During the discussions in April 2019, I indicated that China had taken a concessionary approach toward the U.S. in the hope of swiftly resolving trade disputes that have continued between the two countries since March of last year. However, the U.S. has found this Chinese response unsatisfactory, and Chinese leader Xi Jinping is facing one of the most critical moments since his appointment as General Secretary .
U.S.-China tensions have since become increasingly serious and more complex. The Xi administration, their hands already full with the endless unpredictable curveballs that the Trump administration has thrown at them, has now been forced to deal with disputes outside of the commercial sphere.
1. Conflict over the “Fourth Round” of Additional Tariffs
China reported in early April that the U.S.-China minister-level meetings had ended smoothly , but the tides rapidly turned in May. On May 5th, Trump announced via Twitter that the Chinese response was too slow, and as a result, he would increase the 10% tariffs on 200 billion dollars’ (approximately 22 trillion yen) worth of Chinese imported goods to 25% by the 10th. This was how the so-called “third round” of tariffs began.However, a certain degree of calmness was still observed in China at this stage. For example, at a regularly scheduled press conference on May 7th, a spokesperson for the Chinese Ministry of Foreign Affairs announced that it was normal that the differences in perspectives were present on either side, and China would not avoid disagreements and was committed to continued discussions between the two nations . Also, from the Chinese Ministry of Commerce, top trade negotiator and Vice Premier Liu visited the U.S. on May 9th and 10th and announced his participation in the 11th round of minister-level meetings . However, these meetings failed to reach an agreement, and the Trump administration immediately initiated tariff hike measures on 200 billion dollars’ worth of Chinese imported goods. Furthermore, President Trump announced that a fourth round of tariffs of 25% was underway for 325 billion dollars’ (approximately 36 trillion yen) worth of goods, thereby putting a check on China. Were these tariffs to be implemented, virtually all Chinese imported goods would have punitive tariffs imposed on them. At this stage, China could not stay silent. There may have been dissenting voices from within the party against those who sought to establish a deal. On May 13th, China announced the initiation of retaliatory tariff measures with additional tariffs of 25%, 20%, and 10% from June 1st on 60 billion dollars’ worth of U.S. imported goods that already had tariffs imposed on them .
In the 1.5 months that followed, both the U.S. and the Chinese side hastened to arrange a summit meeting between the two nations. On June 29th, 2019, Presidents Xi Jinping and Donald Trump met for the first time in seven months at the opening of the G20 Osaka Summit, and according to Chinese reports, they announced that both nations had re-opened economic trade discussions on a foundation of equality and mutual respect and agreed that the U.S. side would not impose additional tariffs toward Chinese products, and economic trade delegations from both sides would meet to concretely discuss the problems . As this was effectively a victory speech by the Chinese side, the author was left to wonder what the aims of President Trump were, who acted as the concessionary party.
On July 29th, immediately prior to the opening of the next round of minister-level meetings as agreed upon at the summit meeting, and as if building on its prior success, the CCP-run publication People’s Daily eported the following: “Ships carrying several million tons of U.S.-produced soy are heading to China, and simultaneously, the U.S. has announced the removal of additional tariffs on a total of 110 categories of Chinese-produced U.S.-imported industrial goods, and U.S. companies intend to continue supplying goods to Chinese companies. Both sides are intending to implement the consensus agreed upon at the Osaka Summit based on these elements”. In this way, the Chinese side expressed their hope of progress based on the summit meetings held. However, the only thing that the two sides agreed upon during the meetings held immediately after these events was that they would meet again in the U.S. in September, and yet again, both sides failed to reach an agreement.
