President Trump China Press Conference: More Bark Than Bite, So Far
(4 min read)
Bottom line: markets rallied on Friday’s Trump press conference on China as it turned out more a list of threats than actual actions and Trump did not announce that he was pulling out of the phase 1 trade agreement. But his distrust of China is a long held belief, and he is likely to make good on some of these threats in a manner that does not threaten long term market performance and supports his re-election prospects. So Chinese-US news are likely to remain a source of market volatility though not of broad-based performance reversal.
On May 27th, Secretary of State Pompeo certified that, following the adoption by China’s National People’s Congress of a new security law, Hong Kong no longer had a high degree of autonomy from China. The certification is required under the 1992 Hong Kong Policy Act that in practice gave Hong Kong more liberal economic, trade, technology transfer and immigration regimes than China after the 1997 handover. The Act, however, authorizes the president to withdraw this special treatment if the State Department certifies that Hong Kong is no longer sufficiently autonomous from the mainland.
Following Secretary Pompeo May 27th de-certification, President Trump on Friday announced a series of measures:
Chinese graduate students or researchers who work or have worked at entities associated with the Chinese military will be barred from entering the US. Those already in the US could have their visas revoked.
The president’s financial markets working group is to study the practices of Chinese companies listed on US markets, to “protect US investors”.
The administration is to begin the process of eliminating Hong Kong’s special policy exemptions, including extradition treaty, controls on exports of dual use technology, customs and travel.
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