"China Is Making Arrangements On Scenario Of No Deal", Global Times Editor Warns

One day after China warned the US that it won't make trade concessions if the US "plays the Hong Kong card", the famous twitter troll Hu Xijin, editor in chief of the nationalist, state owned Chinese newspaper Global Times, amplified the sentiment tweeting moments ago that "China is making arrangements on scenario of no deal" as a result of Trump's recent shift in strategy that links trade talks with the situation in Hong Kong. "The deterrence of the US not signing the deal on China is close to zero."

As a reminder, yesterday we reported that in a short commentary published by Communist Party mouthpiece People’s Daily late on Monday, the author said that events in Hong Kong were the internal affairs of China, and linking them with trade negotiations was a "dirty" aim.

“Making a fuss about Hong Kong will not be helpful to economic and trade negotiations between China and the US,” the commentary said. “They would be naive in thinking China would make concessions if they played the Hong Kong card” the oped cautioned. Chinese diplomatic observers also said Beijing considered the worsening situation in Hong Kong a sovereignty issue and would be highly unlikely to cave to Washington’s pressure.

The remarks followed a statement by US Vice-President Mike Pence on Monday which reiterated President Donald Trump’s demand to tie the largely stalled trade talks with Hong Kong’s deepening crisis, a day after hundreds of thousands of people marched peacefully in defiance of repeated intimidation from Beijing. In an address at the Detroit Economic Club on Monday, Pence said the Trump administration would continue to urge Beijing to resolve differences with the protesters peacefully and warned that it would be harder for Washington to make a trade deal with Beijing if there was violence in the former British territory. Separately, Mike Pompeo said that China should allow Hong Kong protesters the freedom to express themselves, in what China saw as clear interference in its own internal matters.

The Chinese article countered by saying that the top priority for Hong Kong was to stop violence and restore order, adding that US politicians should not send the wrong message to people creating chaos in the city. “In the face of political intimidation, we not only dare to say no, but also take countermeasures,” it warned.

Hu Xijin's Global Times also warned in an editorial on Monday that American political and public opinion elites should not harbour the illusion they could influence China’s decisions on Hong Kong.

“Because of the trade war, the US has lost the ability to impose additional pressure on China,” it said. “The US should stop its meaningless threat of linking the China-US trade talks with the Hong Kong problem. Beijing did not expect to quickly reach a trade deal with Washington. More Chinese people are prepared that China and the US may not reach a deal for a long time.”

Chinese analysts noted Trump appeared to have hardened his stance on Hong Kong in the past week or so, under growing pressure from US lawmakers and extensive media coverage of the increasingly violent protests.  Indeed, it was only a month ago when we reported that "Trump Abandoned Support For Hong Kong Protests To Revive Trade Talks With Beijing." Now that trade war is once again front and center, with Trump using it as leverage for further Fed rate cuts, the US president is once again refocusing his attention on Hong Kong.

As the SCMP writes, Trump initially focused on making a deal with China ahead of his 2020 re-election bid and adopted a hands-off approach by characterizing the protests as “riots” which were a matter for China to handle. Over the past few days, he suggested Chinese President Xi Jinping should resolve the situation by meeting with protest leaders and warned that any violence in the handling of the Hong Kong crisis would exacerbate difficulties for attempts to bring an early end to the trade war.

“Trump’s about-face on Hong Kong, from being neutral to piling pressure on Beijing, is largely due to domestic political pressure ahead of the presidential elections,” said Shi Yinhong, an international relations expert at Renmin University and an adviser to the State Council which is China’s cabinet.

But the Hong Kong issue concerns China’s sovereignty and the government’s ability to maintain stability, which in Beijing’s view is of superior priority. China cannot afford to make much compromise and will do everything to fend off interventions from abroad, in spite of all the risks and ramifications,” he said.

Shi also said none of the flashpoints in the bilateral ties – from Hong Kong, Taiwan, to the South China Sea and the denuclearisation of North Korea – had any easy solution in sight, with both sides showing little willingness to cooperate and accommodate the other’s interests. He said the increasingly hardline, confrontational approach on China by Trump – who faced mounting pressure in his bid for re-election, especially amid signs of a looming global economic recession – would only make a trade deal increasingly unattainable.

“Even if there were no Hong Kong crisis, could the US and China reach a trade deal? Even if Beijing caved into Washington’s pressure on Hong Kong, would it make it easier for them to bridge their glaring differences in the trade talks and cut a deal?”

Of course not, and since Trump is far more interested in keeping trade war simmering and on the verge of a substantial escalation if only to keep the Fed on its toes and ready for far more aggressive rate cuts, and even "some quantitative easing", that's precisely what the US president wants.