President Trump's "China Carnage" statement; US response to Hong Kong law; Friday Open Thread

President Trump made a statement a little while ago. He laid out a long list of issues with China in what sounded like a “China Carnage” speech. The rhetoric was very tough as he announced that the US:

  • is studying what to do about US-listed PRC firms;

  • will start restricting some PRC students from studying in the US;

  • is starting the process to eliminate special treatment for Hong Kong, across the board;

  • will take steps to sanction PRC officials who are involved in the Hong Kong situation;

  • is terminating the US membership in the WHO.

US stock markets shot up after his comments; it looks like investors are relieved the measures are not as bad as some were expecting. The language the President used appears to leave some wiggle room for timing and implementation. He did not mention the fate of the trade deal.

I would love to hear your thoughts about how painful these measures will be, and painful to whom, as well as what you thought about my comments yesterday. I hated writing them:

President Trump will hold a press conference Friday to discuss China. The speculation is that he will outline US actions in response to the Hong Kong law that will include changes to how the US treats Hong Kong in trade and immigration as well as “penalties” on the PRC and possibly PRC-linked entities and individuals. If President Trump still thinks the phase one trade deal is useful then expect the measures to be fairly weak. Whatever he announces, I highly doubt the actions will change the CCP’s course on Hong Kong.

The US runs the risk of having made a big deal about this law and then issuing a weak response that imposes relatively little cost on Beijing. I believe that is what Xi is betting on, and certainly the utterances from other governments have been fairly milquetoast, or non-existent as in the case of most of the PRC’s neighbors.

For Xi and the CCP, Hong Kong political security and the territory’s place in the Motherland trump whatever increase in US-China friction may come, and in the logic the two countries are now stuck in a harsh US response will only confirm to Xi and many in China that the US is hellbent on keeping China down, while a weak response from DC will add to the view already held by more than a few in Beijing that Trump and the US are paper tigers, as Mao liked to say, and Beijing can increasingly act with impunity. It is a toxic dynamic.

And how do these measures look from that lens, or is it too early to tell?

And of course anything else. Thanks