By Rob La Terza

In a rare moment of bipartisanship, the U.S. House of Representatives passed the Hong Kong Human Rights and Democracy Act on October 15th [1]. China condemned the decision, with Chinese Foreign Ministry spokesman Geng Shuang stating the Act’s passage “fully exposes the shocking hypocrisy of some in the U.S. on human rights and democracy and their malicious intention to undermine Hong Kong’s prosperity and stability to contain China’s development.” [2]. Geng warned of unspecified retaliation by the Chinese government, saying that continued U.S. efforts to intervene in China’s internal politics must stop “before falling off the edge of the cliff.” [2] The Senate is expected to vote on the bill soon, and without significant opposition the Act is likely to pass [2]. President Trump’s position on the Act is unclear, though the bill will probably garner enough votes to override a presidential veto. How will the Act’s passage impact U.S.-China relations?

The official summary of the Act [3] is as follows:

The Department of State shall report annually to Congress as to whether Hong Kong is sufficiently autonomous from China to justify its unique treatment. The report shall assess whether China has eroded Hong Kong’s civil liberties and rule of law as protected by Hong Kong’s Basic Law.

The Department of Commerce shall report annually to Congress on China’s efforts to use Hong Kong to evade U.S. export controls and sanctions.

The President shall provide Congress an assessment as to whether to withdraw from the U.S.-Hong Kong extradition treaty, and what actions are needed to protect U.S. citizens and national security interests, if Hong Kong (1) amends its laws to allow the rendition of individuals to countries that lack defendants’ rights protections, or (2) passes a national security law.

The State Department shall allow otherwise qualified Hong Kong residents to obtain visas to work or study in the United States, even if the applicant had been arrested for participating in certain nonviolent protests supporting human rights or the rule of law.

The President shall report to Congress a list of individuals responsible for abducting and torturing people for exercising internationally recognized human rights in Hong Kong. The bill bars such individuals from entering the United States and imposes sanctions on them.

China has made it clear that it does not support any effort by the U.S. to intervene in Chinese internal affairs and that it considers the Hong Kong protests an internal dispute within the framework of “One Country, Two Systems”. With that in mind, the U.S. should expect China to follow through on its promised retaliation should the Act become law. Under the current state of affairs in U.S.-China relations, the simplest way for China to retaliate would be for it to refuse to formally sign on to Trump’s much-hyped trade deal. Continuing the trade conflict would inflict economic harm on the U.S. and politically punish President Trump, an especially stinging blow as he heads into an election year. However, refusing to end the trade conflict would hurt China as much as it hurts the U.S.. China’s economic bruises from the trade conflict were on full display in its third quarter growth report. At 6% year-on-year, China’s rate of economic growth is at its lowest level in almost 30 years. [4]. The GDP decrease was accompanied by an export drop by 3.2% year on year and producer prices falling 1.2% year on year, demonstrating that the trade war’s impact has worsened as it continues [4]. China’s leadership will probably determine that passing the Act is not a sufficiently grievous transgression to justify such a harsh and self-destructive response, given China’s economic woes. As of October 17, China had not raised the possibility of delaying the trade agreement as a punishment.

Former acting Assistant Secretary of State for East Asian and Pacific affairs Susan Thornton expressed skepticism about whether passing the Act is in the U.S.’ best interests during an interview with the South China Morning Post. Thornton remarked that passing the Act would be a “huge mistake” that would end up “punishing exactly the wrong people.” [5]. She elaborated, saying, “To me, Beijing would like nothing more than the U.S. to remove Hong Kong’s special status. I don’t really get it. I don’t understand what game they think they are playing,” in reference to members of Congress supporting the Act [5]. However, Thornton’s argument is somewhat confusing. She appears to equate passing the Act with the revocation of Hong Kong’s special status, which is not the case. Although the Act mandates that the Secretary of State annually report whether Hong Kong’s democracy is robust enough to justify special treatment from the U.S., it does not give the Secretary of State unilateral authority to determine whether the U.S. should end its special trade relationship with Hong Kong. That authority lies with the President [6], who can choose whether to act in accordance with the Secretary of State’s report. It should be noted that if they deemed it appropriate, the President would have the authority to end the special trading relationship even if there were no Hong Kong Human Rights and Democracy Act.

