27 May 2020   Leave a comment

US Secretary of State, Mike Pompeo, declared that Hong Kong is no longer autonomous from China. He issued the following statement to the press today:

“Last week, the People’s Republic of China (PRC) National People’s Congress announced its intention to unilaterally and arbitrarily impose national security legislation on Hong Kong. Beijing’s disastrous decision is only the latest in a series of actions that fundamentally undermine Hong Kong’s autonomy and freedoms and China’s own promises to the Hong Kong people under the Sino-British Joint Declaration, a UN-filed international treaty.

“The State Department is required by the Hong Kong Policy Act to assess the autonomy of the territory from China. After careful study of developments over the reporting period, I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997. No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.

“Hong Kong and its dynamic, enterprising, and free people have flourished for decades as a bastion of liberty, and this decision gives me no pleasure. But sound policy making requires a recognition of reality. While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself.

“The United States stands with the people of Hong Kong as they struggle against the CCP’s increasing denial of the autonomy that they were promised.”

The revocation of the certification means that the US Congress can now withdraw the special trading and financial commitments US companies enjoy. That special status has well-served both US and Chinese interests, as US companies invested heavily in China believing that investments in Hong Kong, even though the money filtered into mainland China, were protected from the Chinese Communist Party by the protections of the British laws instituted while Hong Kong was a colony.

The Chinese response to the US decision was quite sharp–much sharper than I had expected. Global Times, which often acts as a mouthpiece for Beijing official policy, made this comment:

“Since China is determined to push forward the national security legislation for Hong Kong, it has been prepared for any possible reaction from the US. Sanctions with individual assets and visas as levers are obviously not presentable. Support for this legislation in Hong Kong is gaining momentum.

“Many Chinese people have realized that some US politicians are seizing China by its throat. A long-term rivalry between China and the US is inevitable. In the face of US aggression, China should adopt a calm mentality and be prepared to engage in a long-term battle with the US.

“As China maintains its powerful nuclear deterrence and boosts its military strength, the US will not readily resort to a military showdown with China over China’s core interests. Decoupling is the last trump card the US has.”

The reference to military power was, to me, an escalation that did not seem necessary. But it is an index of how seriously China regards Hong Kong as an internal matter, the British agreement notwithstanding. And the Chinese are correct: ending the special status of Hong Kong is the last card that the US can play on this particular issue unless it, too, begins to talk about military power (a losing card for the US on this matter). Paradoxically, Pompeo’s statement is actually an endorsement of the Chinese position on Hong Kong–that Hong Kong is completely under the control of Beijing.

I actually hate it when analysts on TV start yelling at each other. It makes developing an argument impossible and very rarely is coherent or intelligible. But there was an exchange today on the financial news network, CNBC, between Andrew Sorkin (who actually wrote a very good book on the financial crisis of 2007) and Joe Kernan that suggests how nerves are getting frayed as we try to make sense of the right way to approach the debate about whether deaths from the pandemic are more or less important than deaths from an economic slowdown (a debate that will surely rank as one of the most inane policy debates in American history–the purported “tradeoff” is spurious).

I have posted the exchange, not because I believe that it is itself newsworthy, but rather to provide some measure to assess the relative importance of the stock market to the lives of ordinary American citizens. There was once a time when the stock market bore some connection to the overall health of the economy. Now the stock market is completely decoupled from the economy and is rather a game being played among some very rich people, who are waging bets with each other to see which ones have more influence over the value of stocks. You can access the video here.

Posted May 27, 2020 by vferraro1971 in World Politics

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