American companies are expected to receive a warning Wednesday from the Biden administration about the growing risks of operating in Hong Kong, sources familiar with the matter said.
The U.S. government is expected to outline how data stored in Hong Kong might be accessed by the China government. U.S. Government sources said the warning, first reported by Financial Times, will be sent to American companies as a business advisory.
The advisory is part of the Biden administration's latest effort to put pressure on China over its repression of Hong Kong's democracy among other disagreements. The U.S. has repeatedly warned of business problems in Hong Kong - mired in democracy demonstrations since 2019.
U.S. officials have said the China-drafted national security legislation passed last year was undermining the rule of law. Officials said the current political climate was no longer conducive to the prosperity of businesses in Hong Kong.
Officials said Hong Kong was meant to be a "Special Administrative Region" with separate political and economic systems. Sources said the U.S. was concerned the law allows China to individually target companies that comply with U.S.-imposed sanctions.
The business advisory warning will expand on the previous administration's move to roll back special trade privileges for Hong Kong. The Donald Trump administration said privileges were granted only after China promised to give the city a "high degree of autonomy."
U.S. President Joe Biden will be attending a virtual meeting of the Asia-Pacific Economic Cooperation forum Friday. Representatives from China will attend. It isn't yet clear if Hong Kong and the American companies there will be part of the discussions.
Relations between the U.S. and China are strained following the years of reciprocal sanctions and a recent debate over the origins of the Covid-19 pandemic.
The Biden administration hasn't yet ruled out the possibility the pandemic may have resulted from a laboratory leak - a stance that has angered China. Both countries have also clashed over China's recent assertion of its territorial claims in the South China Sea and over the U.S.'s continued accusations of alleged genocide in China's Xinjiang region.