On August 1st, Trump further destabilized the fragile order. He announced via Twitter that the fourth round of punitive tariffs in the form of additional 10% in duties on 300 billion dollars’ (approximately 33 trillion yen) worth of Chinese-imported goods would commence on September 1st . Perhaps irritated by the lack of progress at the minister-level meetings in Shanghai, President Trump might have also thought that the U.S. had compromised earlier, and now it was China’s turn to do so. However, as expected, there was a strong opposition from the Chinese side. On August 2nd, the spokesperson for the Ministry of Commerce announced, “The measure taken by the U.S. side runs counter to the consensus agreed upon between the two nations in the summit meeting in Osaka, derails progress, and has no benefits with regards to solving this problem. China has strongly disapproved of this and is firmly opposed to this situation. If the U.S. is to bring the additional tariffs into practice, then China will be forced to take the necessary measures in the form of retaliatory tariffs and firmly protect the core and fundamental interests of the state and the people of China. All responsibility of these actions falls squarely on the shoulders of the U.S. China believes that there are no winners in a trade war, and although we neither wish to fight nor fear a fight, at times there are unavoidable conflicts. We hope that the U.S. will right their wrongs, fix this problem on a basis of equality and mutual respect, and return to the right path forward”. Furthermore, on the early morning of the 6th, a temporary stop on the purchase of all agricultural goods from the U.S. was announced.
The time for an “unavoidable conflict” arose. On August 23rd, the Chinese government announced the following retaliatory measures: 5% or 10% additional tariffs on 5078 different types of the U.S.-produced products for a total of 75 billion dollars, starting on either September 1st or December 15th; the resumption of 25% or 5% additional tariffs on the U.S.-produced automobiles and its parts (a stop starting January 2019 was agreed upon in the U.S.-Chinese summit meetings in December 2018). Meanwhile, the U.S. simultaneously announced the increase of additional tariff rates to a maximum value of 30%. This solicited strong opposition from the spokesperson for the Chinese Ministry of Commerce, who announced that if these misguided measures were not immediately stopped, the U.S. would then shoulder all the blame and consequences .
The table below summarizes the U.S.-China tariff conflict since July of last year.
The U.S.-China Additional Tariff Measures Reference Sheet (As of September 9th, 2019)
In this way, the Trump administration sought to destabilize the Chinese side since May through the threat of a fourth round of additional tariff measures. However, with China labeled as a currency manipulator on August 5th, the zone of conflict between the two nations extended from that of trade to that of finance. Furthermore, this time, the conflict had already extended to political problems. For China, these were the “internal problems” of Taiwan and Hong Kong.
2. Weapons Provisions and the Extradition Law Amendment Bill
Already rather supportive of the Democratic Progressive Party (DPP) of Taiwan, the Trump administration formally announced to the U.S. Congress that they would be selling 2.2 billion dollars’ (approximately 242 billion yen) worth of weapons, such as tanks, missiles, and ammunition, on July 8th and a total of 66 new F-16V fighter jets (worth 8 billion dollars/880 billion yen, including related equipment) on August 20th to Taiwan. As expected, there was strong opposition from China. In response to this purchase deal, a spokesperson for the Chinese Ministry of Foreign Affairs announced at a regularly scheduled press conference on August 21st, “The U.S. supplying of weapons to Taiwan significantly interferes with the internal affairs of China and hurts its sovereignty and guarantee of safety. China is firmly opposed to this deal and has lodged strict complaints. We demand that the U.S. immediately cancel their weapons deal with Taiwan and terminate all military communications with Taiwan. Otherwise, the U.S. will be forced to shoulder all consequences stemming from these actions”. The extent of anger experienced on the Chinese side was evident given that they lodged a complaint against the U.S. and did not merely stop at a simple request.
Incidentally, with regard to the U.S.-China relations, although Taiwan had consistently been a thorn in the side of China, Hong Kong was almost never a serious source of tensions between the two nations. This changed after August. How these changes occurred is outlined below.
As is well known, the Hong Kong situation has become increasingly chaotic since April, but its starting point lies in the proposed amendments for the two bills, which are the “Fugitive Offenders Ordinance” and the “Mutual Legal Assistance in Criminal Matters Ordinance” (hereinafter, these two bills combined will be referred to as the “Extradition Law”).
The impetus for the Hong Kong government to pass this Law Amendment Bill was due to the fact that in February 2018, a man from Hong Kong murdered a woman from Hong Kong in Taiwan, after which he fled to Hong Kong and thus avoided prosecution from the Taiwanese authorities. The man was not prosecuted because extradition between Hong Kong and the People’s Republic of China (PRC) and/or its administrative regions was excluded from the Extradition Law at the time of the incident. Following requests from the victim’s mother to amend the bill, the Hong Kong government proposed an Extradition Law Amendment bill in February 2019, which then resulted in a public outcry. The reason being since the position of Hong Kong was that Taiwan was a part of China (i.e., PRC), if an amendment was made that allowed for the extradition of Taiwanese citizens to China, the same would be applicable to Hong Kong citizens, and these citizens may be prosecuted by the Chinese law-enforcement authorities.
