You could easily argue that risks to the macro outlook multiplied on Thursday, as the first concrete signs that the US economy may be forced to cope with another wave of localized lockdowns coincided with the Senate passing bipartisan legislation aimed at punishing banks for interactions with Chinese officials associated with the new national security law in Hong Kong.
The Senate measure, approved on a voice vote, mandates an annual review from the State department, which is charged with identifying officials engaged in activities deemed detrimental to the city’s “one country, two systems” model. Those individuals could have their assets seized.
Some parts of the new bill are broadly similar to the steps required under the Hong Kong Human Rights and Democracy Act, which Trump (somewhat begrudgingly) signed in November. But the threat of sanctions against banks is new.
“What the government of China is doing in Hong Kong is unacceptable”, Chris Van Hollen said on the floor Thursday. “They are taking away the rights of people [and] they are snuffing out freedoms”.
Details of the new national security law released last weekend clearly suggest Beijing intends to override Hong Kong law whenever the mainland sees fit regarding matters of national security.
Read more: End Game Nears In Hong Kong, As China Releases Details Of National Security Plan
There are palpable concerns on Capitol Hill about the White House’s commitment to holding Xi accountable.
Those concerns were heightened by John Bolton’s memoir, which alleges that Trump once explicitly tied Chinese purchases of US farm goods to the 2020 election, an accusation Trump denies.
Although the president did finally sign bipartisan legislation green-lighting sanctions on Chinese officials responsible for human rights abuses in Xinjiang, Bolton also claims Trump indicated to Xi that the White House did not intend to intervene in any way to protect Uighurs who are detained in “re-education camps”.
Trump told Axios late last week that he held off on sanctions in an effort to ensure the trade deal could advance. This week, Peter Navarro indicated the trade agreement is as good as dead, only to recant minutes later, claiming his comments were taken “wildly out of context”. The administration insists the deal is still on, but at this point, nobody believes China can live up to its year-one commitments under the accord.
“Despite some statements from the secretary of state, this administration is still taking no action” to rebuke China on Hong Kong, Van Hollen chided on Thursday.
A companion bill will need to pass the House before the legislation will land on Trump’s desk.
This may seem dry, but it’s yet another incremental escalation, and it comes on a day when Dow Jones said Trump is pondering intervention in the private sector to promote competition against Huawei.
“Trump administration officials have talked about inserting the federal government deep into the private sector”, The Wall Street Journal said, citing sources. “The ideas, discussed intermittently with US tech giants, private-equity firms and veteran telecom executives, include prodding large US technology companies like Cisco to acquire European companies Ericsson AB or Nokia”.
Earlier this year, William Barr suggested the US acquire controlling stakes in both “either directly or through a consortium of private American and allied companies” in a bid to counter Huawei in the 5G race.
On Wednesday, the Pentagon included Huawei on a list of “entities owned by, controlled by, or affiliated with China’s government, military, or defense industry”.
The Journal says the White House is also considering assisting Ericsson and/or Nokia with tax breaks and export financing, sources said, adding that discussions have been complicated by the pandemic.
All’s fair in love and (cold) war.
Meanwhile, Huawei reported that it received permission to build a $1B GBP research facility in UK.
LOL