White House Weighs Economic Retaliation Against China As Hassett Warns "All Options Are On The Table"

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by Tyler Durden
Friday, May 22, 2020 - 12:25 PM

While Secretary of State Mike Pompeo slams China over its planned 'National Security' law, which clearly aims to suppress all political dissent and "foreign influence" in Hong Kong, while hinting that the special trade status enjoyed by the city-state might soon be revoked, White House economic advisor Kevin Hassett appears on CNN Friday to play 'bad cop' to Pompeo's 'good cop'.

As Huawei scrambles to find suppliers not based in the US, Hassett insisted that the White House is "absolutely not going to give China a pass" and is already considering any and all forms of economic punishment, including, presumably, more laws to force the de-listing of Chinese companies on US exchanges, or even the cancellation of US debt held by Beijing.

"We’re absolutely not going to give China a pass. All the options are on the table," Hassett said.

He added that the new law was a "scary move" as it shows Beijing is starting to care less and less about the objections of the West.

"And that’s going to be very costly to China and the people of Hong Kong. So, yeah, I think it is a very difficult, scary move and that it is something that people need to pay close attention to," he said.

Ultimately, a less-free Hong Kong will hurt the city-state's status as a financial hub.

"If Hong Kong stops being Hong Kong, the open place it is, then it is no longer going to be the financial center that it is."

For some reason, CNN chose not to share the clip of Hassett discussing the potential to economically punish China. However, it did share clips where he discussed the potential May unemployment rate, which Hassett said could be as high as 22%... well as a clip where he said there 'probably will' be another White House stimulus bill, something President Trump himself has said, though the president has noted that he's in "no rush" to pass the legislation.

In a separate interview with Fox Business, Hassett said China would see "a lot of economic harm" over this decision, and also predicted it would "backfire" against Beijing, and trigger "capital flight" problems in Hong Kong, potentially forcing a devaluation of HKD (much to the delight of one Kyle Bass).

"They’re going to see a lot of economic harm from what they’re doing, because if I had capital to invest, would you really want to invest it in a place where they’re basically, you know, sneering at the rule of law the way they are right now?” he said Friday in an interview on Fox Business Network.

“I would expect that they’re going to have serious capital flight problems in Hong Kong, if they follow through this, they will no longer be the financial center of Asia, and that they themselves will pay very very heavy costs,” he added.

Yesterday, China's National Party Congress supported a resolution to allow the Standing Committee - China's most-senior legal authority - to draft a new "National Security" bill to prohibit political dissent, "terrorism" and "foreign influence." Demonstrators during the unrest in Hong Kong last fall were frequently branded as "terrorists" by the mainland press.