The reason why many people in Hong Kong were apprehensive and fearful of the Chinese law-enforcement was due to the history of China ignoring human rights. One past example is the “Causeway Bay Books disappearances.” In October 2015, five associates of the Causeway Bay Bookstore, which handled books banned by China, disappeared one after the other. However, according to the testimony of one of these five in the following year, it was made clear that this was a deliberate arrest and detention by the Chinese authorities to drive the bookstore out of business, and that one of these individuals was kidnapped from Hong Kong.
The Anti-Extradition Law Amendment Bill protests that emerged within this context gradually changed in their scope and nature with the response of local law enforcement and their mutual interactions.
The first change was that of the protests growing to a massive scale. Sunday protests were established against the amendment on June 9th, but a total of 1.03 million individuals participated, which, according to the Civil Human Rights Front (CHRF) acting as the organizing group, far exceeded the demonstrators that were present at the end of April. This was the largest protest in Hong Kong since its transfer from the British to China in 1997. In response, Chief Executive and top Hong Kong government official Carrie Lam called an emergency press conference on the 15th and took a concessionary step of suspending the extradition bill indefinitely, but also simultaneously stated that the extradition bill would not be suspended. The next day, that is, on June 16th, a large-scale demonstration was organized that demanded not just suspension but full withdrawal of the bill, with a total participation thought to be around 2 million people. Two days later on the 18th, Chief Executive Lam called another emergency press conference and announced that the amendment bill would be effectively dropped, but this was no longer enough to satisfy her opposition. Meanwhile, at every stage, the Chinese government, which served as the rear-guard of the Hong Kong government, announced that “they fully supported the amendment of the two bills proposed by the Hong Kong specially administered regional government” (June 10th), and that “they supported, respected, and understood the suspension of the law amendment bill” (June 15th) and sought to defend the position of the Hong Kong government .
The second change was the radicalization of the protesters and inciting violence and riots among a fraction of protesters. On July 1st, the 22nd anniversary of the British transfer, approximately 550,000 individuals participated in the protests, but a small section of these incited violence and occupied the Legislative Council Complex (legislative body of Hong Kong). Chief Executive Lam held an emergency press conference early the next day, that is, on the 2nd, announcing that those involved in the occupation would be held criminally liable, while also taking further conciliatory measures by announcing that the “extradition bill was dead” and the “amendment bill had ended in complete failure” on July 9th. However, these half-hearted statements only served to provoke the protesters further . Incidents where thousands of citizens occupied the arrival lobby of the Hong Kong International Airport and forced numerous cancellations became a regular occurrence end of July onwards. Given this situation, the Chinese government’s response became harsher in tone. A spokesperson for the Hong Kong and Macau Affairs Office, which is overseeing the Hong Kong situation, announced that the occupation of the Legislative Council Complex was “trampling on the rule of law in Hong Kong, destroying its social order, fundamentally disruptive to the city, and a direct challenge to the ‘One Country, Two Systems’ principle”  Furthermore, the same spokesperson announced on August 12th that an incident that occurred the day prior, where a small number of protestors threw gasoline bombs at police officers and induced burns, was deemed a burgeoning sign of terrorism, and the Chinese felt utter indignation and a strong reproach to this behavior .
The third change was that the demands of the protesters (or the pro-democracy group) had increased in number and complexity. The initial demand of the protesters was the withdrawal of the amendment bill, but these demands eventually numbered five in total, which are as follows: the complete withdrawal of the extradition bill, retraction of the characterization of the protests as “riots” by the government, the exoneration of arrested protestors, the application of an independent commission of inquiry into police conduct and use of force during protests, and the resignation of Chief Executive Carrie Lam and the implementation of democratic Chief Executive elections. According to Agnes Chow Ting, who was one of the leaders of the protest movement, these demands were already sent out prior to the 2 million-people protest on June 16th . Finally, on September 4th, about 3 months after the expansion in scale of the protests, Chief Executive Lam made a televised appearance and announced the formal withdrawal of the Amendment bill. Although seen as a major concession from the government, it was profoundly difficult to imagine that this action was enough to satisfy the demands of the protesters, given their increasing demands and distrust toward the Hong Kong government.
