high standards for public health and safety. Hong Kong people can protest the policies of the mainland central government, such as the annual vigil to commemorate the victims of the 1989 Tiananmen Square massacre, although protest organizers are required to give police notice before demonstrations.
Bilateral Agreements and Multilateral Forums: Hong Kong continued to participate separately from mainland China in a number of multilateral organizations and agreements, including the financial action task force and the financial stability board. Hong Kong concluded a free trade agreement with Australia in November 2018 and with Georgia in June 2018. An ASEAN-Hong Kong free trade agreement entered into force in January 2019. Hong Kong is a separate and active member of the WTO.
