The city state has its own currency, monetary policy and legal system, enough for the department of state to treat HK as an independent entity as far as trade is concerned. Given the vast amount of money and good flowing through through HK I find it hard to believe any established payment processor would lack familiarity with the status of Hong Kong. It looks more like a (poorly) made up excuse to ban undesirable users.
If you read the actual blogpost, it was more likely an administrative mistake earlier in the process that was then difficult to undo, and no one really giving a fuck on paypal's side.
Attribute things to incompetence before malice and all that, especially when attributing it to malice requires thinking they made a fairly odd decision to outright lie to customers about why you are ceasing doing business with them.
I have to agree. With the amount of money involved internationally with HK I highly doubt Paypal would just decide to shut down an account because of that. If that was the really the case there would have been a LOT of other accounts shutdown.
This sounds more like an excuse from Paypal, who I fear talking bad about in case they decide to ban me too :P
