U.S.-China relations are further deteriorating following the promulgation of the Hong Kong National Security Law. As the U.S. imposed sanctions on Chinese officials, the Chinese government retaliated by imposing visa restrictions on U.S. personnel who have “behaved badly” on Hong Kong-related issues. U.S. Secretary of State Mike Pompeo, Assistant Secretary for East Asia and Pacific Affairs David Stilwell and major sponsors of the Hong Kong Autonomy Act could be on the list of China’s visa countermeasures, according to Lü Xiang, Research Fellow of U.S. studies at the Chinese Academy of Social Sciences (CASS) in Beijing. Also on the list could be diplomats from the U.S. Consulate General in Hong Kong who frequently met with Hong Kong opposition leaders. Both countries did not publicly disclose which officials they were targeting.

The U.S. Senate also approved a law that would impose sanctions on banks that do business with anyone backing any “crackdown on the territory’s autonomy.” This could endanger Hong Kong’s status as an international financial center.

The U.S. ended exports of defense equipment and restricted dual-use technology to Hong Kong. “We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China,” U.S. Secretary of State Mike Pompeo said. Hong Kong had previously been able to import dual-use technologies without the licenses required when the same items were sold to the mainland. The U.S. “is forced to take this action to protect U.S. national security,” Pompeo added. In May, the State Department had told Congress that Hong Kong was no longer considered autonomous from China.

The South China Morning Post notes that experts warn U.S. restrictions on the sale of sensitive technology to Hong Kong could “hammer the city’s re-export business”. Washington’s move is seen as the first in a potentially long line of steps towards removing the city’s special trading privileges, and a further tightening of the screw on China’s access to hi-tech goods. The plan, announced by U.S. Commerce Secretary Wilbur Ross just hours before Beijing passed the national security law for Hong Kong, could see the city relegated from the group of countries enjoying export license exceptions such as Australia, Britain and Taiwan, to a category that includes Russia, Syria and Venezuela. According to the U.S. Bureau of Industry and Security (BIS), license requirements covered 1.2% of U.S. exports to Hong Kong in 2018, while for China, license requirements covered 3% of total U.S. exports.

The U.S. Federal Communications Commission (FCC) designated China’s Huawei and ZTE as national security threats, which means that U.S. tech firms are banned from using the Universal Service Fund to purchase equipment or services provided by these suppliers. The announcement is a step forward in restricting 5G equipment made by Chinese companies from entering U.S. telecoms infrastructure. “Both companies have close ties to the Chinese Communist Party and China’s military apparatus, and both companies are broadly subject to Chinese law obligating them to cooperate with the country’s intelligence services,” said FCC Chairman Ajit Pai. The annual USD8.3 billion Universal Service Fund, established in 1997, is a program of telecoms subsidies for companies to purchase equipment and services. The FCC has recently moved toward revoking the licenses or refused to issue licenses for China Mobile, China Telecom, and China Unicom, commonly referred to as the “Big Three”, to provide telecoms services in the U.S., the South China Morning Post reports.