The news — which could be the biggest blow to Hong Kong’s autonomy since its handover to China in 1997 — also further stoked tensions between China and the United States.
“The very real threat now, is the return of mass protests to the streets of Hong Kong, a downgrade in trade status with the US, and potentially an exit of large companies” from the city, wrote Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a research note Friday. “Overhanging this, are concerns that China and the United States are about to engage in a new round of trade wards. In all honesty, the timing could not be worse by China.”
The law, which is expected to ban sedition, secession and subversion of the Chinese central government, will be introduced through a rarely used constitutional method that could effectively bypass Hong Kong’s legislature.
The news was met with immediate criticism by opposition lawmakers in Hong Kong, human rights groups and the US State Department.
On Wednesday, the US Senate unanimously passed a bill that would prevent companies that refuse to open their books from listing on Wall Street. The bill’s bipartisan cosponsors said the goal is to “kick deceitful Chinese companies off US exchanges.”
“Sentiment remains sensitive to any potential trade dispute between the US and China,” Michael McCarthy, chief market strategist for CMC Markets, said in a note on Friday.
Beijing on Friday also announced that it will not set an economic growth target for 2020 — the first time it has not done so in decades.
Premier Li Keqiang said during China’s annual political gathering that the country must “give priority to stabilizing employment and ensuring living standards, win the battle against poverty, and achieve the goal of building a moderately prosperous society in all aspects.”
The absence of a GDP growth target for this year confirms that policymakers accept that after the plunge in the first quarter, “economic growth will be low for 2020 as a whole,” said Louis Kuijs, an economist with Oxford Economics.