China Protests HK Bill but Trade Breakthrough Still Possible

During the slow news period around Thanksgiving, President Donald Trump signed the legislation supporting protesters in Hong Kong. In the hopes of keeping it quiet, there was no signing ceremony with the President holding up the signed bill and smiling. Nevertheless, it didn’t work, at least on the surface as a furious China called in the U.S. ambassador for a verbal lashing, saying it amounted to interference in an internal Chinese matter.

Me thinks China doth protest too much. I suspect the protest was orchestrated by both sides, as Washington briefed China over the President’s decision to sign the Hong Kong bills. Since the bills had strong, veto proof majorities in both the House and Senate, the President realized that he had no choice but to sign the bills. Being overridden by the Republican Senate would have not only embarrassed the President but be a bigger black eye for China.

The first part of the week had up markets based on positive trade comments from both Beijing and Washington despite that tension over the Hong Kong legislation. Both sides would like to see enough progress on the Phase One agreement as to allow the US to cancel the consumer tariffs scheduled for December 15. A breakthrough is possible even with the Chinese pushback from the US legislation.


Next week when Congress returns, sorting out the spending for the current fiscal year will become a high priority as the House and Senate try to work out funding for the largest domestic programs and the Defense Department.

These talks will avoid any action on funding the border wall, to allow passage of budgets for the largest departments of government prior to the new deadline of December 22. This strategy funds defense and top Democratic domestic spending priorities but leaves unsettled funding for the border wall, and the prospect of a limited government shutdown around Christmas.

China Protests HK Bill but Trade Breakthrough Still Possible
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