HK should brace itself for potential US decoupling

Washington is taking gradual steps to decouple from China under the pretext of “de-risking” because US' economic ties with China are too strong, notes the writer.


Illustration by China Daily

October 16, 2023

HONG KONG – Huawei launched its new smartphones on Sept 25, the second anniversary of rotating chairwoman Meng Wanzhou’s return to China after being put under house arrest in Canada two years earlier.

The high-profile new-product launch marked the rebirth of Huawei. The following day, Chinese Vice-President Han Zheng and Wang Yi, director of the Office of the Foreign Affairs Commission of the Communist Party of China Central Committee, met with former US Treasury secretary Henry Paulson in Beijing. Although the timing of the two events could have been sheer coincidence, it has caused speculation about Sino-US relations.

Paulson told Han that China and the United States should maintain communication and dialogue, strengthen people-to-people exchanges and economic and trade cooperation, and jointly cope with global challenges such as climate change. When speaking with Wang, Paulson indicated that the two sides should find a way to get along, build mutual trust, push for the steady improvement of US-China relations, and explore areas of common interest such as the economy, finance, agriculture, and climate change response.

Paulson made no mention of an important sector — technology — an omission that was conspicuous given that Huawei’s high-profile new-product launch the previous day highlighted the country’s achievements in its self-reliance drive for high-end technology.

While US Commerce Secretary Gina Raimondo was visiting China from Aug 27-30, Huawei surprised everyone with the release of its latest Mate 60 Pro cellphone on Aug 29. The new flagship smartphone, which is deemed by many netizens to outperform Apple’s latest iPhone, is certified by some research institutions as being compatible with 5G technology and the world’s first cellphone that supports calls over satellite. It is equipped with a Chinese-made Kirin 9000S chip. Some regard it as China’s “Battle of Stalingrad” against the US’ technology embargo, which was considered the turning point in World War II.

Some have suggested that Huawei’s new product launches in September signaled a shake-up of the global information industry chain; that is to say, Huawei is doing what Cisco, Apple, Qualcomm, Starlink, Nvidia, Google and Microsoft are doing.

Washington has taken action to decouple from China in the field of science and technology but duplicitously rephrased it as a “de-risking” move. Some people in Hong Kong, either out of self-interest or fear, choose to believe that China, including the Hong Kong Special Administrative Region, should be receptive to any Washington initiative for maintaining ties in any economic area.

That was a wishful and naive suggestion. Technology and the economy are interrelated. Being hellbent on curbing China’s advancement in science and technology, Washington is bound to try and restrict bilateral economic exchanges.

Indeed, the US has imposed “sanctions” on many mainland and Hong Kong enterprises using various pretexts. One of those sanction orders dates back to Sept 17, 2021, when the US Department of Treasury sanctioned seven Hong Kong-based companies over allegations of aiding Iran. On June 28, 2022, the US Department of Commerce imposed sanctions on five Chinese firms, four of which are Hong Kong-based companies, for allegedly supporting Russia’s military. On March 23, 2023, the US Department of Commerce added 14 Chinese firms to its Unverified List, two of which are registered in Hong Kong. Washington has also made use of the pretext of “forced labor in Xinjiang” to “sanction” Chinese companies. For example, on Sept 26, the US Department of Homeland Security banned three more Chinese companies from exporting goods to the US under this pretext. So far, 27 Chinese companies have been affected by the embargo on these grounds.

Washington has also sought to harm China’s business environment. On Sept 26, US government agencies issued a joint advisory urging US companies to try their best to uncover any “Xinjiang links” in their supply chains, and warning them of the “risks” of operating in China.

As we can see, Washington has been trying to constrain Chinese companies by overstretching the concept of national security, abusing export control, and leveraging state power. It is only because the US’ economic ties with China, including Hong Kong, are too strong to be completely severed within a short period of time that Washington is taking gradual steps to decouple from China under the pretext of “de-risking”. Therefore, the HKSAR government and the city’s vulnerable sectors, such as finance and business, will have to formulate contingency plans and brace themselves for the worst-case scenario of the US decoupling from China.

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