China looks set to add its recently passed foreign sanctions law to Hong Kong's statute book this week, after sanctioning a slew of rights activists and former U.S. officials in July.
The National People's Congress (NPC) standing committee "will likely discuss including the Anti-Foreign Sanctions Law" in Hong Kong law, the ruling Chinese Communist Party (CCP)-backed Global Times newspaper reported on Tuesday.
"The agenda will likely be discussed during a meeting of the [NPC] standing committee," the paper quoted Hong Kong standing committee member Tam Yiu-chung as saying.
"It is appropriate to implement the Anti-Foreign Sanctions Law in Hong Kong," Tam told the paper.
Hong Kong leader Carrie Lam, who has been targeted alongside Chinese and Hong Kong officials over human rights violations linked to the crackdown on the 2019 protest movement and a citywide crackdown on dissent under the national security law, has said China's law will give the U.S. and other countries "a taste of their own medicine."
However, a top economist warned that more than 80 percent of banks with operations in Hong Kong are foreign, so requiring them to comply with sanctions against foreign individuals could trigger their departure from the city.
"The crucial thing will be the scale of sanctions," Chinese University of Hong Kong (CUHK) economist Law Ka-chung told RFA. "If there are a large number of people, or a broad scope that sanctions everyone in a particular sector or category, it will cause huge problems."
"It will be a dilemma [for banks], who will be forced to pick a side," he said. "There are more than 200 banks, and only about 10 percent of their business comes from retail banking."
"Many of them are foreign, including banks from southeast Asia and the Middle East," Law said. "They're not going to give up their U.S. dollar business, so they will choose to leave, and the number of banks operating in Hong Kong could fall by more than half."
Joseph Cheng, former politics lecturer at Hong Kong's City University, said a conservative use of the law could save the situation.
"But if they are really going to force banks and other financial institutions to choose ... then most financial institutions will be unwilling to offend the U.S., and will decide to leave Hong Kong," Cheng said.
He said foreign-funded companies will likely gradually reduce their investment in Hong Kong, and move their business to other cities in the region, like Singapore or Tokyo.
On July 23, China announced it would impose "counter-sanctions" on individuals in the U.S., including former commerce secretary Wilbur Ross under the law, which took effect in June 2021.
China also imposed unspecified "counter-sanctions" on current and former representatives of a number of organizations, including the Congressional-Executive Commission on China, Human Rights Watch (HRW), and the Washington-based Hong Kong Democracy Council (HKDC).
"The U.S. side concocted the so-called Hong Kong business advisory, baselessly smeared Hong Kong's commercial environment, and illegally sanctioned Chinese officials in Hong Kong," China's foreign ministry said in a statement at the time.
"These actions seriously violated international law and the basic principles of international relations, and seriously interfered in China's internal affairs," the ministry said.
'Medal of honor'
HKDC executive director Samuel Chu told RFA in a recent interview that being sanctioned by the CCP was a "medal of honor" for everyone targeted.
"Being on Hong Kong's wanted list, and China's sanctions against the HKDC are medals of honor for all of us," Chu said. "It means we have being doing things right."
"Personally, I've never had to stop to think about whether or not to do this work," he said.
HRW's China director Sophie Richardson, who was sanctioned by China by name, told Reuters that the move was a distraction from growing international criticism over the CCP's mass incarceration of Uyghurs and other Turkic Muslims in Xinjiang.
"These are diplomatic tantrums that are designed to distract attention away from Beijing's complicity in crimes against humanity," Richardson said at the time.
China passed its tit-for-tat law allowing targeted sanctions against foreign individuals and organizations on June 10, 2021. The move followed a slew of sanctions targeting CCP and Hong Kong officials over human rights abuses in Xinjiang, Tibet and Hong Kong.
Earlier that month, the Biden administration banned U.S. investment in around 60 companies in China’s defense or surveillance technology sectors in a bid to limit the flow of money to firms that undermine U.S. security or “domestic values,” which allows listings for human rights abuses.
And on March 22, the European Union, U.S., Canada, and the U.K. sanctioned Chinese officials and security entities as part of a multilateral approach to hold to account those responsible for Beijing’s policies of oppression against Uyghurs in the Xinjiang Uyghur Autonomous Region (XUAR).
Translated and edited by Luisetta Mudie.
This content originally appeared on Radio Free Asia and was authored by By Emily Chan and Rita Cheng.