Hong Kong: China-US tensions put Asia's financial hub at risk
Hong Kong, discerned as one of the leading financial cores across the globe, is on the verge of doom because of the geopolitical conflict between the USA and China. According to experts, if the special trade privileges of Hong Kong stood rescinded, it would certainly wear away the city as a global financial and export hub.
The new security law imposed in HK is going to end it's freedom. The State Department of the US declared that HK is no longer independent from China and does not perform like an autonomous entity.
This declaration has clearly stated that China and the US are on for a full-fledged economy war. The Government of the United States could backfire by inflicting high tariffs, visa cutoffs, and additional financial embargoes.
As a result of the Security Bill, it is expected that Washington might abolish economic and trading benefits and include the unique customs territory. In the initial quarter of 2020, Hong Kong's economy faced a contraction of 8.9% after the technical depression of 2019.
Rajiv Biswas in an interview with DW stated that the HKSAR economy is predicted to shrink by 6.6% this year. The tourism and retail sector has to deal with a lot of losses due to the Coronavirus outbreak. Abandoning Hong Kong's SAR economic status by the US Government could make the Hong Kong economy depreciate beyond imagination.
Hong Kong's Government reacted to this and asserted that abandonment of the country’s Special status will not only create a negative impact on it but also on the US economy.
HK occurred to be the biggest trading partner for Washington from 2009 to 2018 with a trade value of $297 billion. They also proclaimed that 1300 US firms were working and based in the city.
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It has always been the gateway for China to connect with International financial markets despite the fact that Shanghai and Shenzhen work as China's financial hubs. China utilizes Hong Kong to extract foreign funds.
China intervenes in the financial system and keeps thorough capital control, whereas Hong Kong is one of the open economies globally and works like a big debt and capital financing market. For this reason, international companies choose Hong Kong as a headquarters to develop their businesses.
"As a result of desertification from the US Government, the city would miss the access to advanced US technology and face huge casualties. It would also increase US tariffs" put down in a research note by Mark Williams.
HK cardholders might suffer from this geopolitical war too. Earlier, they were allowed to transit to the United States without an advanced visa application, but in the current scenario, they might lose this benefit.
To impose supremacy on Hong Kong, both countries are eroding the economic market, affecting a lot of firms as well as staking Asia's financial center.