Saturday , December 14 2019

US Senate passes bill backing HK protests, draws China’s ire

Bloomberg

The US Senate unanimously passed a bill aimed at supporting protesters in Hong Kong and warning China against a violent suppression of the demonstrations — drawing a rebuke from Beijing.
China reiterated on Wednesday a threat to impose unspecified retaliation if the bill became law and urged the US to stop meddling in Hong Kong affairs. Separately, the city’s government expressed “extreme regret” over the bill, saying it would negatively impact relations between Hong Kong and the US.
The vote marks a challenge to the government in Beijing just as the US and China, the world’s largest economies, seek to close a preliminary agreement to
end their trade war. The Senate measure would require the State Department to certify annually whether Hong Kong remains sufficiently autonomous from Beijing to justify special trade privileges, as well as protect US citizens from rendition to China through measures including sanctions on mainland officials.
The bill’s passage, as well as China’s threat of retaliation, hit stocks around the globe. The Hang Seng Index lost as much as 1.1% on Wednesday after surging 2.9% in two days, while US stock index futures fell.
The legislation comes at a difficult time for President Donald Trump as his administration is trying to complete the first phase of a long-awaited trade deal with Chinese leader Xi Jinping. Vice President Mike Pence said that it would be tough for the US to sign a trade agreement with China if the demonstrations in Hong Kong are met with violence.
“China is likely to take offense and with that there will be negative effects for the ongoing trade war negotiations,” said Justin Tang, head of Asian research at United First Partners. “China is already fighting fires on both fronts and the Senate’s decision is unlikely to be well received. The market won’t receive this well either, given the uncertainly it creates.”
Hong Kong’s position as a global financial hub has already been shaken by months of protests and police responses that have grown increasingly violent. US lawmakers have voiced strong support for the demonstrators and warned China against responding with violence, while Hong Kong authorities have said they are simply trying to enforce the law.
The likelihood of the US government using the power in the near future to revoke Hong Kong’s special trading status — like similar anti-China legislation requiring high-level diplomatic and military visits to Taiwan — is very low. That’s not least because many Americans stand to lose money if some
$38 billion in two-way trade is thrown into doubt.
In its statement, Hong Kong’s government noted the US had a larger trade surplus with the city than any other jurisdiction, and mentioned that many American companies and citizens live there.
“Any unilateral change of US economic and trade policy towards Hong Kong will create a negative impact on the relations between the two sides as well as the US’s own interests,” it said.
US Senate Majority Leader Mitch McConnell, a Kentucky Republican, urged Trump to personally voice support for the protesters, which he hasn’t yet done. Nor has Trump indicated whether he would sign the legislation if it got to his desk.
The House unanimously passed a similar bill last month, but slight differences mean both chambers still have to pass the same version before sending it to the president.

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