After Trump’s Hong Kong Democracy Act, China Is Still Winning

In a surprise move just before Thanksgiving, U.S. President Donald Trump signed the Hong Kong Human Rights and Democracy Act in support of the pro-democracy movement there. Given its inclusion of a requirement to reexamine Hong Kong’s special trade status each year, the move may be a Hail Mary to try to force China to the negotiating table on trade talks and reclaim some of the United States’ fading leverage as Chinese international influence grows.

Trump is likely desperate for a deal, because the ongoing trade war is hurting both the U.S. and Chinese economies. The United States is in a manufacturing recession, which hits hardest in key swing states such as Michigan, Pennsylvania, and Wisconsin, where Trump won by the narrowest of margins in the 2016 presidential elections and where he will likely need to win again in next year’s race. Over the coming year, the Federal Reserve Bank of New York puts the risk of recession at almost 40 percent, with Republican-leaning states having the weakest economic fundamentals. Trade frictions are a big part of it, and the grimmer the U.S. economic outlook, the worse Trump’s reelection prospects look.

Mounting signs of financial stress are also putting Chinese President Xi Jinping’s government in a difficult position. In the third quarter of 2019, China’s economic growth slowed to a near 30-year low of 6 percent, and it is forecast to drop even further in 2020. The People’s Bank of China’s annual Financial Stability Report, which came out in November, warned of the pressures facing China’s Big Four banks and announced that corporate debt had jumped to 165 percent of China’s gross domestic product in 2018. Although Xi does not face the stress of reelection, the Hong Kong pro-democracy protests, which have been ongoing since the spring, do put a strain on his administration.

Given China’s sluggish economic outlook and rising domestic political pressures, Xi just may be enticed to strike a deal with the United States on trade. Trump’s logic here is that China is stretched between potential political instability and a looming economic slowdown. By coupling these two issues, Trump has tried to bring Xi to the negotiating table to save his own political career. However, Trump’s last-ditch effort demonstrates that Xi is the one in control.

The tension between the United States and China over the Hong Kong protests and ongoing trade war is emblematic of a greater shift in power relations. China’s successful economic and geopolitical rise has positioned Beijing to push an agenda that is antithetical to the political and economic order Washington champions. China is no longer a rising power but rather a peer competitor with the United States. Meanwhile, the United States remains distracted by domestic political polarization, protracted foreign wars, and Trump’s gesture politics. As a consequence, U.S. disengagement coupled with increasing Chinese ambition offer a chance for Beijing to become the dominant player in the international system.

As a major player on the world stage, China has an agenda that is rules-based, but it opposes global liberal values. Beijing systematically pushes national stability and unity within its borders, while simultaneously wiping out ethnic minorities in Xinjiang and putting down protests in Hong Kong. And on the international front, China’s strategy of debt-trap diplomacy actually led to the financial destabilization of weaker states. Furthermore, when faced with the possibility of greater economic gains, China transgresses international rules and norms. In September, Beijing signed an updated comprehensive strategic partnership with Tehran, directly challenging Washington’s strategic objectives in the region by dismissing its sanctions against Iran. Under the new deal, Beijing agreed to invest $280 billion in developing Iran’s oil, gas and petrochemical sectors.

And it is unclear whether Trump’s bet on Hong Kong will pay off and allow the United States to reassert its position and force China to the negotiating table. After all, if China rolled tanks into Hong Kong to quell the persisting pro-democracy demonstrations, it seems unlikely that the United States would intervene. Since the protests began to swell in June, the Trump administration has sat on the sidelines. This sudden interest in democratic protests stands apart from the U.S. president’s previous statements praising Xi and other authoritarian leaders.

Xi understands as much, which means that the human rights bill only proves the weakness of Washington’s resolve on Hong Kong and trade—but also when it comes to confronting China in general. As Chinese structural power expands, it becomes increasingly difficult for Washington to exert pressure on Beijing. And at the moment, Trump is more impatient than Xi to cut a deal because of the looming 2020 election.

Still, China is not unstoppable, and the United States can pursue policies to contain Beijing’s ambitions. But that would require throwing off the Trump administration’s “America First” posture and putting forward a coherent agenda that prioritizes U.S. global leadership—something that requires a strategic middle ground between the engagement of Barack Obama’s presidency and Soviet-style containment.