Hong Kong leader says U.S. law may damage business confidence

Hong Kong leader Carrie Lam said on Tuesday U.S. legislation supporting protesters may hurt business confidence in the financial hub, as she announced a fourth round of relief measures to bolster the city’s battered economy.

Lam told reporters the Hong Kong Human Rights and Democracy Act signed into U.S. law a week ago was “wholly unnecessary”, as the former British colony grapples with its first recession in a decade.

The act will require the U.S. State Department to certify at least annually that Hong Kong retains enough autonomy to justify favourable U.S. trading terms, and threatens sanctions for human rights violations.

“The impact currently is on confidence … because corporates will be worried about the actions the U.S. government may take in the future after they review this legislation,” Lam told reporters.

Lam did not specify what additional measures would be taken to reinforce economic activity, saying details would be revealed in the near-term. The government has previously offered relief of about HK$21 billion ($2.7 billion) to support the economy, particularly the transport, tourism, and retail sectors.

The unrest has hammered retail sales which dropped by their steepest on record in October as protests scared off tourists and hit spending.

In more bad news for the economy, China banned U.S. military ships and aircraft from visiting Hong Kong on Monday – a rest and recreation stop for the U.S. Seventh Fleet – in retaliation for the U.S. legislation.

Lam said approvals for such port visits were a matter for China’s Ministry of Foreign Affairs.

Hong Kong has been rattled by six months of sometimes violent unrest in the biggest challenge to Chinese stability since the bloody crackdown on pro-democracy protesters in and around Beijing’s Tiananmen Square occurred in 1989.

The protesters’ demands involve universal suffrage, an investigation into alleged police brutality and an end to Beijing’s perceived efforts to undermine democratic freedoms promised when the former British colony was handed back to China in 1997.

China denies its interference in Hong Kong’s affairs and says it is committed to the “one country, two systems” formula enshrined at the handover and guaranteeing the territory a high degree of autonomy. Beijing blames foreign countries, including the United States for inciting unrest.

Activists have pledged to hold lunch-time rallies throughout the week following a mass demonstration over the weekend when police fired tear gas to disperse crowds of protesters.

Hundreds of office workers gathered in Hong Kong’s business district on Monday in support of the pro-democracy movement after it scored a resounding victory in district polls a month ago.

Lam has renewed her appeals for peace but her administration has failed to offer any concessions to the protest movement despite the election results.

Source: Reuters