Hong Kong shares tumble as China plans new security law

Hong Kong-listed stocks plunged on Friday morning after talk of Beijing planning a new security law in response to massive pro-democracy protests that have gripped the city over the past year.

Premier Li Keqiang said China would “improve” the legal system and ensure national security in Hong Kong and Macau. Li promised that China would honor the “one country, two systems” structure, however, political critics are doubtful.

Activists in Hong Kong called for protests on Friday against the new plan. The region faces threat of repeating last year’s violent demonstration that began as a rejection of the ways in which Beijing has attempted to take away the right of freedom and expression of the former British colony in recent years.

Reportedly, the new law will make the handling of future political protests easier by prohibiting insubordination and insurgence and it could be passed as earlier as next week.

China’s plans to impose the new security law have caused an outrage in US Congress, putting President Trump into uncomfortable position because of his self-described friendship with Chinese President Xi Jinping.

When asked about it, Trump told reporters:

I don’t know what it is, because nobody knows yet. If it happens, we’ll address that issue very strongly.

In December, the US passed the Hong Kong Human Rights and Democracy Act that threatens to strip Hong Kong’s preferential trading status in the US if I t no longer enjoys autonomy from the China.

Morgan Ortagus, a State Department spokeswoman stated:

Any effort to impose national security legislation that does not reflect the will of the people of Hong Kong would be highly destabilizing, and would be met with strong condemnation from the United States and the international community.

Ortagus added:

We urge Beijing to honor its commitments and obligations in the Sino-British Joint Declaration — including that Hong Kong will ‘enjoy a high degree of autonomy’ and that people of Hong Kong will enjoy human rights and fundamental freedoms — which are key to preserving Hong Kong’s special status in international affairs and, consistent with U.S. law, the United States’ current treatment of Hong Kong.

Hong Kong’s Hang Seng index sank by 5.56% by 1.350 points and Japan’s Nikkei slipped 0.25%.

The coronavirus pandemic also had a heavy effect on Hong Kong economy, a record 8.9% contraction in the first three months of the year and grim expectations of the quarter.

Markets were also fazed as China said that it will not be setting a GDP target for 2020 for a first time in decades.

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