Earlier this week, Donald Trump kept hopes alive for an upcoming trade deal with China as he opted not to sign the controversial Hong Kong bill passed by the United States Congress. However, now he made up his mind and chose to sign the bill into effect, much to China’s displeasure.
The bill’s main goal is to aid Hong Kong in maintaining its degree of independence from China. It includes specific criteria of autonomy that Hong Kong must meet each year in order for trade between the US and the region to continue. Moreover, it also imposes conditions for the upholding of human rights, together with punishment for the Chinese officials who violate them.
China has recently faced international criticism for cracking down on pro-democracy protesters in Hong Kong. Moreover, the United States has also raised the issue of the holding of Muslim Chinese citizens in special camps. However, China has long adhered to the same principle of not getting involved in other countries’ political affairs and getting the same treatment in return.
China was deeply angered by Trump’s decision to sign the bill, which it had criticized publicly before, and immediately summoned the US ambassador to discuss the issue.
The markets reacted quite negatively to the news, as it might mean that China would refuse to sign a trade agreement with the United States. Just a few days ago, both the US and China stated they were close to a phase-one agreement, but now it is unclear if that’s still an option.
US and Asian (especially Hong Kong) futures and stock indices dropped, as did the value of the yuan and of crude oil. The Japanese yen, on the other hand, is strengthening.
