New briefing warns President Trump before Beijing on how China is using Hong Kong to build a sanctions-proof war economy

Today, Hong Kong Watch is publishing a briefing, Hong Kong’s Role in the PRC’s War-Proofing Strategy: Implications for the US, ahead of President Donald Trump’s summit with General Secretary Xi Jinping in Beijing next week. The briefing outlines the steps the administration should take to address China’s use of Hong Kong as a financial gateway for its war-proofing strategy, as well as what is at stake if the President returns from Beijing without having raised it. 

Since Russia’s 2022 invasion of Ukraine, the People’s Republic of China has accelerated its sweeping “war-proofing” campaign. It has stockpiled crude oil, strategic metals, and staple grains; redirected state investment into dual-use industries; tightened its monopoly over the mining and processing of rare earth elements critical to global semiconductor supply chains; and moved aggressively to build financial infrastructure that bypasses the US-led SWIFT and CHIPS payments networks.

The briefing reveals how Hong Kong is at the centre of this architecture. Its US dollar-pegged currency, deep correspondent banking relationships, and open financial system make it an irreplaceable gateway for Beijing’s continued access to global capital. Hong Kong is also an increasingly effective vehicle for sanctions evasion, trade finance manipulation, and export control circumvention.

At the same time, the briefing details how military pressure on Taiwan, including large-scale exercises, blockade rehearsals, and repeated airspace incursions, has intensified during the same period in which this economic war-proofing has accelerated. The two tracks are connected, and the United States must treat them as such.

In Beijing, Hong Kong Watch urges President Trump to press for the following recommendations:

  • Condition Hong Kong’s access to US financial infrastructure. Hong Kong-based financial institutions must demonstrate verifiable compliance with US sanctions and export controls as a condition of continued access to dollar clearing and correspondent banking. This conditionality must be enforced, not merely signalled. 

  • Demand an end to trade finance manipulation and illicit transshipment. The administration should treat targeted enforcement of shell companies, falsified trade documentation, and Hong Kong-linked transshipment routes which are actively undermining US export controls as a standing policy priority, and make it clear that Beijing must cooperate or face consequences. 

  • Close the gap on alternative payment rails. China’s CBDC pilots and digital-asset settlement platforms routed through Hong Kong represent a deliberate effort to construct financial infrastructure outside US jurisdiction. Enhanced due-diligence requirements on institutions that interact with these systems and coordination with allied partners should be a condition of any broader economic agreement.

Ray Wong, Hong Kong Watch Policy and Strategy Advisor, said:

“The Trump-Xi summit represents a historic opportunity that the United States cannot afford to miss. For three years, Beijing has been methodically building an economic architecture designed to make future confrontation in the Indo-Pacific survivable. The administration must use this moment to impose meaningful discipline on that architecture before it matures further. What President Trump signals in Beijing next week will shape the strategic landscape of the Indo-Pacific for years to come.”

特朗普下週訪中  香港監察發表簡報警告中國利用香港建立防制裁戰爭經濟

因應美國總統特朗普（Donald Trump）下星期到訪北京與中國國家主席習近平舉行峰會，香港監察今日發表簡報。

這份簡報概述為應對中國利用香港作為防戰策略金融通道的問題，美國政府應該採取的措施。

我們促請特朗普總統在北京期間提出下列建議：

  • 為香港使用美國金融基建設下條件；

  • 要求終止貿易融資操縱和非法轉運；

  • 堵截替代付款方式的漏洞。

Photo: Kaboom Pics on Pexels

NewsMegan KhooUS, us