Even as the global economy reels from the coronavirus pandemic, Beijing implemented its controversial national security law for Hong Kong this month. This resulted in strong condemnation and punitive action from the US which claims it “will not stand idly by while China swallows Hong Kong into its authoritarian maw”. In fact, over the past year, Sino-US relations have deteriorated, with the trade war and US President Donald Trump attributing the devastating coronavirus pandemic to China’s irresponsibility – leaving the two economies on the verge of decoupling. Still worse, the trajectory of US actions over the past six months shows that the country is moving from a tariff war with China to a financial war . While the trade dispute seemed to have been alleviated earlier this year, the relief proved short-lived as the US’ strategic direction became clearer. In January, an anonymous report released by activist investment firm Muddy Waters alleged that Luckin Coffee had inflated the number of items sold in-store per day by 69 per cent in the third quarter of 2019 and 88 per cent in the fourth, supported by thousands of hours of video footage. An investigation by the company confirmed that sales and expenses had been inflated. This accounting scandal highlights general concerns about Chinese companies’ transparency and has sparked a debate about the need for oversight. Eventually, on May 20, the US Senate passed the Holding Foreign Companies Accountable Act , preventing Chinese companies listed on US exchanges from obstructing audit work. In fact, Chinese firms’ lack of transparency has long been a problem, but is only now getting serious attention because of US-China tensions. Back in Hong Kong, just before the passage of the national security law by the National People’s Congress on June 30 and its adoption in Hong Kong, the US Senate passed the Hong Kong Autonomy Act by unanimous consent and US President Trump has now signed it into law. This legislation aims to sanction individuals, firms and banks eroding Hong Kong’s autonomy. In other words, this law targets financial institutions, giving the US government more power to impose secondary sanctions. Given that Chinese firms look to the stock market in Hong Kong and the US for financing, rupturing the capital chain might be a tactic in the US strategy vis-à-vis China. It also sends the message that the international community will not stand idly by but will respond to China’s flagrant breach of its promise to the world. Jacky T.K. Tam, accountancy student, City University of Hong Kong