China Protests New U.S. Law

BEIJING (Dow Jones) -- China is leaving the door open for a trade deal with the U.S., even as it noisily complains about President Trump's signing of a bill supporting Hong Kong's anti-Beijing protesters.

Despite harsh language criticizing what Beijing calls U.S. interference in China's domestic affairs, and a second summoning of the U.S. ambassador in a week, China's leadership still wants a deal to help alleviate pressure on its fast-weakening economy. Mr. Trump also prefers a deal to boost his re-election bid.

For days after the U.S. Senate passed the Hong Kong Human Rights and Democracy Act last week, Beijing had warned about unspecified countermeasures if Mr. Trump signed the bill, fueling concerns that President Xi Jinping would scuttle the trade talks to appear tough on the U.S. Mr. Trump had said earlier this week that talks were in their "final throes" -- nearly complete.

But Wednesday's bill signing by Mr. Trump came and went without any real action. Instead, Chinese officials shifted their focus to whether the U.S. president would implement any of the bill's measures, according to officials involved in economic policy-making. They seized on a sentence in Mr. Trump's signing statement that emphasized his "constitutional authorities with respect to foreign relations."

Mr. Trump also chose the evening before Thanksgiving to sign the measure, a time guaranteed to get little attention in the U.S. While his signature still makes the bill law, his timing suggests he was trying to play down the political impact at home.

Asked whether the bill's signing would affect trade talks, Chinese Foreign Ministry spokesman Geng Shuang didn't answer directly but demanded the U.S. not implement the law because it would risk "undermining our bilateral relations and cooperation in important areas."

Beijing, while loudly proclaiming its opposition, hasn't given up yet on the U.S. president, who has been far less outspoken in supporting Hong Kong's protesters than members of Congress, and partly because China itself is hoping to keep trade talks on track.

"It does spoil the mood, but it shouldn't interfere with the trade talks," said Wang Yong, a professor of international relations at Peking University, of Mr. Trump's move. "Both sides have enough reasons to keep trade, Hong Kong and political issues on separate tracks."

Beijing has been trying to keep geopolitical issues separate from trade negotiations. While the new U.S. law could make it politically more difficult for President Xi to sign a so-called phase-one trade deal with Mr. Trump, Chinese officials said, the White House statement indicates that the U.S. president could choose not to implement the law if he wanted to, for example, seal a China trade deal. Mr. Xi has built up a strongman image in large part by being viewed as standing up to foreign pressure.

Chinese officials were also encouraged by Mr. Trump's efforts to emphasize his respect for Mr. Xi. "I signed these bills out of respect for President Xi, China, and the people of Hong Kong," Mr. Trump said in the statement.

The legislation, passed by the House of Representatives and the Senate with near-unanimous support, reaffirms and amends a 1992 law. It requires the State Department to certify annually that Hong Kong is autonomous enough from Beijing to retain its favorable-trading terms with the U.S. -- a designation that has helped the former British colony maintain its status as a global financial center.

Some outside experts agree with Beijing's interpretation that while the U.S. law gives the president broad powers to impose sanctions and travel restrictions on individuals who commit human-rights violations in Hong Kong, the president already had many of those powers -- and still has the discretion to not apply them.

"My reading of D.C. is there's a lot of appetite for talking tough on China, but not that much in terms of actually being tough," said Andrew Polk, founder of Trivium, a Beijing-based economics and policy consulting firm.

Beijing is counting on that, and it offered ramped-up rhetoric. Shortly after the bill was signed, China's Foreign Ministry summoned U.S. Ambassador Terry Branstad for the second time this week.

It issued a terse statement criticizing the U.S. for having "seriously interfered with Hong Kong affairs, seriously interfered with China's internal affairs and seriously violated international law and basic norms of international relations." And it repeated warnings of taking firm countermeasures if the U.S. didn't change course.

It isn't known what countermeasures China is considering. Hu Xijin, editor in chief of the state-run Global Times, said on Twitter that China was considering barring those responsible for drafting the legislation from entering mainland China, Hong Kong and Macau. Mimicking Mr. Trump's turn of phrase, he said this was "out of respect for President Trump, the U.S. and its people."

U.S.-China trade negotiations have been stop-and-go, but the two sides have pushed for progress after calling a truce at the White House in October. China raised hopes for a limited deal earlier this week by suggesting a phone call on Tuesday between negotiators had gone smoothly. "Both sides are finalizing the text of the phase-one deal right now," said a person with knowledge of the matter.

Still, China's attempts to keep Hong Kong issues and the trade talks on separate tracks might not be universally popular, some analysts say. Shi Yinhong, a professor of international relations at Renmin University, said it could be embarrassing for a phase-one trade deal to progress despite the Hong Kong law.

Mr. Shi, who is also an adviser to China's cabinet, said the Foreign Ministry's threats of countermeasures if the U.S. "continued going down the wrong path" were ambiguous and that the U.S. had already done its worst by signing the bill into law.

(ES)