Since Beijing imposed a national security law on Hong Kong in mid-2020, the city “has shifted from a trusted global financial centre to a critical player in the deepening authoritarian axis” of China, Iran, Russia and North Korea, the heads of the House China Select Committee said in a letter to treasury secretary Janet Yellen.
The letter was signed by the committee chairman, representative John Moolenaar of Michigan, and the panel’s top Democrat, Raja Krishnamoorthi of Illinois.
They added that the shift raised questions over “whether longstanding US policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate.”
Hong Kong’s government didn’t immediately respond to a request for comment today.
The relationship between Hong Kong and the US has deteriorated over a crackdown on dissent that American officials say has eroded the rule of law and democratic rights.
US lawmakers have stepped up efforts to penalise the city, though it remains unclear if those efforts will bear fruit.
In September, the House passed a bill that could see the closure of the city’s economic and trade offices in the US.
The measure still needs to be approved by the Senate and signed by the president to become law.
President-elect Donald Trump’s pick for secretary of state, Marco Rubio, has said the offices are mouthpieces for the ruling Communist Party.
Hong Kong officials have strongly condemned the bill’s passage, with chief executive John Lee saying American businesses will suffer if it is passed.
In their letter, Moolenaar and Krishnamoorthi said Hong Kong had become a “global leader” in illicit practices such as, giving Russia access to prohibited western technology, forming front companies for buying banned Iranian oil, helping with the trade of gold from Russia and running ships that conduct illegal trade with North Korea.
The letter also cited research that it said showed that some 40% of goods shipped to Russia from Hong Kong last year were on a “common high priority” list of items that the US and EU use to focus sanctions enforcement.
Those items included “semiconductors and other technology that Russia most needs for its war in Ukraine,” the letter said.
In July, Ukraine’s then-foreign minister, Dmytro Kuleba, asked Lee to take steps to prevent Russia and its companies from using the city to circumvent sanctions put in place by western governments over Moscow’s full-scale invasion in 2022.
The Hong Kong government said at the time it implements United Nation Security Council sanctions but didn’t directly answer a question on whether it helped Moscow evade trade curbs.
China’s state-owned banks have tightened curbs on funding to Russian clients after the US authorised secondary sanctions on overseas financial firms that aid Moscow’s war effort, Bloomberg News reported earlier this year.
That move marked an escalation of curbs that state banks had in place since at least early 2022.