(Adds dropped words in headline)
BEIJING/WASHINGTON, July 17 (Reuters) – The United States on Friday partially restored Hong Kong’s special legal status that was revoked by U.S. President Donald Trump in 2020, a move lauded by China as “a more positive direction” for U.S.-China relations.
The U.S. Treasury Department announced that it allowed the expiration of an executive order issued during Trump’s first term in response to Beijing’s imposition of a national security law in Hong Kong.
The July 14, 2020 order, which had been extended annually for the past five years, declared a national emergency over China’s security crackdown on Hong Kong, imposing sanctions on individuals associated with it and suspending special economic and trade privileges.
The Treasury said the action does not affect restrictions under the Hong Kong Human Rights and Democracy Act of 2019 nor the Hong Kong Autonomy Act of 2020.
A Treasury spokesperson said the two laws had significant overlap with the national emergency that has now been rescinded, adding that sanctions will remain on 38 of 49 people affected by the executive order.
“The non-renewal is consistent with sanctions modernization efforts that streamline sanctions for greater efficiency and effectiveness, including by ensuring our sanctions are not duplicative,” the Treasury spokesperson said.
Hong Kong had benefited from a special economic and trade status with the United States that was separate from U.S. dealings with China. This status was based on the principle that Hong Kong remained a separate customs territory and maintained a high degree of autonomy after its 1997 handover from Britain to China.
The reported decision to let the order lapse would mark a significant reversal and comes after recent trade talks between Washington and Beijing that also produced tariff reductions.
The U.S. has treated Hong Kong the same as China on tariffs and export controls since 2020, but it was not immediately clear whether the order’s expiration would affect duties imposed by Trump since he returned to office in January 2025. Those duties were imposed based on other U.S. laws.
CHINA SAYS U.S. IS MOVING IN A MORE POSITIVE DIRECTION
China’s commerce ministry nonetheless welcomed the move to restore the status as a step toward implementing understandings reached during recent talks between Beijing and Washington.
Trump met Chinese President Xi Jinping in Beijing in May and has invited Xi to visit the White House in Washington in September.
“The U.S. adjustment of its Hong Kong policy in a more positive direction also aligns with the widespread expectations of the international community,” the statement published on its website said.
It urged the U.S. to respect China’s sovereignty and the rule of law in Hong Kong, restore and strengthen normal trade and economic exchanges with the city, and help improve China-U.S. relations.
Critics of the security law say it has crushed the wide-ranging freedoms promised to Hong Kong when it returned to Chinese rule; supporters say it has brought stability to the city after a year of anti-government protests in 2019.
The United States began eliminating Hong Kong’s special status in June 2020, halting defense exports and restricting the territory’s access to high-technology products as China prepared to enact the security legislation.
The Hong Kong government, which is selected by a pro-Beijing committee, also welcomed the move to restore it.
(Reporting by Beijing newsroom and David Lawder in Washington; Additional reporting Trevor Hunnicutt in Washington; Editing by William Maclean and Philippa Fletcher)
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