Always considering the never-ending Hong Kong problem as an internal affair, China has, from an early stage, viewed with suspicion the “meddling” in its affairs by the U.S. and the U.K. (of which Hong Kong was a former colony). On June 26th, at a regularly scheduled press conference of the Chinese Ministry of Foreign Affairs, immediately prior to the G20 Osaka Summit, a spokesperson warned that “there was no possibility that the G20 would discuss the Hong Kong situation. Furthermore, the Chinese government would never agree to a discussion of the Hong Kong situation at the G20. This was entirely a Chinese internal affair” .
However, after August, a rivalry began between the U.S. and China over Hong Kong.
On the 1st, Xinhua News Agency conducted an interview with the Central Foreign Affairs Commission Office Director Yang Jiechi, who stated that “certain western governments, like the U.S., had meddled in the internal affairs of China by ordering high-ranking officials of their own countries to become close to those most responsible in the Hong Kong chaos”  and made clear their suspicions toward the U.S. In response, a spokesperson for the U.S. Department of State announced on the 8th that the Chinese government had released the private information of families of diplomats who were close to Hong Kong pro-democracy activists across pro-Chinese media and labeled China as a violent administration. China then immediately demanded that the U.S. stop meddling in their internal affairs . However, afterward President Trump himself said that “a deal would become extremely difficult if China had a violent response like that in Tiananmen [incident]”  and applied pressure on the Chinese by threatening consequences on economic negotiations.
Hong Kong is a world-class international city and a financial center, and it is a natural right of third-party governments and companies to voice their fears and apprehensions and gather information given that the “One Country, Two Systems” principle is an international commitment of China. Therefore, it is not a good look for the Chinese government to uniformly label all of these actions as “meddling in internal affairs.”
To begin with, there should be no acceptable circumstance under which violent behavior should be affirmed or acknowledged. However, in the current situation, the citizens of Hong Kong strongly sympathize with the protestors, making a logically-based decision difficult. According to public opinion surveys conducted by Ming Pao from August 7-13th, if the chaos of the protest affected the economics of Hong Kong, 56.8% of the individuals responded that the fault would lie with the Hong Kong government, as opposed to 8.5% of the individuals who responded that fault would lie with the protesters . Despite this, the escalation of violence gives the Chinese government a justification to forcefully intervene – the extreme case being military suppression using the People’s Liberation Army. However, there is a reason why China hesitates to take this action. This is due to the influence this action would have on the Taiwan situation.
Originally, the “One Country, Two Systems” principle was conceived with the objective of Taiwanese reunification. This initiative lost considerable momentum following democratic reforms in Taiwan in the 1990s and strong anti-Taiwan policies in China. A major objective of China, who has long sought reunification, was for the Kuomintang (who promoted the “One China” policy) to obtain power in the Taiwanese presidential elections in January of next year. Therefore, in order to achieve these objectives, China could not easily restore order in Hong Kong via violent means. A violent response would greatly anger the Taiwanese population and only serve to help the DPP administration of Tsai Ing-wen, who holds a hardline stance against China.
Over the course of a year and a half, the U.S.-China stand-off that started with a trade war has extended to the financial sector and the Hong Kong/Taiwan problem and now is poised to become a full-fledged conflict between the two nations. Although dealing with the Hong Kong situation is an urgent concern, China also must acknowledge that it is unrealistic to remove the U.S. element in dealing with this situation. The resolution of such a problem is perhaps at a stage where only the leaders of each nation can resolve it through political means.
It is unlikely to expect many changes in Trump’s anti-China strategies and actions, as he is only facing presidential elections over a year from now and values economic advantages from deals than taking responsibility in his statements. However, an unexpected outcome may result if, under the surface, Trump deems it prudent to make a deal with China by helping mediate the Hong Kong situation, which would then be used as currency to result in a breakthrough regarding the trade war impasse and in turn help his re-election chances.
