Taiwan should not allow direct exchanges of Hong Kong dollars into New Taiwan dollars, as the Chinese territory’s economy could be thrown into crisis if the US follows through with a plan to withdraw its special economic privileges, a Democratic Progressive Party legislator said yesterday.
As Hong Kong sinicizes, it could quickly lose its re-export status and become a “financial center in ruins,” Legislator Wu Ping-jui (吳秉叡) told Premier Chen Chien-jen (陳建仁) at the legislature.
Taiwan should follow the US’ lead and build safeguards against the loss of Hong Kong’s economic autonomy, he said.
Photo: EPA-EFE
Wu was referring to the Hong Kong Economic and Trade Office (HKETO) Certification Act proposed by US lawmakers last year, which, if passed, would require the US president to review at least once a year whether HKETOs would be allowed to continue operating in the US.
There are currently three Hong Kong offices in the US, which enjoy special privileges granted under the International Organization Immunities Act, including tax exemptions and immunity from some judicial processes.
Hong Kong is gradually becoming more like a Chinese city, but cities are rarely granted such diplomatic privileges, Wu said.
If Hong Kong loses its preferential US tariffs, it could damage its status as a re-export center, Wu said.
“The ‘Pearl of the Orient’ has long since fallen into disrepair, and is now being ridiculed as a financial center in ruins,” he said.
Many Western technology companies are also rethinking Hong Kong as a window to the Chinese market, he said.
Most importantly, the US is considering whether to disallow direct conversion of Hong Kong dollars into US dollars, as no single country is allowed to use two different currencies in this manner, Wu said.
If this happens, the Hong Kong dollar would be kicked out of the US currency settlement mechanism, he added.
Taiwan has followed the US’ lead in granting special privileges to Hong Kong, but if Washington decides to change its status, it could throw the territory into a financial crisis, Wu said, advising administrative and national security agencies to be prepared.
Chen replied that the Cabinet is paying close attention to the issue, agreeing that the territory would gradually lose its political, economic and trade status as it sinicizes.
Mainland Affairs Council Minister Chiu Tai-san (邱太三) also assured that his agency invites experts annually to study the economic, political and social environments in Hong Kong in collaboration with international experts.
Taiwanese banks, insurers and securities firms’ investments in Hong Kong have been declining over the years, Financial Supervisory Commission Chairman Thomas Huang (黃天牧) said.
Moreover, Hong Kong has fallen to fifth place in the banking sector’s foreign debt exposure, he said, adding that the commission regularly reminds banks of the risks.
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