Background
China Most Favoured Nation (MFN) Status
1. The prospects for US renewal of MFN status are not looking encouraging this year. Although the President has unconditionally renewed MFN, Congress and the Senate can veto that decision if they are able to muster a two thirds majority, or they can seek to add onerous conditions on renewal next year. The US trade deficit has expanded enormously, and China now has the third largest bilateral surplus with the US. In addition the US has disputes with
China on textile quotas and intellectual property.
are also concerns about China's performance on human rights
and fears about China's role in arms proliferation.
There
2. effects for the Hong Kong economy because of the huge volume
of China/US trade which goes through Hong Kong.
Withdrawal of MFN status for China would have serious
3.
Renewal with conditions could also damage Hong Kong as
it would introduce uncertainty which would act as a
disincentive to investment in the territory.
4.
Non-renewal would also damage the extensive US interests
in Hong Kong. The US is one of Hong Kongs largest investors
with a total investment of about USD 6 bn, involving about
900 US companies, including over 140 factories.
5. HMG are supporting the renewal of China's MFN through
high-level contacts with the US Administration and selective
lobbying.
BRIAER/5