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US-China relations
EconomyChina Economy

China says US sanctions have no ‘legal effect’ in Hong Kong or China, but analysts urge caution

  • China’s financial sector regulator claimed last week that US sanctions on companies or individuals have no legal grounds in Hong Kong or the mainland
  • Analysts warn that engaging in international transactions with sanctioned entities involves risks many banks may not want to take

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Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor was sanctioned alongside other top officials in August for their alleged role in curtailing political freedoms in the city. Photo: Sam Tsang
Amanda LeeandKaren Yeung

After China’s banking and insurance regulator claimed US financial sanctions have no “legal effect” in Hong Kong or China, analysts have warned that financial institutions might still face penalties if found providing services to sanctioned entities.

Washington has unleashed a swathe of sanctions on Chinese and Hong Kong officials and companies over the past year, potentially penalising financial institutions that do business with them. Those targeted include Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor, who was sanctioned alongside other top officials in August for their alleged role in curtailing political freedoms in the city.
Last month, the US also sanctioned 14 members of the National People’s Congress, the Chinese legislature, for their role in drafting the new national security law for the city.
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In a response to a media question on US financial sanctions on individuals and companies, the China Banking and Insurance Regulatory Commission (CBIRC) said it did not “acknowledge” or “accept” US financial sanctions on individuals or companies, because they are against “international law and international relations”.

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Hong Kong leader Carrie Lam says she gets around sanctions by collecting her salary in cash

Hong Kong leader Carrie Lam says she gets around sanctions by collecting her salary in cash

“The so-called US sanctions do not have legal effect in China and the Hong Kong Special Administrative Region,” said the regulator, in a statement posted to its website last Thursday.

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