WASHINGTON - Rancorous relations between the United States and China grew more tense Wednesday when Secretary of State Mike Pompeo notified Congress that Hong Kong no longer should be considered autonomous, a declaration that could have far-reaching ramifications in its trade relationship with the United States.
It will be up to President Donald Trump to decide the next steps, which could include sanctions on Chinese officials, higher tariffs and visa restrictions.
David Stilwell, the assistant secretary of state for East Asia Pacific affairs, said the administration has a "very long list" of options; he refused to be more specific. Stilwell said efforts will be made to target the pain on officials in Beijing while mitigating the impact on the people of Hong Kong and the United States.
"We're not hurting anybody, we're simply responding to what the PRC is doing," said Stilwell, using an acronym for the People's Republic of China.
Tensions between Washington and Beijing have been growing steadily over the past year, with disputes over trade, press freedoms and China's early reluctance to alert the world to the coronavirus that became a global pandemic. Last week, China announced a proposed law in which the Chinese Communist Party can deploy "relevant national security organs" to Hong Kong, giving legal cover for the mainland security services to operate in the previously autonomous financial center.
Pompeo has called it a "death knell" for Hong Kong.
In a statement, Pompeo called the proposed security law "only the latest in a series of actions that fundamentally undermine Hong Kong's autonomy and freedoms." As a result, he said, Hong Kong no longer merits special treatment that applied when the territory was under British rule before 1997.
"No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground," Pompeo said.
"Hong Kong and its dynamic, enterprising, and free people have flourished for decades as a bastion of liberty, and this decision gives me no pleasure," he added. "But sound policymaking requires a recognition of reality. While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself."
Pompeo's statement warned that the proposal jeopardizes Hong Kong's special status that has given it a favorable trading relationship with the United States. Trade between the two exceeded $66 billion in 2018, and Hong Kong has been exempted from tariffs that the Trump administration imposed on China.
But the decertification of Hong Kong for special treatment is just the beginning of a process as the administration weighs a menu of options, including the removal of Hong Kong's special status and sanctions against specific individuals and entities in Beijing.
It is unclear how the United States can respond in a manner that would not hurt residents of Hong Kong and American businesses that have invested in Hong Kong, which has had a more open business and political climate than exists in the rest of China.
"The PRC, I think, has tried to paint this as, it would respect the economic freedom in Hong Kong without feeling obligated to respect political freedom," Stilwell said. "You can't have one without the other. We know that's the case. So the U.S. will do what we can, and thread the needle as best we can."
The dispute over Hong Kong is shaping up to be a pivotal moment, for the United States as much as for China.
"Irrespective of the specific actions, this is an inflection point for the economic and political future of Hong Kong in terms of U.S. companies and investment," said Jude Blanchette, who holds the Freeman Chair in China Studies at the Center for Strategic and International Studies,
"If Beijing is unlikely to shift the trajectory, what do we get for putting Hong Kong's economic future at risk? And that's unclear. We've got to take action, make a public stand against encroachment by Beijing. The implications are profound.
Trump said Tuesday that the administration's response should be unveiled this week.
Whatever penalties it imposes, the administration's determination to demonstrate its opposition to Beijing's approach to Hong Kong is certain to cause already strained relations with China to deteriorate further. Rarely a week goes by without Pompeo excoriating Beijing for its behavior, accusing the government of covering up the origins of the coronavirus pandemic. China's state media outlets have reacted by labeling Pompeo evil, insane, a liar and the "common enemy of mankind."
Richard Bush, a China expert at the Brookings Institution, noted that many people in Hong Kong and China proper already suspect that the United States is covertly seeking regime change.
"This will reconfirm for China that our intentions are quite hostile," he said. "It will certainly contribute to deepening hostility, resentment and fear on each side."
Congressional leaders have been fiercely critical of Beijing's proposed national security law and have threatened consequences.
"With this latest national security legislative proposal, Beijing demonstrates that it would rather smother Hong Kong - a city of tremendous value to China and to the world - than keep its promise to give Hong Kong the latitude to manage its own internal affairs," Rep. Eliot L. Engel, chairman of the House Foreign Affairs Committee, said last week.
"If the National People's Congress enacts this proposed national security legislation, its actions not only imperil Hong Kong's special status, but Beijing's own interests," he said.
Sen. James Risch, R-Idaho, chairman of the Senate Foreign Relations Committee, issued a similar statement of support Wednesday.