China: Hawaii Meeting, Trade, and Hong Kong

Published on June 23, 2020

The agenda of last week’s meeting between US Secretary of State Mike Pompeo and China’s top diplomat, Yang Jiechi, on an airbase in Hawaii has been shrouded in secrecy. And scant details of the meeting have been provided by either side since.

*** Despite major political and strategic tensions between China and the US, from what we understand Yang Jiechi assured Secretary of State Mike Pompeo that as long as the two sides maintain “relatively stable” bilateral relations, China will strive to implement the flagging Phase One trade deal and “try its best” to import more agricultural products in the second half of the year — before, he is said to have noted, the US November presidential elections. ***

*** As to the political hot button issue of Hong Kong, under pressure from Beijing, the National Security Law for Hong Kong will be formally enacted on July 1, two months ahead of schedule. Having threatened, and telegraphed, its intentions, the Trump administration will then suspend Hong Kong’s special status as a separate customs territory from July. In response, Beijing will in turn take unspecified “strong countermeasures” against US interests in Hong Kong. ***

Matters of Mutual Interest

There was little clarity provided either before or after last week’s Pompeo-Yang meeting in Hawaii beyond a bland statement from the US side that “the secretary stressed important American interests…across commercial, security, and diplomatic interactions,” and then, rather more substantively, an assurance from Pompeo that Beijing had promised again to honor its commitments under the Phase-One trade deal between the two sides.

The public read out and media coverage from Beijing was equally taciturn, except to note that Yang had, in fact, attended the meeting at Pompeo’s request.

From what we understand, the dialogue between Secretary of State Mike Pompeo and Yang Jiechi, member of the Politburo of the CPC Central Committee and director of the Office of the Central Foreign Affairs Commission, lasted for seven hours, stretching from Tuesday evening, June 16, to Wednesday morning, June 17, local Hawaii-Aleutian time.

According to senior Chinese officials, Pompeo told Yang at their dinner on Tuesday that the meeting had been requested by President Donald Trump, and that on behalf of the President, he hoped the discussion would yield positive results.

With tensions still high, the meeting provided an opportunity for the two sides to discuss matters of common interest, inform each other of their respective intentions and bottom lines, and attempt to avoid “imprudent” actions and reduce the risk of misunderstandings and miscalculations.

The two sides disagreed on almost all the important issues but did address several risk points ahead of the upcoming US presidential elections.

According to Chinese sources, Pompeo urged China to stop its “unfriendly actions” towards the US, to persuade North Korea not to launch missiles or conduct nuclear tests, and to step up its purchases of US agricultural products.

Yang, in turn, asked the Trump administration to stop provoking China on issues related to its core interests, and to refrain from attacking China as a campaign strategy. That said, a senior Chinese security official afterwards noted, “As Trump and the US Republican Party have settled on China-bashing as a major campaign strategy, it is doubtful that the Trump administration would make turnabouts in its China policy.”

On Hong Kong, Yang stressed that China will enact the national security law for Hong Kong very soon (see below), and Pompeo fired back that the US would then be certain to impose sanctions on Hong Kong. Yang reiterated that in response to US sanctions, China would most definitely take “strong countermeasures.” These appear deliberately not to be specified.

On trade, Yang stressed that as long as the two sides maintained “relatively stable” bilateral relations, China would strive to implement the Phase One trade deal and “try its best” to import more agricultural products in the second half of the year, especially, he allegedly added, before the US elections.

Accelerating Ratification of HK Security Law

In parallel, sources in Beijing report that “under the strong suggestion of three Hong Kong leaders,” Chief Executive Carrie Lam and two former chief executives, Tung Chee-hwa and Leung Chun-ying, the Standing Committee of the National People’s Congress (NPC) has decided to further accelerate the legislation of the national security law for Hong Kong, and has shortened the draft law readings from the originally planned three readings to two.

The NPC Standing Committee, China’s top legislative body, has already reviewed the draft law at a three-day meeting that just concluded on Saturday, paving the way for a second reading of the legislative process of the draft law.

The next session of the NPC Standing Committee will be held on June 28-30 in Beijing, which means the National Security Law for Hong Kong will be formally enacted on July 1, two months ahead of schedule. Senior officials in Beijing have no doubt whatsoever that Trump will then formally suspend Hong Kong’s special status as a separate customs territory from July.

In anticipation of the US response, the central government has prepared a series of measures to support Hong Kong’s financial markets.

To reinforce that message, Executive Vice-Premier Han Zheng, who has served as a top-level liaison to Carrie Lam and other pro-Beijing Hong Kong leaders, has ensured Beijing’s commitment to the stability of Hong Kong’s stock, futures, and bond markets, to the Hong Kong dollar, and to its US dollar-linked exchange rate.

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