AILSA CHANG, HOST:
Today, the Biden administration issued a warning to American businesses operating in Hong Kong. It flagged a range of risks that a year ago, nobody really had to worry about. It also imposed new sanctions on several Chinese officials for undermining Hong Kong's autonomy from Beijing. To help us understand the significance of all of this, we're joined now by NPR China affairs correspondent John Ruwitch. Hey, John.
JOHN RUWITCH, BYLINE: Hi, Ailsa.
CHANG: Hi. OK, so new sanctions, also a new warning to businesses. Let's start with the sanctions. Who exactly is being sanctioned, and why?
RUWITCH: So this time, they have sanctioned seven officials from the liaison office of the Central Government of China. That's the office, the State Department says, that projects Beijing's influence into Hong Kong. And the State Department also says that that office has been undermining Hong Kong's autonomy. If you think back to 1997 when Britain handed Hong Kong back to China, China promised basically to be - that Hong Kong would be untouched politically for 50 years, right? But a year ago this month, there was this huge hit to it with the introduction of the national security law, which is sweeping. It's been very broadly interpreted, and it's been used to silence dissent and arrest critics of the government.
CHANG: OK, so connect the dots for us. How specifically did this new national security law lead to this new advisory for U.S. companies?
RUWITCH: Yeah, good question. The national security law, it's the backdrop to all this, right? The business advisory warns that as China's grip is tightening on Hong Kong, businesses face a risk of electronic surveillance without a warrant or that company data could be vulnerable. And a big part of what's changing in Hong Kong is that it's no longer clear that the judiciary is going to act as independently as it has for decades, right? The State Department says that there's a new legal landscape, and the national security law is the cornerstone of that, right? And it could pose a threat to businesses and individuals operating there.
It's worth noting that this business advisory is significant because it's a first, really. I mean, the U.S. government for decades encouraged American business with Hong Kong. And so a specific warning like this is really a turning point.
CHANG: It is. So how do you think American businesses are actually hearing the warning? Do you think a lot of them will pull out of Hong Kong?
RUWITCH: That's a question that I asked Tara Joseph, who's the president of the American Chamber of Commerce in Hong Kong. You know, her view is that everyone knows that the risk premium is going up in Hong Kong. But the bottom line is that the Hong Kong - you know, Hong Kong remains attractive.
TARA JOSEPH: There's all sorts of questions being asked, which makes it feel volatile and uncomfortable. But there's still a lot of money to be made here, and this is still a very important hub for U.S. companies. It's just a question of how much risk is coming down the highway.
RUWITCH: You know, the U.S. government has warned of business risks in mainland China for years, and American companies have stayed there. So a wholesale pull-out from Hong Kong seems pretty unlikely. I mean, there are more than 85,000 Americans living and working there. There's more than a thousand U.S. companies with significant significant operations in Hong Kong. But the mood's changing, and companies and individuals are really assessing the risks accordingly.
CHANG: But, John, I mean, the context for all of this, it goes beyond Hong Kong, right? Like, the worsening relationship between the U.S. and China probably plays a role here, doesn't it?
RUWITCH: Absolutely. I mean, that colors everything. I chatted with Ho-Fung Hung, who's a professor at Johns Hopkins University, about this point. And, you know, he notes that Hong Kong has really flourished from the 1970s onward as a doorway into China, in part because U.S.-China relations were so good.
HO-FUNG HUNG: So Hong Kong is kind like the child of this marriage between U.S. and China. And so as they are breaking up, there's no way that Hong Kong will not be crushed in the process or hurt in a significant way.
RUWITCH: You know, those are strong words, right? It's hard to see either side really backing down.
CHANG: That is NPR's John Ruwitch. Thank you, John.
RUWITCH: Thank you. Transcript provided by NPR, Copyright NPR.
