U.S. President Donald Trump makes an announcement about U.S. trade relations with China and Hong Kong in the Rose Garden of the White House in Washington.
One key variable going forward is the U.S. position and whether the U.S. is willing to stay globally engaged in multilateral institutions,” Rafferty said. “My base case is America will stay engaged.
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While Trump said the changes would “affect the full range” of agreements that give Hong Kong preferential treatment versus mainland China, he gave few details. Similarly, the new security law leaves plenty of uncertainty over the extent to which the central Chinese government will begin to actively control affairs in Hong Kong, which has so far remained a city with greater freedom of speech and alignment with international financial standards than the mainland.
“This announcement does not mean that US companies will be flipping a switch in HK and running for the exits,” American Chamber of Commerce in Hong Kong President Tara Joseph said in an email to CNBC. “There are many unanswered questions about how the US – HK special status could be unwound. The more clarity business receives, the more helpful it will be at this challenging juncture.”
In the immediate future, many analysts point out that the U.S. has far more business interests at stake in Hong Kong. On the other hand, pressure in U.S. financial markets will likely send more Chinese companies to the Hong Kong exchange for listings, which will likely offset outflows, according to Bruce Pang of China Renaissance.
China has also taken few actions against U.S. businesses.
Leaders have emphasized how they will increase the industries available for investment, while threatening to put foreign firms on an “unreliable entity list,” a blacklist for foreign organizations and individuals that damage the interests of domestic firms. But no details have emerged 12 months out.
“We find ourselves in a moment where the voices of scapegoating (foreign countries for the pandemic) are getting louder,” Jeffrey Lehman, Vice Chancellor of New York University in Shanghai and chair of the board for the American Chamber of Commerce in Shanghai. “But I’m an optimist and I think over time, those voices will subside as leaders in the business community step forward and say, ‘We know the benefits that humans everywhere enjoy (from globalization).’”
Until the details on recent political proclamations become clear, China and the U.S. publicly maintain that communication channels are open – for now. And others in international business hold out hope for more constructive discussions.
“We don’t want to leave China,” Joerg Wuttke, President of the European Chamber of Commerce in China, said in a phone call. “That’s why we engage more with China and ask for more.”
In an increasingly tense environment, Wuttke said the EU Chamber is looking for incremental areas of cooperation around China. “In this kind of situation, there are no big solutions anymore.”