Residents sign a petition in support of the national security legislation at a street stand in Hong Kong, south China, May 29, 2020. (Xinhua/Wang Shen)

US President Donald Trump's latest volley of threats at China's Hong Kong Special Administrative Region (HKSAR) is unlikely to intimidate savvy businessmen into a withdrawal from the city, regional affairs watchers said.

Trump said last week that he would take "meaningful" action to eliminate Hong Kong's trade privileges under US law. Although most market watchers believe Trump's move is more bark than bite, his words suggest that Washington may consider imposing the same tariff rates on Hong Kong as in the Chinese mainland.

Results of a survey by the American Chamber of Commerce in Hong Kong showed Wednesday that nearly half of the respondents voiced pessimism about the city's medium- to long-term outlook.

On a positive note, 70 percent of the respondents have no relocation plans. Those planning to move capital, assets or business operations are considering South America, Singapore, the US and other possible locations, according to the results. 

Dong Shaopeng, a senior research fellow at the Changing Institute for Financial Studies at Renmin University of China, predicted that if the US canceled Hong Kong's special trade status, it would only backfire on US companies, some of which may consider moving directly into the Chinese mainland where markets are opening in a gradual manner.

"Hong Kong is an entrepot. Most American firms open offices in Hong Kong to tap into the Chinese mainland as well as Southeast Asian markets. If they retreat from Hong Kong to Singapore or back to the US, that will incur millions of dollars in losses. They will also be cut off from the world's fastest-rising market," Dong said.

For the US, Hong Kong is the third-largest wine export market, the fourth-largest beef product export market and the seventh-largest market for agricultural exports, media reports said. 

"In the past decade, the US trade surplus with Hong Kong has been the biggest among all its trading partners, with a merchandise trade surplus totaling $297 billion from 2009 to 2018. 

"In 2019, that surplus dropped from $31.4 billion in the preceding year to $26.4 billion as a result of US-China trade tensions," a spokesman for the HKSAR government said last week.

"Should any sanctions be contemplated in other areas like services and investment, the interests of the 1,300 US corporations based in Hong Kong will be shortcut," the spokesman added.

China's Ministry of Commerce (MOFCOM) on Thursday expressed steadfast support for Hong Kong's push to maintain its status as a separate customs territory.

The legal basis for Hong Kong's customs status derives from the WTO agreements and is confirmed by the Basic Law of the HKSAR as well as recognized by WTO members, said Gao Feng, a MOFCOM spokesperson. 

"If the US turns a blind eye to basic principles in international relations and adopts unilateral measures [against Hong Kong] based on its domestic laws, [its move] would be a violation of WTO rules and not in the interests of the US," Gao noted. 

If the US moves to control capital flows into and out of Hong Kong and demands that US firms withdraw from the city, international market sentiment regarding the city would inevitably take a hit. But meanwhile, such moves would deal a blow to the US, said Liang Haiming, chairman of Guangzhou-based China Silk Road Valley Research Institute.

Assets held by US financial institutions in Hong Kong total roughly $148 billion, according to Liang, adding that over 800 funds globally manage nearly $2 trillion in assets and about 25 percent of those assets are invested in Chinese shares, mostly Chinese stocks traded on the Hong Kong market. US pension funds are estimated to hold $250 billion worth of Chinese shares.

In a statement posted on its website on Thursday, the China Banking and Insurance Regulatory Commission (CBIRC) said that the just-approved national security legislation would help consolidate Hong Kong's status as an international financial hub and won't affect the legitimate rights of foreign investors in the city. 

With a sound legal system, a stable financial regime, a massive number of financial professionals, solid economic fundamentals and a world-class business climate, the city holds $440 billion in foreign reserves and over HK$1 trillion ($129 billion) in fiscal reserves, rendering it fully capable of handling various risks and challenges, the CBIRC said, stressing that the city's financial market maintains stable operations and its Linked Exchange Rate System is well-founded.

A major business of many US financial institutions in the HKSAR is IPO underwriting for companies in the Chinese mainland that seek to list on the Hong Kong bourse, and that makes it hard for them to leave the market, industry insiders said.

"It has become a trend for more Chinese mainland-based companies to raise funds in Hong Kong amid the US crackdown. As the importance of Hong Kong rises in the capital market, US financial firms will stay. Otherwise, they will be severed from the market and lose competitiveness," a manager of the Hong Kong branch of a Beijing-based financial institution, who spoke on condition of anonymity, told the Global Times on Thursday.

The national security law will curtail anti-government forces and contribute to Hong Kong's stability, while cementing the rule of law and the HKSAR's position as a free trade port. "It will make the city a hot target for foreign investment in the long run," the manager added.

In the words of the banking and insurance regulator, there are no abnormal capital outflows and "Hong Kong's tomorrow will certainly be more beautiful."