In 1993; annually from 1995 through 2007; and in 2015, 2016, and 2017, the Department of State submitted reports to Congress referred to in section 301 of the United States-Hong Kong Policy Act of 1992, as amended (the “Act”). Consistent with section 7019(e) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2018 (Div. K, P.L. 115-141) and Senate Report 115-152, the Department submits a similar report this year. This report highlights key issues from September 2017 through April 2018 and is submitted to update Congress on recent developments in Hong Kong.
Key Findings
The United States continues to have deep economic and cultural interests in Hong Kong. Cooperation between the U.S. government and the Hong Kong government remains, in many areas, broad, effective, and mutually beneficial. Certain actions by the Mainland Central Government during the period covered by this report were inconsistent with China’s commitment in the Basic Law to allow Hong Kong to exercise a high degree of autonomy. Hong Kong still generally maintains a high degree of autonomy under the “one country, two systems” framework in most areas – more than sufficient to justify continued special treatment by the United States for bilateral agreements and programs per the Act.
Progress in U.S.-Hong Kong Relations
U.S.-Hong Kong relations are based upon the continued substantial maintenance of the “one country, two systems” framework, as established in the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, as enacted by the National People’s Congress. The Act establishes the policy of the U.S. government to treat Hong Kong as a non-sovereign entity distinct from China for the purposes of U.S. domestic law, based on the principles of the 1984 Sino-British Joint Declaration.
Hong Kong’s strong traditions of rule of law, as displayed by its independent judiciary, low levels of corruption, and high standards for public health and safety, have continued to make Hong Kong a preferred platform for U.S. businesses, as well as an important base for U.S. investments and business activity in the Indo-Pacific region writ large. Hong Kong was ranked the world’s freest economy for the 24th consecutive year on the 2018 Heritage Foundation Index of Economic Freedom. However, for the same year, Freedom House continued to rate Hong Kong as only “partly free” for political rights and civil liberties.
Trade, commerce, and finance: The United States recognizes Hong Kong as a separate customs territory. More than a dozen U.S.-Hong Kong bilateral agreements are in force, helping to provide the legal underpinning for the extensive and mutually beneficial economic relationship between the United States and Hong Kong. The World Bank lists Hong Kong as the world’s 33rd-largest economy (ranked at 14th on a per capita basis).
Hong Kong is a major international financial center, with a U.S. dollar peg. More than 1,400 U.S. firms operate in Hong Kong, and most leading U.S. financial services firms are represented there.
U.S. trade relations with Hong Kong are very strong. Two-way trade in goods and services totaled an estimated $68.9 billion in 2017. The United States enjoyed its largest bilateral trade surplus world-wide with Hong Kong, at $34.5 billion, as exports totaled $51.7 billion and imports were $17.2 billion. U.S. exports of goods and services to Hong Kong supported an estimated 188,000 U.S. jobs in 2015 (latest data available). Hong Kong’s trade and investment policies were based on free market principles, although there were a few areas that could be improved (see the National Trade Estimate for more details).
Looking specifically at goods trade, in 2017 the United States’ bilateral surplus was $32.5 billion. Hong Kong counted the United States as its second-largest goods trading partner, while Hong Kong ranked ninth-largest among U.S. goods exports destinations. In 2017, Hong Kong was the fourth-largest market for U.S. exports of consumer-oriented agricultural products, valued at $4.3 billion, representing a 10 percent growth from 2016. Top-selling items included $1.3 billion in tree nuts, $884 million in beef and beef products, $469 million in poultry meat and products (excluding eggs), $415 million in pork and pork products, $292 million in U.S. fresh and dried fruits, and over $100 million in U.S. wine exports to Hong Kong.