So, how can Xi Jinping begin to untangle this complex and multi-factorial U.S.-China relationship and the current Hong Kong situation? The author believes that there are two completely different possibilities regarding this situation.
The first possibility is that the Xi administration may take a hardline approach to the situation. The first basis for this possibility is based on the statements made by the spokesperson for the Hong Kong and Macau Affairs Office at a press conference on September 3rd: “The Chinese central government will not accept that the chaos in Hong Kong will last indefinitely. If the situation in Hong Kong continues to deteriorate to a point where the Special Administrative Region cannot be controlled and separatist thugs threaten the sovereignty and safety of the government, we will not look on idly” . By defining the Hong Kong situation as one run by “separatist thugs,” China can resort to military force at any stage of their choosing. The second basis for this possibility is the political tendency of Xi Jinping as a leader. As can be seen in his anti-corruption campaign, he particularly emphasized an “end-justifies-the-means” approach and the stability that comes with it. Furthermore, there is likely little change in his confidence in achieving the objective of being economically equivalent to, and even exceeding that of, the U.S. by mid-century. Thus, the author believes that it is a realistic possibility that Xi Jinping may take a hardline approach if he deems that forcing “stability” by committing his military forces to the situation will not isolate the PRC. There is a non-zero probability that he might think, “It only took a few years to overcome even the difficult times that arose from the Tiananmen Incident in June 4th, 1989, back when our influence in international society was limited. We also have the Belt and Road Initiative, and we would be able to overcome the fallout in one or two years”. The fact that Xi Jinping repeatedly emphasized the need for a long-term struggle  in his televised appearance on September 3rd lends credence to the fact that he is considering a hardline approach to this problem.
The second possibility is that he may seek to control the situation by taking a more concessionary approach. It is the author’s opinion that China has already taken this path. The first basis for this possibility is the change observed in the Chinese response to the situation. As mentioned above, while repeatedly announcing a hardline stance, the Chinese government has already gone from an announcement of “we will fully support the amendment of the two bills proposed by the Hong Kong specially administered regional government” to “we support, respect, and understand the suspension of the law amendment bill,” within the span of the single month of June, making clear that they are not adhering to the position of a rapid implementation of the amendment bill. The second basis for this possibility is that the announcement of the withdrawal of the Amendment bill by Chief Executive Carrie Lam on September 4th would not have been possible without the prior approval of the Chinese central government (although, it is unlikely that the authorities would have thought that the situation would have been resolved with this single statement).
Many have interpreted this announcement as a loss on the part of the Chinese government . It is true that this can be interpreted as such from a third-party observer. However, what we want at present is not just a simple criticism but an active position that contributes to the recovery of the regional and international situation. To begin with, the Chinese Communist Party, who view themselves as a party without error, would never acknowledge that the results stemming from their policies was a clear “mistake.” Even in cases where certain corrections need to be made, most of those are referred to as “adjustments” and that a new, “correct path” will be followed; thus, imbuing the party with a certain degree of positivity. As such, is it necessary to have a plan for effectively taking advantage of this characteristic and to direct the situation into one that is favorable for us?
The author believes that if China wants to earn respect from international society as a responsible nation, it must exhibit a certain degree of “magnanimity.” If President Xi Jinping wanted to support the Hong Kong situation, he could have maintained the “One Country, Two Systems” principle and de-escalated the situation by acknowledging Chief Executive Carrie Lam’s “resignation” (in reality a “dismissal”), which would have in turn resulted in improved relations with the U.S. However, despite the numerous solid political foundations established by Xi Jinping and his leadership, there would be numerous challenges associated with making such a “weak” decision. Therefore, using recent improved Japan-China relations as an opportunity, it is important for us to help the Chinese understand, via numerous routes and opportunities, that the implementation of a flexible approach (i.e., the second possibility outlined above) is a self-preserving and self-strengthening step. It is the author’s belief that these types of efforts will greatly contribute to the peace, stability, and progress of international society.
8 “第十二轮中美经贸高级别磋商在上海举行.” People’s Daily. August 1st, 2019.
9 The Office of the United States Trade Representative (USTR) afterward announced that regarding the fourth round of punitive tariffs imposed on virtually all Chinese products, additional tariffs on 555 products, including smartphones and note tablets, would be delayed until December 15th.