November 19, 2019 / 4:54 AM / 25 days ago

Breakingviews - Hong Kong becomes potent piece in trade-war games

Demonstrators raise their hands as they attend a protest at the Central District in Hong Kong, China, November 15, 2019. REUTERS/Adnan Abidi

HONG KONG (Reuters Breakingviews) - When it comes to trade-war talks, Hong Kong has become more than a pawn. The latest developments after more than five months of unrest have attracted increased international attention. U.S. lawmakers are making a show of their support for protesters and ratcheting up pressure on President Donald Trump to the same. That might endanger all-important negotiations with his counterpart, Xi Jinping.

An extended, violent siege at Polytechnic University, where police have encircled students and activists, raises city tensions to a new high. China added fuel, signalling on Tuesday that Hong Kong courts lack power to rule on the constitutionality of legislation under its Basic Law. That can only be judged by the Standing Committee of the National People’s Congress, a spokesman said, a day after Hong Kong’s High Court shot down a government ban on wearing face masks during demonstrations. That challenge will stoke fears that the territory’s “one country, two systems” regime, which has another 27 years to run, is being undermined.

Momentum is already building in the U.S. Congress to support Hong Kong and punish China. The Senate this week could vote on a bill that would review the city’s special status on an annual basis and sanction mainland officials blamed for human rights abuses. A version passed in the House of Representatives and there may be enough support to override any veto by Trump, who has been lukewarm on the subject.  

The Republican leader in the Senate, Mitch McConnell, invoked Tiananmen Square and likened Hong Kong campuses to war zones in comments on Monday backing the proposal. He also advised Trump “not to shy away from speaking out on Hong Kong himself.” 

That may be hard. Stronger words from the president would risk irritating Xi, who has publicly approved of Hong Kong Chief Executive Carrie Lam’s management. China also has threatened retaliation if the Hong Kong Human Rights and Democracy Act passes.

Trump is more focused on sealing a trade pact with Beijing as part of his reelection campaign. He is also in search of distractions from impeachment hearings. Judging by vague updates, however, the United States and China have struggled to reach accord on tariffs and other matters. That only makes Hong Kong a more dangerous piece in the trade-war games.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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