U.S. to sanction Chinese officials and warn companies over Hong Kong -sources

WASHINGTON, July 15 (Reuters) – The United States is preparing to impose sanctions on Friday on a number of Chinese officials over Beijing’s crackdown on democracy in Hong Kong, as well as a warning to international businesses operating there about deteriorating conditions, two people with knowledge of the situation told Reuters.

The sources said the financial sanctions would target seven officials from China’s Hong Kong liaison office, the official platform which projects Beijing’s influence into the Chinese territory.

A separate updated business advisory issued by the State Department would highlight U.S. government concerns about the impact on international companies of Hong Kong’s national security law. Critics say Beijing implemented that law last year to facilitate a crackdown on pro-democracy activists and free press.

“Let me talk about the business advisory,” U.S. President Joe Biden said when asked about it at a news conference with visiting German Chancellor Angela Merkel.

“The situation in Hong Kong is deteriorating. And the Chinese government is not keeping its commitment that it made on how it would deal with Hong Kong, and so it is more of an advisory as to what may happen in Hong Kong. It’s as simple as that and as a complicated as that.”

The moves, certain to anger Beijing, mark the Biden administration’s latest effort to hold the Chinese government accountable for what Washington calls an erosion of rule of law in the former British colony that returned to Chinese control in 1997.

Both people, who asked not to be named, said the Hong Kong measures were still subject to change. One of the sources said the White House was also reviewing a possible executive order on immigration from Hong Kong, but that it was still not certain to be implemented.

The U.S. Treasury Department has declined to comment on the issue following media reports this week about possible new sanctions.

“We know that a healthy business community relies on the rule of law, which the national security law that applies to Hong Kong continues to undermine,” State Department spokesman Ned Price said on Tuesday when asked about the issue.

U.S. Deputy Secretary of State Wendy Sherman is preparing a visit to Japan, South Korea and Mongolia next week. The State Department’s announcement of her trip made no mention of any stop in China, which had been anticipated in foreign policy circles and reported in some media.

The State Department on Tuesday strengthened warnings to businesses about the growing risks of having supply chain and investment links to China’s Xinjiang region, citing forced labor and human rights abuses there.

Reporting by Humeyra Pamuk, David Shepardson, Michael Martina and David Brunnstrom; Editing by David Gregorio