The United States is inseparable from Hong Kong？！

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Sanctions are sanctions, the United States can not do without Hong Kong

There will be no differential treatment between Hong Kong and mainland China from now on. Well, that's not surprising.

 A month and a half ago, Trump said he would impose three sanctions on Hong Kong:

 ◎ First, restrictions on the export of sensitive technologies;

 ◎2. To abolish the treatment of Hong Kong Special Customs Areas;

 ◎ Third, seek further financial blows.

 The three sanctions are aimed at Hong Kong's two key identities: a free trade port and an offshore financial center.

 But in fact, the United States can not determine Hong Kong's "special tariff zone" status, it can only determine its own tariffs with Hong Kong.

 Tariffs in Hong Kong, due to the "principle of origin" in U.S. trade accounting, are also limited to Hong Kong's local production of goods exported to the United States (i.e., goods not considered transit to Hong Kong exports ").

As we all know, there is not much manufacturing left in Hong Kong.

 Last year, only HK $3.7 billion was exported to the United States, or 0.1 percent of Hong Kong's total exports. Now that the U.S. says it wants to impose the same tariffs on Hong Kong as on the mainland, it's very small for both sides.

 But hong kong also has a more important identity —— offshore financial centers. Offshore finance, in simple terms, serves mainly non-local customers.

 *Note: Many people think that the "offshore" of offshore financial centers refers to the fact that Hong Kong is offshore relative to the Mainland, but rather to the fact that the main customers are offshore relative to Hong Kong (not local). So Shanghai can also build the offshore RMB market.

 Hong Kong is the third-largest dollar market, the second-largest renminbi market outside the mainland, and the world's money goes in and out of Hong Kong.

 So can the US influence Hong Kong's offshore financial center status? This raises two questions: where the offshore money comes from and where it goes.

 Where does the money come from

 There are three main sources of money in offshore financial centers:

 tax avoidance funds 

1. transnational corporations and transnational capital;

2. of asylum-seeking funds from powerful and powerful nations;

3. all kinds of illegal and criminal proceeds of money.

 The first category is tax avoidance funds. Corporate tax avoidance and capital operations are tricky, but the core logic is to transfer profits to low-tax offshore tax havens, clean up, and then transfer money to the financial industry developed investment-friendly offshore financial centers

We give a concrete example to help you understand. For example! For example! The numbers are all written in vain! )

 Some friends may know that Ireland is an important offshore tax haven for Apple.

 Assuming Apple is going to sell one in France for 1000 euros iPhone, the costs of production, transportation, advertising, and so on, plus the money the agent makes, is assumed to be 500 euros, and the remaining 500 euros is pre-tax profits.

 But corporate income tax rates are high in some European countries, such as France, where rates for large companies are as high as 33.33%.

 But Apple certainly didn't want to pay high taxes, so it set up a subsidiary in Ireland to license all the technology and patents of American head office to the subsidiary, and then pay the Irish subsidiary a royalty of iPhone 300 euros per unit by a French subsidiary. Why 300 euros so much? No why, buy yourself and sell yourself.

 As a result, the French side of the cost of more than 300 euros, pre-tax profits left only 200 euros, in France naturally pay a lot less tax.

 (re-emphasize that the numbers in this are all casual, and we understand the logic. ).

The second category is grey funding, with the largest sources being Russia, Eastern Europe, the Middle East, and Latin America. 

The governance capacity of these countries is problematic, especially in the Middle East and Latin America. Some places are still in the state of former modernization, but often rich in resources, the most representative is oil resources.

 There is a characteristic of the income brought by the resource industry, that is, it is highly concentrated in power, so it is difficult to drive the common prosperity of the society.

 The result, on the one hand, is that those who hold power in these regions and countries are extremely rich and the money is very easy to come by; on the other hand, there is a hidden danger that wealth derived from power can easily be lost along with power, whether it is the failure of political struggle, the change of regime or the change of political-business relations, etc., which can lead to the destruction of everything.

 Therefore, the powerful and oligarchs in these places have never invested their money in their own countries, but prefer to get the money out and store it in the major offshore financial centers.

 These funds may not be defined as proceeds of crime, but to be honest, they may not be completely clean, so they are called grey funds.

The third category is the simplest: completely black money. 

For example, corrupt officials embezzled money, such as international drug trafficking, arms smuggling, human trafficking, organ trafficking, illegal immigration and other criminal proceeds, and even some terrorist funds.

 Anyway, that's black money. There's nothing to say.

 There is a commonality in these three types of money, that is, the requirement of convenience is much higher than the requirement of investment income, especially in the latter two, because of the problem of coming, it will also attach the extremely high requirement of confidentiality and security, and the requirement of investment income is little.

 So, for financial institutions that receive and provide management services, the money is extremely cheap, a piece of fat, and an important reason why these institutions in offshore financial centers can make a lot of money.

China and the United States have great interests in London, Britain and the United States have great interests in Hong Kong, as for New York, can not afford it. This led to the three families do not care about each other.

 Now we should understand that the real offshore, not on the Swiss such "permanently neutral" slogan and position, but on the strength of the great powers. The international community, after all, comes first.

 If you take a step further, you should also understand that Hong Kong's position as an offshore financial center is very stable, because it is not China, but the United States, that needs Hong Kong most. The U. S. has few major destinations overseas, including London and Hong Kong, including Mexico City and Tokyo.

 The money will not go back to the United States, and even if Trump drastically reduces the tax on capital return, there will not be much to go back. After all, the United States is an iron capitalist, the president of running water, what if in a few years to change a tax-loving president to come up?

 So if the U.S. strikes Hong Kong, it's trade and society. As for financial instruments, they are not easy targets for the time being. Coupled with this year's epidemic, international capital is more confident in Hong Kong.

 This is the offshore financial center, where most of the wealth stored and managed comes from the less glorious side of the world, and it is precisely because of the less glorious, so contains excess profits, so that each of them is bright and rich. Maybe that's the face of the world.