Commentary
Both President Donald Trump and China leader Xi Jinping have some tough decisions to make regarding Hong Kong and the ongoing trade war. For one, both houses of Congress have passed the Hong Kong Human Rights and Democracy Act of 2019. The bill is now headed to Trump’s desk for his signature.
Will he sign it?
A Question of Good Versus Evil
The battle between the Chinese Communist Party (CCP) and the pro-democracy protesters in Hong Kong is fundamentally a contest between good and evil. The world needs to stand up against China’s massive threat of oppression against the people of Hong Kong. To his credit, Trump has very publicly—and correctly—voiced his support of the protesters, saying, “I stand with Hong Kong. I stand with freedom.” And just as importantly, he has linked the outcome of U.S. trade negotiations with China’s treatment of the Hong Kong protesters.
But, Trump also added, “But we are also in the process of making the largest trade deal in history. And if we could do that, that would be great.” Trump’s second statement would seem to cast doubt on his support for Congress’ so-called “Hong Kong bill.”
Is Trump vacillating?
Not really.
If the Hong Kong bill becomes law, it will require the United States to impose sanctions against China and Hong Kong for human rights abuses. It will also force an annual review by the U.S. State Department and others to determine if Hong Kong’s political status under China merits renewing Hong Kong’s special trade status for the coming year. In other words, it has teeth.
Not surprisingly, China was angered over the passage of the bill, claiming that it “seriously violated international law and basic norms governing international relations. China condemns and firmly opposes it.”
But will—or should—Trump sign the bill?
It actually works to Trump’s advantage if he does not sign the bill. Since it is veto-proof, the bill could become law whether he signs it or not. That lets Trump off the hook and still yet codifies U.S. sanctions against China and the annual review of Hong Kong’s special status.
Beijing won’t like it, but Trump can just shrug his shoulders and say, “that’s the way our American republic works.”
What Are China’s Options?
What will China do if the bill becomes law?
They could certainly decide to pull out of the trade negotiations. They could also send in the military to put an end to the politically embarrassing protests in Hong Kong, or both. The United States could not stop China from doing either of those things.
But China has its own balancing act to perform. It’s clear, for example, that the CCP leadership is keenly aware of the high costs of cracking down on Hong Kong. That’s precisely why the military has largely remained in its barracks.
It’s also evident that China’s economy is the worst in 30 years, and with it the CCP’s political legitimacy. And with a potential real estate meltdown on the horizon, Beijing needs all the relief it can get.
The fact is that China needs a deal more than the United States does—at least at this point—if only to avoid the next round of tariffs, which are significant and imminent. If no deal is reached by mid-December, the Trump administration is prepared to impose new tariffs on another $160 billion worth of imports from China, including popular consumer items such as cell phones and laptops.
That would be another big blow to an already battered Chinese economy.
Trump Coming to Farmers’ Aid
That’s not to say that the U.S. economy remains unscathed. Farmers have taken the brunt of the trade war damage so far.
In response, President Trump has helped American soy bean farmers and other agricultural producers with $16 billion in aid from the Commodity Credit Organization, which was founded in the Great Depression to help farmers stabilize production in unstable market conditions. It’s likely much more aid will be necessary.
China Wary About Helping Trump
At the same time, China doesn’t want to give Trump a political win that would help his re-election chances. They would much prefer that Trump is defeated in 2020.
China’s intentions going forward may well be to allow Trump a symbolic victory only. They would agree to an initial deal to avoid the scheduled tariffs, but then refuse to live up to the deal in key areas such as enforcing IP protections and allowing greater market access. That’s been the modus operandi since joining the World Trade Organization in 2000 and it has served them well.
Why should they change a winning tactic?
It could be easily accomplished since phase one of the trade deal doesn’t really get to the heart of structural issues. Besides, China’s economy can scarcely afford to lose more than it already has.
100 Flowers Campaign 2.0 in Hong Kong?
With regard to the Hong Kong bill and the ongoing protest, China may continue to apply graduated responses to the problem. Or, we may be watching a 21st-century version of Mao’s 100 Flowers Campaign, begun back in 1956.
The 100 Flowers strategy encouraged intellectuals, students and others with complaints against the CCP to freely express them. Once the identities of the “poisonous weeds” were known, the CCP removed them from society to be re-educated or worse.
If that’s part of Beijing’s thinking, it would make some sense for it to happen after the 2020 election.
US and China on Collision Course
Can the CCP endure the risks of waiting that long? Or will the CCP leadership feel so threatened that they lose their cool and send in the tanks?
That remains to be seen. Either scenario is plausible.
What’s more than plausible, however, is that the American people, through their elected representatives, have taken a stand directly against China and for the people of Hong Kong. The Hong Kong Human Rights and Democracy Act of 2019 will become law.
That in itself puts the United States and China on a collision course that’s been a long time in coming. But as much as Beijing howls in protest, there’s not a thing that they can do about it.
