A bipartisan US government panel tasked with monitoring the US-China economic and security relationship has formally urged Congress to enact stricter legal oversight measures concerning Hong Kong’s financial and commercial interactions with the United States. In its newly released annual assessment, the US-China Economic and Security Review Commission (USCC) recommended legislative action to tighten controls over US dollar-denominated cross-border transactions and export activities involving the Special Administrative Region (SAR).
The comprehensive 733-page report, published on a Tuesday in mid-November 2025, goes beyond mere recommendations, calling for the codification of existing executive orders that impact Hong Kong’s special trade status. This move would transform temporary measures, such as the suspension of preferential US treatment for the city, into permanent federal law, reflecting ongoing concerns about the erosion of institutional autonomy within the territory.
Scrutinizing Hong Kong’s Economic Autonomy
The USCC’s legislative push comes despite recent efforts by Washington and Beijing to stabilize diplomatic relations, including a high-level meeting between the two nations’ leaders where a mutual desire for a “tariff calm” and reduced friction was expressed. Nonetheless, the Commission signaled a need for ongoing vigilance regarding Hong Kong’s status.
The report asserts that while Hong Kong officials actively seek to project an image of institutional independence vital for attracting global investment, the SAR’s governing system is integrating more closely with the mainland. According to the USCC, expanding definitions of national security have increased expectations placed on private enterprises, narrowing the previous operational distinctions between Hong Kong and mainland China.
Furthermore, the US advisory body heavily criticized recent law-and-order measures enforced in the commercial hub. The report explicitly alleges that actions taken under national security provisions have significantly constrained certain fundamental political activities within the city.
Background on Security Legislation
Hong Kong operates under the principles of “One Country, Two Systems,” governed by the Basic Law. In recent years, the SAR has finalized significant national security legislation. The National Security Law, imposed by Beijing, marked its fifth anniversary this past June, while local security legislation, mandated under Article 23 of the Basic Law, was enacted in March 2025.
The Hong Kong SAR Government has consistently defended these legislative actions, arguing that the laws target a limited scope of serious offenses aimed at safeguarding internal stability and restoring order. Officials maintain that these measures are essential for creating a more predictable and secure environment for both international investors and local residents, all within the constitutional framework of the People’s Republic of China.
Implications for Businesses and Trade
Should Congress heed the USCC’s recommendations, the ramifications for global businesses operating through Hong Kong’s financial hub could be substantial. Greater Congressional control over US dollar transactions would introduce new regulatory hurdles and compliance requirements, potentially impacting capital flows and supply chain logistics that rely on the city’s historically unfettered financial interface.
The key legislative considerations Congress is now facing include:
- Mandating enhanced scrutiny of US dollar transfers tied to designated activities in Hong Kong.
- Creating permanent legal authority for revoking or adjusting Hong Kong’s specific trade privileges.
- Increasing export control vigilance over sensitive technologies passing through the jurisdiction.
This advisory underscores a persistent tension point in US-China relations, signaling that political concerns over freedom and autonomy in Hong Kong continue to drive policy recommendations aimed at limiting commercial and financial interaction until greater institutional independence can be credibly demonstrated. American businesses should monitor these legislative discussions closely to prepare for potentially shifting compliance landscapes in the region.