Stocks, Futures Drop Ahead of Trump's China Talk: Markets Wrap

Yolanda Curtis
May 29, 2020

China is facing growing global pressure over its move to impose a security law on Hong Kong that critics say will destroy the city's autonomy.

China faced growing worldwide pressure on Friday over its move to impose a security law on Hong Kong that critics say will destroy the city's autonomy, with the United States and Britain placing the issue before the UN Security Council. They're going to allow the state security service, which is the Chinese secret police that terrorizes people all over mainland China, to operate openly in Hong Kong, which they have not been allowed to do.

Thousands of protesters have demonstrated in Hong Kong against the law, which came after severe clashes between demonstrators and police over a period of months in 2019.

Some of China's actions have sparked a bipartisan USA response. It has denounced China's repeated military drills near the island and rejected China's offer of a "one country, two systems" model of a high degree of autonomy.

The plan to enact the national security legislation was first announced in Beijing late last week, with Chinese officials saying it was needed to stem sometimes-violent protests that hit the city a year ago.

British Foreign Secretary Dominic Raab also said the United Kingdom would widen its rules around the rights of British National (Overseas) passport holders - a status offered to many Hongkongers at the time of handover - if China went ahead with the new law. In turn, with sanctions against Chinese officials likely to be the main outcome, alongside a potential change to Hong Kong's special trading status with the US. -China trade war. Hong Kong is one of the United States' biggest export markets and it has a zero tariff rate on US imports.

The statement has been released a day before the US President Donald Trump is due to announce later his response to the Chinese parliament's new security laws for Hong Kong. Stocks tumbled off their intraday highs and into negative territory during the regular session Thursday following the announcement of Trump's remarks. "If we have no way out, we might as well die with China".

The move to bypass the semi-autonomous city's local Legislative Council has alarmed Hong Kong's pro-democracy activists and opposition politicians.

The US Department of State said in a report on Thursday it could "no longer certify that Hong Kong continues to warrant (differential) treatment" from Beijing.

"We have been very clear that the security legislation risks undermining the principle of one country, two systems".

Hong Kong is a "purely internal affair that allows no foreign interference", Chinese Foreign Ministry spokesman Zhao Lijian declared at a recent press briefing. The move comes in the backdrop of months of anti-government protests a year ago and as protests were planning to be relaunched in the post-Covid period.

Alan, an architect in his 30s, said American recognition of Hong Kong's loss of autonomy was "a good direction" because Hong Kong has "no other cards left".

"For (Hong Kong residents), safeguarding national security is a must, rather than a choice", the official news agency Xinhua in a commentary.

"What we have communicated directly through our diplomatic engagements is what we have said publicly".

Hong Kong's Hang Seng index dropped 0.7% to 22,961.47, while Japan's Nikkei 225 index fell 0.2% to 21,877.89.

Sitting by a wall in front of a banner reading "Free Hong Kong, revolution now" in the tiny shop in Taipei, Tsai expressed support for the city's democracy movement and reiterated her pledge to assist fleeing Hong Kong citizens. But they haven't implemented the security law yet.

From the USA perspective, perhaps the biggest way in which Hong Kong is treated as separate from China has been in trade and economics.

It's a lose-lose situation for everyone, said Willy Lam, professor at the Center for China Studies at the Chinese University of Hong Kong.

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