Economy

Donald Trump defies China, signs law supporting Hong Kong protesters

Donald Trump signed legislation that expresses US support for protesters, a move that threatens to complicate trade talks with Beijing just as the two nations get close to signing a phase one deal.

The bill requires annual reviews of Hong Kong’s special trade status under American law, as well as sanctions against any officials deemed responsible for human rights abuses or undermining the city’s autonomy. A second measure also bans the export of crowd-control items such as tear gas and rubber bullets to the city’s police.

China’s foreign ministry reiterated a threat of retaliation without offering any details. The local government in also expressed “extreme regret,” similar to previous statements it has made.

While signing the bills, Trump signaled that he didn’t want the broader relationship with China to veer off track. He expressed concerns with unspecified portions of the new law, saying they risked interfering with his constitutional authority to carry out American foreign policy.

“I signed these bills out of respect for President Xi, China, and the people of Hong Kong,” the president said in a statement Wednesday. “They are being enacted in the hope that leaders and representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all.”

Asian stocks and US futures slid after Trump signed the bill, while the yen nudged higher and the yuan lower. Hong Kong shares were among the worst performers, though declines were still modest at the open.

Investors are looking for any sign that measure will prevent the world’s biggest economies from reaching a deal that could deescalate a trade war that’s dragged on for 20 months. Trump on Tuesday said the two sides were in the “final throes” of a deal that would start to unwind tariffs on about $500 billion in products traded between them.

Trump would like the agreement finished in order to ease economic uncertainty for his re-election campaign in 2020, and he has floated the possibility of signing the deal in a farm state as an acknowledgment of the constituency that’s borne the brunt of retaliatory Chinese tariffs. China is also looking to avoid further damage to an growing at the slowest pace in decades.

‘Xi Wants a Deal’

“This is not a fundamental challenge to US-China trade negotiations,” said David Zweig, an emeritus professor at the Hong Kong University of Science and Technology and director of Transnational China Consulting Ltd. “It’s another notch in US-China hostility, it’s Congress being more assertive than usual, but I think it will be a short-term response, not even a medium-term response. Xi wants a deal, I think.”

Trump had little choice but to sign the bill: The House cleared it 417-1 on Nov. 20 after the Senate passed it without opposition, majorities that would allow lawmakers to override any veto by the president.

Asked if Trump’s signing statement was aimed at the sanctions provisions, a senior administration official said the statement was drafted with all of the bill’s provisions in mind.

Senator Marco Rubio, a Florida Republican, said the law, S. 1838, would give the US “meaningful tools to deter further influence and interference from Beijing into Hong Kong’s internal affairs.” Speaker Nancy Pelosi said it was crucial for the US to speak up.

“If America does not speak out for human rights in China because of commercial interests, we lose all moral authority to speak out elsewhere,” she said in a statement.

“In an overwhelming display of bipartisan unity, Congress passed our Hong Kong Human Rights and Democracy Act, and I applaud President Trump for signing this critical legislation into law,” Rubio said in a statement. “I look forward to continuing to work with the administration to implement this law.”

While many members of Congress in both parties had voiced strong support for the protesters who are demanding greater autonomy for the city, Trump stayed largely silent, even as the demonstrations have been met by rising police violence.

Last week, Senate Majority Leader Mitch McConnell, a Kentucky Republican, called on the president to speak out, saying that “the world should hear from him directly that the United States stands with” the protesters.

China’s foreign ministry had repeatedly urged Trump to prevent the legislation from becoming law, warning the Americans not to underestimate China’s determination to defend its “sovereignty, security and development interests.” Chinese Vice Foreign Minister Zheng Zeguang summoned the US ambassador, Terry Branstad, on Monday to express “strong opposition” to what the country’s government considers American interference in the protests, including the legislation, according to statement.

US and Chinese trade negotiators will continue communicating closely and work toward a phase one deal, Ministry of Commerce spokesman Gao Feng said at a briefing in Beijing on Thursday.

Before a speech at the Bloomberg New Forum in Beijing last week, China’s Vice Premier Liu He — the country’s chief trade negotiator — said that he was “cautiously optimistic” about reaching the phase one accord, according to people who attended a dinner and asked not to be identified.

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