US-China relations have evolved in ways beyond what has been anticipated, with many unforeseeable challenges.
Washington’s latest sanctions against 11 Chinese officials and their allies in Hong Kong, including Hong Kong Chief Executive Carrie Lam (林鄭月娥), are more than a sideshow to the deteriorating bilateral ties. This is just the beginning of a more coordinated campaign of economic and political pressure against China’s misrule in the territory.
While Hong Kong’s political elites and business leaders are coming to grips with the rippling effects of the sanctions, one should never lose sight of the far-reaching consequences of this radical shift in Washington’s policy toward Hong Kong.
The immediate effect is political — undermining rather than facilitating diplomacy.
Whenever the US sanctions a head of state, that leader is no longer perceived as legitimate. By targeting Lam, Washington signals to Beijing that she has to go before any fresh start can take place.
The timing of the sanctions is also of great symbolic importance. Within three days, Washington released a string of harsh policies against China and Hong Kong.
Before announcing the sanctions on Friday last week, US President Donald Trump vowed, two days earlier, to revoke the territory’s special economic status in global financial markets. The next day, he signed two executive orders, banning China’s immensely popular social media apps Tik Tok and WeChat.
Very soon, the US’ allies are likely to launch similar sanctions, and such punitive policies entail cross-debarment and information sharing by multilateral banks and national governments.
On the diplomatic front, the sanctions highlight the changing attitude of the West toward Hong Kong amid escalating US-China tensions.
Hong Kong is no longer an internal crisis, but an entanglement of intense rivalries between two superpowers, clashing over irreconcilable agendas, strategies and interests.
Having viewed diplomacy as a transactional exercise, Lam and her Cabinet put on a brave face and mocked Washington. Such rash and impulsive responses betray a lack of understanding of international relations and the domestic ramifications of China’s foreign policy. No matter how tough they sound, they have no bargaining power in this situation.
Causing a series of diplomatic and political problems, they are now a liability to Beijing, and their future is of no concern to the Chinese Communist Party’s leadership. Any retaliatory measures by Hong Kong are bound to raise the stakes in US-China confrontation.
Worse still, the sanctions are likely to undermine Hong Kong’s financial and banking systems. The territory has carefully positioned itself to benefit from foreign investment interest in successful Chinese enterprises in case Washington moves to delist these companies’ shares from the US stock exchanges.
Many prominent firms, such as Alibaba and JD.com, have moved, or are shifting, their company listings to Hong Kong’s stock market. The process is quite simple and straightforward. When these Chinese corporations launch a secondary listing in Hong Kong, individual and institutional investors worldwide can buy their shares locally.
After raising the trading volume to a satisfactory level, the firms can exit the US stock exchanges and make the Hong Kong listing their primary.
Feeling confident that the market for capital flows is always global, Chinese business executives find Hong Kong a convenient platform to circumvent Trump’s delisting plan, access fresh capital, and acquire the latest technologies and skills from the most advanced nations.
Striving to cut off this economic lifeline to China, the US seems to be determined to deny the Lam administration and her patrons in Beijing an indispensable source of financing to maintain their autocratic rule.
Compared with existing sanctions on Cuba, Iran, North Korea, Syria and Venezuela, Trump’s policies against China over Hong Kong are still lenient, as they are designed to intensify pressure and effect in negotiations.
Mastering the art of making the impossible possible is essential for seeking common ground for compromise. Chinese officials in charge of Hong Kong affairs must advise Chinese President Xi Jinping (習近平) to make appropriate gestures and concessions in order to reconcile with the West.
As Hong Kong becomes a political headache to China, calling on the US to lift sanctions is top priority. Even though the mutual suspicion and animosity between both sides cannot be dispelled, a large-scale reshuffling of Hong Kong’s political leadership could be a promising start.
Otherwise, the diplomatic stalemate is narrowing the policy options for ending bilateral conflicts peacefully.
Joseph Tse-hei Lee is a professor of history at Pace University in New York City.
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