Beijing also has little reason to want Hong Kong’s special status revoked. While the city’s unrest raises problems for Beijing, China also benefits from Hong Kong’s special status. Hong Kong is a crucial center for equity financing and foreign investment, precisely because of its democracy and special trading relationship with the US [7]. In addition to these benefits, China has taken advantage of Hong Kong’s independence to use it as an economic testing ground. Some of the reforms China has introduced include the “dim sum” bond market and a 2009 trade settlement experiment that began “the yuan’s path towards acceptance as a global currency.” [8].  As of October 17, 2019, Hong Kong received two-thirds of all foreign direct investment into China [8]. The U.S. would only revoke Hong Kong’s special status if the city’s democratic rule of law and freedom eroded beyond repair, which would eliminate the motivation for foreign companies to invest in Hong Kong. China gains nothing from that outcome. 

Passing the Act without supplemental legislation should not result in significant U.S. policy change towards China or Hong Kong. If China adheres to its own statements regarding One Country, Two Systems, there will be virtually no change. The Act provides no specific penalties apart from targeting the Chinese officials involved in human rights violations in Hong Kong. It lays out no plans for directly punishing China if the Secretary of State’s report finds Hong Kong insufficiently democratic. If that eventuality comes to pass, the penalty will probably be decided by the President and senior State department officials. China can easily avert any penalties based on the Human Rights and Democracy Act by simply adhering to its previously stated One Country, Two Systems doctrine.

Rob La Terza is an intern in The Carter Center’s China Program. The views expressed in this article are those of the author and do not necessarily represent those of The Carter Center.

References:

  1. “Hong Kong Protests: US Lawmakers Pass Human Rights and Democracy Act.” BBC News. BBC, October 16, 2019. https://www.bbc.co.uk/news/world-U.S.-canada-50064803
  2. Daniel Flatley and Dandan Li. “U.S. Senators Defy China Threat, Press Ahead With Hong Kong Bill.” Bloomberg.com. Bloomberg, October 16, 2019. https://www.bloomberg.com/news/articles/2019-10-16/senators-press-ahead-on-hong-kong-bill-despite-threat-from-china
  3. Congressional Research Service. “H.R.3289 – 116th Congress (2019-2020): Hong Kong Human Rights and Democracy Act of 2019.” Congress.gov, September 25, 2019. https://www.congress.gov/bill/116th-congress/house-bill/3289?overview=closed
  4. Don Weinland, Sun Yu, and Xinning Liu. “Slowing Chinese Growth Delivers Blow to Global Economy.” Financial Times. Financial Times, October 18, 2019. https://www.ft.com/content/396e67be-f0b5-11e9-ad1e-4367d8281195.https://www.ft.com/content/396e67be-f0b5-11e9-ad1e-4367d8281195
  5. John Power. “US Passing Hong Kong Bill Will ‘Punish the Wrong People’: Ex-Trump Envoy.” South China Morning Post, October 9, 2019. https://www.scmp.com/week-asia/politics/article/3032158/U.S.-passing-hong-kong-human-rights-and-democracy-act-will-only
  6. Naomi Xu Elegant. “’It’s Life or Death:’ Hong Kong Protests Risk Its Special Trade Relationship With the U.S.” Fortune. Fortune, August 19, 2019. https://fortune.com/2019/08/19/hong-kong-protest-special-trade-status-U.S./
  7. S.R. “Why Hong Kong Remains Vital to China’s Economy.” The Economist. The Economist Newspaper, September 30, 2014. https://www.economist.com/the-economist-explains/2014/09/30/why-hong-kong-remains-vital-to-chinas-economy
  8. Orange Wang. “Hong Kong Remains Key Gateway as China’s Foreign Investment Rises.” South China Morning Post, October 17, 2019. https://www.scmp.com/economy/china-economy/article/3033377/hong-kong-remains-key-gateway-chinas-fdi-rises-29-cent-first