Hong Kong act complicates world’s most important relationship


In the end, it took only 20 years for US-China relations to come full circle.

Donald Trump’s decision to sign the Hong Kong Human Rights and Democracy Act into law will further complicate the world’s most important bilateral diplomatic relationship.

Under the act, the US secretary of state is required to make a determination every year as to whether the “one country, two systems” formula that guarantees Hong Kong’s independent legal system and civil liberties is intact. If it is not, the US could revoke special economic and commercial privileges that it extends to the semi-autonomous Chinese territory.

That, in turn, would enrage and probably provoke a concrete response from Chinese leader Xi Jinping, whose administration insists that it continues to honour one country, two systems and is hypersensitive to any suggestions to the contrary.

It is easy to forget now but it was only two decades ago that US-China relations were regularly roiled by a similar annual review process.

Throughout the 1990s, in the wake of the 1989 Tiananmen Square massacre, the Bush and Clinton administrations renewed China’s “most-favoured nation” trade status every year. This simply ensured the tariffs imposed on its exports to the US were the same as those for other trading partners.

And each year, China’s MFN renewal was subject to a heated debate in the US Congress, with legislators threatening to revoke it because of Beijing’s poor human rights record.

But a coalition of pro-business Republicans and farm-state Democrats, urged on by US multinational companies, would block these attempts to revoke China’s MFN status. By the late 1990s, annual renewal of China’s MFN status was assured.

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Bill Clinton gave China “permanent” MFN status in 2000 and paved the way for its entry into the World Trade Organization a year later. Max Baucus, Barack Obama’s last ambassador to China, was treated as a hero during his time in Beijing for his efforts — as a Democratic senator for Montana — on behalf of MFN renewal.

For now, that pattern will hold. Trump administration officials have made it clear to their Chinese counterparts that the president could not veto a piece of legislation that sailed through Congress with veto-proof majorities. In a statement apparently aimed at mollifying Chinese anger, Mr Trump said he had signed the act “out of respect for President Xi” and “in hope that . . . China and Hong Kong will be able to amicably settle their differences leading to long-term peace and prosperity for all”.

Mike Pompeo, Mr Trump’s secretary of state, is also unlikely to trigger the revocation of Hong Kong’s special status as long as Washington and Beijing work towards a comprehensive trade agreement, denuclearisation of the Korean peninsula and other matters of mutual interest.

“The executive branch is left with a fair amount of discretion in carrying out the law,” said James Green, former head of the US Trade Representative’s office in Beijing. “That, and the non-confrontational White House press release around the bill’s signing, will probably limit the damage in terms of the Chinese response.”

But for Beijing, the act’s passage is a reminder that there is no going back to the relatively easy relations it enjoyed with Washington in the early 2000s.

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Mr Trump made it clear last year that he would raise tariffs on Chinese goods as and when he saw fit, and hawks in his administration remain determined to restrict Beijing’s access to a range of technologies.

His signing of the Hong Kong act ensures the territory will be yet another long-running irritant in the two countries’ relationship. The US and China’s two-decade honeymoon has been rocky for more than a year. Now it is officially over.

tom.mitchell@ft.com

Follow Tom Mitchell on Twitter: @tmitchpk





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