August 15, 2019

Trump Links Trade to Hong Kong, Risks Playing Into Xi’s Hands
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. President Donald Trump linked Hong Kong’s unrest to talks with Chinese leader Xi Jinping, in a move that could reinforce Beijing’s efforts to blame the U.S. for increasingly violent protests in the Asian financial hub.In a flurry of tweets Wednesday, Trump defended his tariffs decisions, praised Xi and urged the Chinese president to “humanely” resolve the protests that have gripped Hong Kong for more than two months. He ended the posts with an apparent overture to Xi -- writing “Personal meeting?” -- without clarifying whether he was suggesting another summit.“Of course China wants to make a trade deal,” Trump wrote. “Let them work humanely with Hong Kong first!”The White House had no immediate comment on the tweets, which were posted hours after U.S. equities plunged as a Treasury yield curve inverted, heightening fears of a recession. The trade dispute with China has contributed to the rising anxiety, which arrived at a difficult time for Trump, who has based his re-election strategy on a robust economy.The remarks on Hong Kong signaled a shift by the U.S. president, who has expressed sympathy for Chinese views of the protests, even as demonstrators wave American flags and other administration officials defend their right to freedom of expression. Earlier this month, he described the protests as “riots” and suggested that the U.S. would stay out of an issue that was “between Hong Kong and China.”Even suggesting a link between the trade dispute and unrest in the former British colony will feed suspicions in Beijing that the U.S. was seeking to leverage China’s domestic crisis as part of broader strategy to check its rise. China has in recent weeks attempted to paint the U.S. as a “black hand” behind the protests, with a front-page commentary in the Communist Party’s People Daily newspaper saying Thursday that such forces were trying to foment a “color revolution.”“The men at the top in Beijing know that the ‘black hand’ theory is nonsense,” said Perry Link, editor of the “Tiananmen Papers” and a professor at the University of California, Riverside. “But will they grab the remark to try to strengthen their deception of the Chinese people? Of course they will.”China’s foreign ministry didn’t immediately respond to a faxed request for comment Thursday. Asked Wednesday about an earlier Hong Kong tweet by Trump, the ministry said: “Hong Kong affairs are purely China’s internal affairs. We again urge the U.S. to immediately stop meddling in Hong Kong affairs.”It’s not the first time Trump has piled seemingly unrelated issues into his trade dispute with Xi, tying it to North Korea nuclear talks and extradition proceedings against a top executive at the Chinese telecommunications giant Huawei Technologies Co. His administration has also ratcheted up military support for Taiwan, which China considers part of its territory, since the trade war began last year.By linking trade to human rights, Trump would be attempting to succeed where others such as President Bill Clinton failed. David Zweig, a professor of social science at the Hong Kong University of Science and Technology, said he imagined members of China’s ruling Politburo “sitting around a table all howling, laughing” at Trump’s suggestion.“He’s got enough trouble cutting a trade deal and now he’s going to add a new human rights criteria to it?,” Zweig said. “Xi Jinping’s not going to engage him on this. He wouldn’t talk to him at the G-20 -- he said Hong Kong is off the table. Why is it going to be on the table now? That will fly nowhere. It’s ridiculous.”Nonetheless, the comments were cheered in online forums popular among Hong Kong protesters. Demonstrators have courted U.S. support, with some bringing American flags and MAGA hats to recent rallies. U.S. lawmakers, including House Speaker Nancy Pelosi and Senator Marco Rubio, have urged action to support protesters.Under a U.S. law, Trump has the power to rescind Hong Kong’s status as a preferential trading partner -- essentially turning the Asian financial hub into just another Chinese city. Such a seismic shift would be an almost unthinkable escalation of the U.S.-China trade war."To some extent, he’s giving pressure to China," said a protester, who wanted to be known only as C. Lee, adding that he saw Trump’s tweets as a win for Hong Kong demonstrators. "It’s a good thing as long as we keep getting international attention."Trump’s comments feed into the Communist Party’s efforts to blame its internal problems on “hostile foreign forces.” Chinese officials have in recent weeks called the protest violence the “creation of the U.S.,” citing statements by American officials and their meetings with Hong Kong activists, as well as “U.S. faces” at rallies.Blaming Hong Kong’s protests on foreign interference not only helps make them less attractive to potential sympathizers on the mainland, it could help provide Beijing a justification should it decide to intervene militarily. Trump further stoked those fears with an earlier tweet saying that U.S. intelligence was monitoring Chinese troop movements near the Hong Kong border and urging everyone to be “calm and safe.”Bonnie Glaser, a senior adviser for Asia at the Center for Strategic and International Studies, said the president’s messaging on Hong Kong has been too “confusing and contradictory” to be effective with China.“They won’t accept any linkage in this case,” Glaser said. “I suspect they’ll ignore it.”(Adds protester’s comment in 14th paragraph.)\--With assistance from Jennifer Jacobs and Natalie Lung.To contact the reporters on this story: John Harney in Washington at jharney2@bloomberg.net;Kevin Hamlin in Beijing at khamlin@bloomberg.netTo contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, ;Kevin Whitelaw at kwhitelaw@bloomberg.net, Karen LeighFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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