President Donald Trump on Friday leveled an extraordinary broadside at the Chinese government, accusing it of a comprehensive “pattern of misconduct” and ordering U.S. officials to begin the process of revoking Hong Kong’s special status under U.S. law.
The president did not outline a deadline for the historic action. But if carried out, it would mean that the United States would no longer treat Hong Kong and China as separate entities for the purposes of extradition, customs, trade and visa issues, he said. And the announcement could include sanctions on Hong Kong or Chinese officials.
In Rose Garden remarks, Trump alleged that the Chinese government covered up the coronavirus outbreak and instigated “a global pandemic that has cost more than 100,000 American lives and over 1 million lives worldwide.” The president also attacked the World Health Organization as effectively controlled by Beijing.
“We will today be terminating our relationship” with the WHO, the president said, adding that the organization’s more than $400 million annual U.S. contribution will be diverted to other health groups.
The president later issued a proclamation to protect sensitive American university research from Chinese spying and to bar an unspecified number of Chinese nationals from entering the United States for graduate study. He also directed an administration working group headed by Treasury Secretary Steven Mnuchin to evaluate Chinese corporations listed on U.S. financial markets as potential targets of future restrictions.
The moves seemed certain to intensify growing U.S.-China tensions, though investors on Friday took them in stride.
The president’s comments were as notable for what he did not say. There was no mention of his irritation with China’s failure to quickly increase purchases of American goods as required by the trade deal he signed in January. He also made no direct reference to Chinese President Xi Jinping, even as he said “the world is now suffering as a result of the malfeasance of the Chinese government.”
In one sign of Trump’s increased fury with the world’s second-largest economy, on Friday morning he tweeted simply: “CHINA!”
His formal Friday announcement – while long on harsh rhetoric – was short on details. The president reiterated some familiar grievances, blaming the Chinese for stealing American trade secrets and jobs and assailing his predecessors for allegedly letting them get away with it.
He expanded his indictment of the Chinese government to include its program of island construction in the South China Sea, a national security concern he rarely addresses.
“The Chinese government has continually violated its promises to us and so many nations,” he said.
Trump also stopped short of taking concrete action against the U.S.-listed Chinese companies he said posed “hidden and undue risks” for American investors. The Securities and Exchange Commission and other regulators have complained for years about China’s refusal to grant access to their companies’ audit records.
As of last year, 156 Chinese companies – including 11 with significant government ownership – traded on U.S. markets, according to the U.S.-China Economic and Security Review Commission, a nonpartisan congressional body.
After Trump’s remarks, Senate Minority Leader Charles Schumer, D-N.Y., suggested the president was trying to use China to distract from the pandemic and battered economy.
“President Trump’s Rose Garden event just now was pathetic,” he said. “It perfectly encapsulates his inability to lead when our nation needs it most. The only question is whether President Trump is afraid to lead or just doesn’t know how.”
Trump’s announcement followed Secretary of State Mike Pompeo’s statement earlier this week that Hong Kong was no longer sufficiently autonomous from mainland China to deserve separate treatment. Under the 1997 handover agreement with the United Kingdom, China agreed to preserve the former British colony’s democratic system for 50 years. Xi’s decision to impose security legislation on Hong Kong directly rather than by working through the territory’s local legislature may mark the collapse of that “one country, two systems” approach.
Some advocates of a tougher U.S. approach to China were disappointed by the president’s 10-minute statement.
“They didn’t do anything with regard to Hong Kong. His Hong Kong comments could have been issued as a statement a week ago,” said Derek Scissors, a China specialist at the American Enterprise Institute. “The administration has absolutely considered specific actions since the NPC proposal was made public but decided not to announce a single one.”
Caught in the middle of the deepening U.S.-China dispute are more than 1,350 U.S. corporations with offices in Hong Kong. The erosion of the city’s freedoms, including an independent judiciary, threatens to turn one of the global economy’s financial centers into just another Chinese city and calls into question the rationale for such a sizable commercial presence there.
The Chinese National People’s Congress, the country’s rubber-stamp legislature, on Thursday approved a plan to impose national security legislation in Hong Kong. The move was denounced in a joint statement by the United States, Canada, Australia and United Kingdom as in “direct conflict” with China’s promises in 1997 when it regained sovereignty over the former British colony.
“The United States may well have to do something the market doesn’t like in light of its longer-term interests,” said Patrick Chovanec, economic adviser for Silvercrest Asset Management in New York. “But there is concern about whether the U.S. is in a spiral of escalation with China on several fronts.”
The president’s visa move targets Chinese graduate students in the United States who have worked, studied, or been employed by entities linked to China’s efforts to “acquire or divert” technology for the People’s Liberation Army.
It is not immediately clear how many of the 350,000 Chinese students in the United States will be affected. And the announcement is expected to draw strong pushback from U.S. universities; some are heavily reliant on the full-fee tuition payments from Chinese students.
Over a 10-year period, the People’s Liberation Army dispatched 2,500 scientists and engineers to study overseas, focusing on democracies like the United States, according to a 2018 report by the Australian Strategic Policy Institute, a nonpartisan think tank.
In January, the FBI arrested a 29-year-old Boston University student, accusing her of failing to disclose on her visa application that she was a lieutenant in the PLA.
Friday’s action represents only the administration’s latest slap at Beijing. The president earlier this month pushed a federal retirement pension board to abandon plans to invest in Chinese securities. And the Commerce Department tightened limits on Chinese telecom giant Huawei’s ability to purchase American computer chips.
Just four months after Trump celebrated a partial trade deal with China, marking an apparent truce in a two-year diplomatic conflict, relations between the two countries have plummeted. The president has been openly displeased with China’s failure to quickly fulfill the trade deal’s terms, including massive additional purchases of American crops, energy products and manufactured goods.
Trump’s decision to “terminate” the United States’ relationship with the World Health Organization comes after repeated threats to act.
Of the $893 million the United States sent in the 2018 and 2019 funding period, $237 million was an “assessed contribution” – a type of membership fee that may prove hard to cut without congressional approval.
At greater risk is what’s known as the “voluntary contribution,” that is money provided to U.S. agencies for health efforts and then given to WHO programs. The largest share of this money goes to polio eradication, with large chunks to fight vaccine preventable disease, malaria, tuberculosis, HIV/AIDS and the provision of basic health care.
The prospect of cutting U.S. funding for public health issues like polio in the middle of the pandemic drew immediate fire. Patrice Harris, president of the American Medical Association, said the action “serves no logical purpose and makes finding a way out of this public health crisis dramatically more challenging.”