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China spares trade in first retaliation to Hong Kong law

President Trump's signing of the U.S. law supporting protests in the region gets some retaliation, but not on the trade front

China avoided measures related to trade in its first actions retaliating against the U.S. over a law supporting Hong Kong’s protesters, instead vowing to sanction some rights organizations and halt warship visits to the city.

Chinese Foreign Ministry spokeswoman Hua Chunying told a news briefing Monday that U.S. groups targeted for sanctions included the National Endowment for Democracy, Human Rights Watch and Freedom House. Hua said that China would also suspend further Hong Kong port visits by U.S. Navy ships over the legislation, which Trump signed into law Wednesday.

Hua didn’t provide details on how China would sanction the rights groups, which are already restricted from operating on the mainland. Similarly, China had already refused visits by a pair of American warships in August.

“This seems to be an empty threat because these groups don’t operate inside mainland China,” said Patrick Poon, a Hong Kong-based China researcher at London-based Amnesty International, which wasn’t named. “But if there are more tangible threats on staffers and representatives for these organizations operating in Hong Kong, it would be a serious clampdown on freedom of expression.”

China’s yuan weakened to 7.0449 per dollar, the lowest level in more than a week, following the foreign ministry’s statement. The currency pared that decline to 7.0412 as of 5:20 p.m. in Shanghai.

While China has promised retaliation since it became clear that U.S. lawmakers intended to pass the legislation, President Xi Jinping has limited options for hitting back exacerbating his own economic slowdown at home. China summoned the U.S. ambassador, Terry Branstad, over the law, prompting speculation that its passage could weigh on trade negotiations between the world’s two largest economies.

The challenge of China protests

Hong Kong has become a persistent source of friction between Beijing and Washington since historic protests broke out almost six months ago, leading to often violent clashes between police and pro-democracy demonstrators. The legislation requires annual reviews of the former British colony’s special trade status under American law, as well as sanctions against any officials deemed responsible for human rights abuses or undermining the city’s autonomy.

“China urges the U.S. side to correct its mistakes and stop any words and deeds that interfere in Hong Kong affairs and China’s internal politics,” Hua told reporters Monday in Beijing. “China will take further necessary actions in light of the development of the situation to firmly safeguard Hong Kong’s stability and prosperity, as well as China’s sovereignty, security and development interests.”

Three of the groups named by Hua -- Freedom House, the International Republican Institute and the National Endowment for Democracy -- didn’t immediately respond to requests for comment. Human Rights Watch declined to comment.

While signing the bills, Trump signaled that he didn’t want the broader relationship with China to veer off track. He expressed concerns with unspecified portions of the new law, saying they risked interfering with his constitutional authority to carry out American foreign policy.

Hu Xijin, the editor-in-chief of state-run Global Times, said last week that China was considering putting the law’s drafters a no-entry list. Hua made no mention of any such action.

Still, Zhu Feng, the dean of the Institute of International Relations at Nanjing University, called the countermeasures “very tough and unprecedented,” especially the decision to halt port visits. “For the first time in the four decades since China and U.S. established diplomatic ties, China has suspended the review of these requests,” Zhu said.

--With assistance from Tian Chen and Li Liu.

To contact Bloomberg News staff for this story:
Dandan Li in Beijing at dli395@bloomberg.net;
Shelly Banjo in Hong Kong at sbanjo@bloomberg.net

To contact the editor responsible for this story:
Brendan Scott at bscott66@bloomberg.net

© 2019 Bloomberg L.P.

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