House's scattergun approach targets trade facilitator

The US House of Representatives passed the Hong Kong Economic and Trade Office (HKETO) Certification Act on Sept 10.

The act denigrates Hong Kong's laws on safeguarding national security and smears Hong Kong's human rights situation, maliciously slanders the legality and legitimate purpose of implementing the Hong Kong National Security Law and the National Security Ordinance, and clamors for the cancellation of the legal rights and even the closure of the HKETOs.

The Hong Kong SAR government has established 14 HKETOs around the world, including three in the United States — in New York, Washington and San Francisco. The HKETOs established in the US maintain close ties with local government departments, business circles, think tanks and people from different sectors with the aim of strengthening exchanges between Hong Kong Special Administrative Region and the US.

The act, if adopted as law, will seriously undermine the normal economic and trade relations between Hong Kong and the US.

Hong Kong is one of the US' major trading partners. Over the past 10 years, the US has gained a trade surplus of $271.5 billion from trading with Hong Kong, exceeding the US' other trading partners. Among the more than 9,000 overseas companies in Hong Kong, there are more than 1,200 US companies.

The unilateral decertification of the HKETOs in the US cannot shake Hong Kong's status as an independent customs area, nor will it affect Hong Kong's linked exchange rate system. The legal basis for Hong Kong's status as a separate customs area originates from the World Trade Organization's agreement. It is a legal status agreed by the Chinese government, confirmed through the Basic Law, established by the multilateral rules of the WTO, and recognized by other WTO members. It is not granted by US lawmakers.

The linked exchange rate system is a monetary policy decided by Hong Kong on its own initiative, that is, all banks issuing HK dollars must pay US dollars equivalent to the amount of issuance. Hong Kong's huge foreign exchange reserves are the pillar of the linked exchange rate system.

As of the end of last month, Hong Kong's foreign exchange reserves were $423.4 billion, equivalent to more than five times the currency in circulation in Hong Kong, accounting for about 39 percent of the total supply of HK dollars, ensuring the stable operation of the linked exchange rate system.

In the face of distortion and smears by external hostile forces, what the Hong Kong government needs to do is to unswervingly maintain and optimize the business environment, and safeguard the legal rights and interests of all businesses in Hong Kong.

ECONOMIC DAILY