James Carafano: Hong Kong protests, trade war with Trump rattle China’s leader – Expect surprises

The announcement Wednesday by the leader of Hong Kong that she is withdrawing legislation allowing people charged with crimes to be extradited to mainland China for trial might reduce massive protests that have rocked the city for nearly three months. But the protests aren’t over and aren’t the only crisis facing Chinese leader Xi Jinping.

Xi has controlled all levers of Chinese power for over a half-decade, ruling with an iron fist. He is simultaneously general secretary of the Communist Party, president of China and chairman of the Central Military Commission.

Yet the Chinese leader has never faced anything like the multiple high-profile challenges he must currently deal with – and it’s not at all clear he knows how to manage them.

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Xi has major problems on two fronts: a costly trade dispute with the U.S. and the mass protests in Hong Kong.

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The back and forth on trade includes billions of dollars in tariffs levied by the Trump administration on imports from China, and billions of dollars in tariffs levied by China on imports from the U.S.

Both nations – which have the two largest economies in the world – are suffering as a result.

President Trump is seeking major changes in the way China does business with U.S. companies, a halt to China’s violations of the norms of international trade, and an end China’s theft of intellectual property. Getting these things would be a major victory for Trump, but Xi shows no sign of giving in to all of Trump’s demands.

Xi’s problem in Hong Kong involves protests that have brought hundreds of thousands of demonstrators – as many as 2 million by some estimates – into the streets of the former British colony, which was returned to Chinese rule in 1997.

The Hong Kong protests have caused major disruptions in the functioning of the city of 7.4 million that is a major world financial center.

The Hong Kong crisis might be more manageable than the trade war – if only because Xi seems to give not one whit about the people of Hong Kong.

Xi might well be willing to let chaotic events roil the city. After all, doing this could encourage investments to flow to more “stable” places on the mainland that are firmly under the government’s thumb.

And there is little danger that the city’s democracy protests will spread to the mainland. The government has succeeded in whipping up criticism of the protesters both domestically and among the diaspora overseas.

Meanwhile, Xi seems content to manage the crisis in Hong Kong by remote control.

News reports that Hong Kong Chief Executive Carrie Lam would step down if the Chinese authorities would permit it ring true, as do her denials that she ever asked. Beijing would assuredly have rejected the offer; it is happy to keep a Hong Kong face on the repression.

Beijing is also happy to keep giving peeks at the ace up its sleeve. Recently, its Hong Kong and Macau Affairs Office released a statement that simply quoted the Basic Law that governs China’s oversight of Hong Kong. It gives Beijing the option of taking action, unrequested by Hong Kong, in the event of an emergency.

The Chinese have this figured out. They just need to drop hints and restate provisions of law –and let the international media do the job of intimidating protesters. As long as the demonstrations don’t spread to the mainland, Xi will not likely step in; he’ll just continue to not so subtlety remind Hong Kong where the real power lies.

Xi looks like the passenger in an out-of-control elevator – smashing all the buttons in the hope one of them does something.

Still, the question remains: How to resolve the protests in Hong Kong? And the answer seems no clearer in Beijing than it does on the streets of Hong Kong.

Lam’s announcement Wednesday that she is withdrawing the proposed extradition law that sparked the Hong Kong protests won’t placate all the protesters, but many will likely leave the streets. That will enable the Hong Kong police to breathe a bit easier.

Still, Hong Kong protesters said on social media Wednesday that they will continue demonstrating until their four other demands are met: an independent investigation of how police have responded to the protests; amnesty for protesters who were arrested; a popular vote to elect the chief executive and legislators; and an end to the government claim that people at a June 12 protest were “rioters.”

The coming days will tell us how much of an impact Lam’s actions will have on the future of the Hong Kong protests.

Some argue that allowing the extradition law to be withdrawn will be taken as a sign of weakness – that Beijing is backing down. Others will disagree, arguing that Xi made his point of who is really in charge.

The reality is what the mixed messages suggest: that this clearly is not part of some well-thought-out plan.

Meanwhile, on the trade front, Beijing continues to counter Trump’s tariffs with an admixture of aggression and conciliation – and a recently announced new round of lawsuits filed against the U.S. at the World Trade Organization.

Xi looks like the passenger in an out-of-control elevator – smashing all the buttons in the hope one of them does something.

It is not at all clear that China has a concerted strategy for resolving the trade dispute with the U.S., nor does any path of obstruction seem likely to provide a promising outcome. The Xi regime may hope that Trump will just give up or back off – but what are the odds of that?

China’s leaders could try to wait Trump out, hoping for a new occupant in the White House come 2021. But that means almost two more years of economic consternation and uncertainty for China. And for what? What if Trump is reelected? What if someone else is elected and is also tough on China?

Perhaps China’s leaders would be better off making a deal with the “devil” they know now. They seemed on that path a few months and then backtracked.

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While Xi has a firm grip on power, there are hardliners who counsel against a trade deal with the U.S., as there are those who fret over the damage the trade war has done to the Chinese economy. Xi seems to be straddling somewhere in the middle.

Xi has never faced a confrontation like this before. There hasn’t been a comparable trade dispute in modern times, not for China – or any other country.

Meanwhile, the U.S. is pressing China on other fronts as well: strengthening defense cooperation with Taiwan; refusing to accede to Beijing’s territorial claims in the South China Sea; considering deploying intermediate-range missiles in the region; lobbying against doing business with Chinese tech giant Huawei; building or strengthening partnerships in the Indo-Pacific; and questioning China’s Belt and Road Initiative, which involves Chinese investments in infrastructure projects around the world.

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And the world appears to be listening. Complaints about a heavy-handed China are much more common now than they were three years ago.

There is zero evidence that Xi was prepared for all of this. There is every indication that the regime is making up its response as it goes. No one knows how it will all turn out.

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