China’s top legislative body postponed a vote on a proposal to impose an anti-sanctions law on Hong Kong, delaying a move that could put global firms in the cross-hairs of a conflict between the world’s two largest economies.

The National People’s Congress Standing Committee ended a closed-door session Friday in Beijing without announcing the passage of a resolution adding the legislation to Hong Kong’s charter. Tam Yiu-chung, a local delegate to the body, later told reporters that the vote had been delayed pending further study, media outlets including Now TV said. 

The additional review time would make the law more effective, Tam said, without saying when the law would be passed. The central government “hopes to listen to further views on the matter,” the South China Morning Post newspaper reported separately, citing a person familiar with the matter. 

The move puts on hold one source of concern for Hong Kong’s financial markets, which have been battered by a wave of Chinese government crackdowns on sectors from technology to education. The anti-sanctions law that China passed in June to retaliate against the U.S. sanctions gives the government broad powers to seize assets from entities that implement such measures.

“The government always knew it was a big blow, but they just don’t want to deliver it now because of the ongoing regulatory changes they’ve been pushing out,” said Dongshu Liu, an assistant professor specializing in Chinese politics at the City University of Hong Kong. “It will eventually pass. It’s more of a political move.”

Hong Kong’s Hang Seng Index has tumbled 19% over the past six months, the third-steepest decline among global benchmarks tracked by Bloomberg. The city’s currency has also faced selling pressure, moving toward the center of its trading band against the U.S. dollar after sitting at the strong end as recently as November.

The city’s government said in a statement Friday that China’s legislature makes decisions on Hong Kong matters “based on the interests of the city,” and that it supports those decisions. Hong Kong’s “status as an international financial center is as robust as ever,” it added.

The central government will send a delegation next week to introduce its latest five-year plan, said the statement, which did not mention the anti-sanctions law.

The U.S. flagged that China could apply its anti-sanctions law to Hong Kong when President Joe Biden’s administration warned businesses about the growing risk of operating in the city. In China, the reciprocal sanctions have yet to make an impact due to the U.S. dollar’s dominance in the global financial system.

Instead, authorities have focused on tit-for-tat responses with little tangible effect, such as visa and travel bans for foreign officials with few ties to China. The anti-sanctions legislation, which outlines new powers to respond, needs to be added to Hong Kong’s charter to take effect locally. 

The sanctions law is also expected to be added to Macau’s law. 

While much about the legislation is left vague, if implemented robustly, it could force companies to navigate two contrary regulatory requirements, leading to a bifurcation of Chinese and U.S. operations in Hong Kong, Adam Smith, a former senior adviser in the U.S. Treasury Department’s sanctions unit, told Bloomberg TV on Tuesday. 

“U.S. sanctions are really the gold standard that companies around the world comply with almost by default,” said Smith, a trade compliance adviser with Gibson, Dunn & Crutcher LLP. “So companies in Hong Kong, especially because of the dollar peg, are very wary of getting it wrong.”

Hong Kong Chief Executive Carrie Lam has expressed support for the legislation, dismissing foreign governments and Western media outlets that she predicted would “make a big deal out of this” by saying it weakens the city’s “position as a financial center.” Still, she said earlier this month that passing the law before the current Legislative Council term ends on Oct. 30 would be “an extremely tight timetable.” 

The sanctions law marks the third time in just over a year that China directly intervened to amend the city’s constitution, despite promises it would allow the Asian financial center to operate with a “high degree of autonomy.” Since June 2020, Chinese lawmakers have enacted a national security law and pushed an election overhaul to ensure the city is under “patriots” only rule.

Hong Kong Justice Secretary Teresa Cheng sought to assuage fears that the law might negatively impact Hong Kong’s business community by acknowledging that “some of us may be very concerned,” during a press conference on Aug. 3. “But I think we shouldn’t be too worried for now,” Cheng said.