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White House national security adviser Robert O'Brien said on NBC's "Meet the Press" Sunday that the U.S. government will likely impose economic sanctions on Hong Kong and China if Beijing moves ahead with a proposed national security law for Hong Kong that could constrain the special region's autonomy.

Why it matters: O'Brien said the U.S. could revoke a special status that allows Hong Kong to function as an international financial hub, stating that it's "hard to see" how the financial community can remain in the city if the law is enacted.

The backdrop: The Chinese Communist Party proposed an amendment to Hong Kong's independent legal system last week that would prohibit acts of sedition, subversion and secession, as well as foreign interference, though Beijing tends to define those crimes broadly.

What he's saying: "It's hard to see how Hong Kong could remain the Asian financial center that it's become if China takes over," O'Brien said.

  • "I just don't see how [the financial community] can stay. One reason that they came to Hong Kong is because there was the rule of law there, there was a free enterprise system, there was a capitalist system, there was democracy and local legislative elections. If all those things go away, I'm not sure how the financial community can stay there."
  • O'Brien said he believes the law would create a "brain drain" for the city as Hong Kongers "seek refuge other places."
  • "They're not going to stay in Hong Kong to be dominated by the People's Republic of China and the Communist Party."

Asked whether China would be threatened by sanctions, O'Brien responded: "China is dependent on capital from the rest of the world, to build their economy and grow their middle class. They're dependent on liquidity in financial markets. If they lose access of that through Hong Kong, that's a real blow to Xi Jinping and the Chinese Communist Party. "

  • O'Brien also refused to say that President Trump's decision not to stand up for pro-democracy protestors in Hong Kong during U.S.-China trade negotiations was a "mistake."
  • "We want good relations with China and with the Chinese people. But unfortunately, we're seeing just action after action by the Chinese Communist Party that makes it difficult."

Driving the news: Thousands of protesters marched through Hong Kong on Sunday in the largest gathering since Beijing's encroachment on the city's independent legal system sparked protests last year.

Go deeper: U.S.-China rivalry chips away at global order

Go deeper

Aug 26, 2020 - World

U.S. presses Israel to cool ties with China over support for Iran

Secretary of State Mike Pompeo with Israeli Prime Minister Benjamin Netanyahu, Aug. 24. Photo: Kobi Gideon/GPO/Anadolu Agency via Getty Images

Secretary of State Mike Pompeo pressed Israeli Prime Minister Benjamin Netanyahu during their meeting in Jerusalem on Monday to further cool relations with China and limit Chinese investments in Israel over the new strategic partnership agreement China signed with Iran, Israeli and U.S. officials said.

Why it matters: The Trump administration has been lobbying Israel for two years to scale back its relations with China. Until now, those efforts have had very little success.

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Illustration: Sarah Grillo/Axios

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Updated 8 hours ago - Economy & Business

Dunkin' Brands agrees to $11B Inspire Brands sale

Photo: Alexi Rosenfeld/Getty Images

Dunkin' Brands, operator of both Dunkin' Donuts and Baskin-Robbins, agreed on Friday to be taken private for nearly $11.3 billion, including debt, by Inspire Brands, a restaurant platform sponsored by private equity firm Roark Capital.

Why it matters: Buying Dunkin’ will more than double Inspire’s footprint, making it one of the biggest restaurant deals in the past 10 years. This could ultimately set up an IPO for Inspire, which already owns Arby's, Jimmy John's and Buffalo Wild Wings.

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