US-China Discord Concerns Hong Kong E-Business

In the wake of the Cox Report and the NATO bombing of China’s Belgrade embassy, US-China relations are at their lowest point in decades causing concern in the Hong Kong electronic commerce industry that a possible US ban on technology exports to China will include the Special Administrative Region (SAR).

Some Hong Kong IT professionals are worried that encryption technologies vital to Hong Kong’s development of e-commerce may be threatened.

Last week, the Hong Kong Government tried to allay the concerns of its IT sector.

Hong Kong’s Financial Secretary Donald Tsang told the press that he did not believe that the strain in the US-China relationship would affect the construction of the Cyberport, a joint IT infrastructure project between the government and Pacific Century Group.

On the question of protection of strategic commodity trade, Tsang stipulated that Hong Kong was separate customs territory from China.

“We have the highest reputation in protecting, for licensing as well as supervising the installation and the trade in strategic commodities,” said Tsang. “And this is well known, well known to all customs administrations, and certainly well known to the United States.”

“In fact, a number of cases reported in the Cox Report are reports relating to cases unearthed by Hong Kong customs authority, and through their co-operation with the authorities in the United States we have been able to bring a number of people to justice,” added Tsang.

According to the Hong Kong Government, it adheres to the Wassenaar Arrangement which is a multilateral agreement that controls the export of conventional arms and dual-use goods and technologies including encryption technologies. The US, Russia, Japan, Korea and most western countries are signatories to the agreement but China is not.

A local Internet entrepreneur and the Chairman of the Asia Pacific Internet Association, Pindar Wong said this about the deterioration in US-China relations: “It’s very unfortunate timing especially with Hong Kong wanting to go hi tech. [But] we are playing by the rules.”

However, some US officials have expressed concern over whether Chinese military vehicles travelling from Hong Kong to China will be subject to the same customs restrictions.

In regard to the industry in China, Pete Hitchen, IDC’s senior Internet analyst in Asia, said, “the fact that the Internet changes the way to do business will over ride political considerations. The Internet by its very nature has no geographical borders.”

Hitchen also indicated that, from an economic standpoint, China’s hunger for technology and e-commerce is so great that any slow down in business between US and Chinese tech companies is only likely to last a few months.

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