HK Prepared For US Sanctions, Says Financial Chief

Financial Secretary Paul Chan says Hong Kong has known for some time it could get caught up in a dispute between Beijing and Washington and the SAR is ready to face possible sanctions from the US.

In an interview with the mainland's Global Times, Chan said Hong Kong would not be seriously affected by Washington punishing the SAR in relation to its special trade status, its import of sensitive technology or its US-dollar peg.

But he said he expected US sanctions to hamper investor confidence.

Chan said the SAR government has also assessed the impact of the US move and devised a contingency plan if Washington begins to treat Hong Kong as no longer being a separate entity from the mainland.

He said any removal of the SAR's special trade treatment would pose a relatively small impact, with less than 0.1 percent of Hong Kong's total exports currently going to the US.

He also said that the stock, futures and currency markets have been "very calm" so far and he has not noticed any massive capital outflow.

Chan revealed that the administration began preparing for any impact on Hong Kong's financial system two years ago, when it realised that the SAR could be caught up in the Sino-US trade dispute.

The Hang Seng Index plunged more than five percent the morning after the National People's Congress announced its plan to impose a national security law on Hong Kong.

The benchmark later recovered some of its losses, but had been under pressure in anticipation of Trump's Friday night announcement of his response to the security law.