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US showing China 'yellow card' on trade, says Hong Kong consul

Kurt Tong, US Consul General to Hong Kong, speaks during a lunch at the Foreign Correspondents Club (AFP Photo/Anthony WALLACE)

The United States has issued China with a "yellow card" on trade, said its consul general in Hong Kong Tuesday, in a strongly worded speech which also urged the importance of the city's autonomy for business.

US President Donald Trump last month approved plans for steep tariffs on tens of billions of dollars of Chinese imports, while Beijing has slapped duties on key US agricultural exports and threatened to do likewise for the sensitive American soybean industry.

The dispute has triggered fear of an all-out trade war that could damage the global economy.

Consul General Kurt Tong said China had breached its commitments to the World Trade Organisation to such an extent that it was detrimental to the US, which was now "justified in claiming damages".

"To borrow a metaphor from my favourite sport, China has drawn a deserved yellow card," said Tong, who is a keen footballer.

"Yellow cards are an opportunity for a player to change their style of play before someone gets hurt," he told the Foreign Correspondents' Club.

Tong said there were "worrisome signs" that China was backsliding on economic reform as the central government tightens control.

Unfavourable terms for inward foreign investment, high tariffs and lack of protection for intellectual property rights were among the problems, he said.

"Some analysts have said that, given its size and importance, China is now too big to be challenged. I would submit that the opposite is true. I think that the China problem is too big to ignore," he added.

Semi-autonomous Hong Kong should stand as an example of how an economy can be part of China but also play by the rules, said Tong.

Since being handed back to China by Britain in 1997 the city has been governed under a "one country, two systems" deal which grants it rights unseen on the mainland.

But in recent years Beijing has tightened its grip on the city. There is growing concern that the autonomy of the financials hub, protected by the rule of law and an independent judiciary, is now in jeopardy.

Tong called on the local government and the city's private sector to make use of what he called Hong Kong's "abiding strengths".

"Hong Kong has an opportunity to proactively use its autonomy to further strengthen its impressive economic competitiveness, as well as its inherent value proposition in the eyes of foreign partners," he said.