Hong Kong Leader Carrie Lam Suspends Chinese Extradition Proposal…

~ Dance With The Dragon ~

Amid the furor from hundreds-of-thousands -perhaps millions- of protestors, Hong Kong leader Carrie Lam announces a ‘suspension‘ of the proposed extradition law that would have permitted extradition of Hong Kong residents to Chinese law enforcement.

Lam apologized on Sunday, for the way the Hong Kong government handled the proposal but she did not fully take the controversial law off the table.  The ripple effect of the proposal itself now calls into question the autonomy of Hong Kong, and many observers foresee it is now only a matter of time before China takes a tighter grip.

Currently Hong Kong is not subject to the same economic consequences within the U.S-China confrontation.  As long as Hong Kong is considered ‘autonomous’ they remain detached from U.S. tariffs and other measures targeted to China.  However, if China breeches the increasingly unclear barriers, judicial and legal systems intended to provide that autonomy – well, then the situation could change.  Hong Kong is tenuous at best.

HONG KONG (Reuters) – Hong Kong’s leader Carrie Lam apologized to its people on Sunday as an estimated 1 million-plus black-clad protesters insisted that she resign over her handling of a bill that would allow citizens to be sent to mainland China for trial.

[…] On Sunday, she apologized for the way the government had handled the draft law, which had been scheduled for debate last Wednesday, but gave no further insight into its fate.

[…]  The protests have plunged Hong Kong into political crisis, heaping pressure on Lam’s administration and her official backers in Beijing.

Critics say the planned extradition law could threaten Hong Kong’s rule of law and its international reputation as an Asian financial hub. Some Hong Kong tycoons have already started moving personal wealth offshore.

U.S. Secretary of State Mike Pompeo said President Trump would raise the issue of Hong Kong human rights at a potential meeting with president Xi Jinping at the G20 summit in Japan this month.  (read more)

This controversy couldn’t come at a worse time for Chinese Chairman Xi Jinping as many in the international community are beginning to question the scale of damage likely to increase as an outcome of the U.S. -vs- China confrontation.

President Donald Trump is applying massive economic pressure upon China in an effort to force a complete restructuring of trade terms that will have global implications.  The recent moves by Trump have significantly weakened the supply chain position of a Chinese nation that is dependent on raw materials, and the import/acquisition of technology systems.

As a consequence, on the geopolitical front – Beijing is now threatening any institution that would consider an exit from China, and simultaneously burning massive amounts of cash to subsidize their manufacturing position and offset any tariff impact.

As manufacturing investment begins to shift to South Korea, Vietnam, Japan, Philippines and alternate ASEAN nations, capital is starting to flow out of Hong Kong into safer financial systems within Tokyo and Singapore.

The situation for Chairman Xi is worsening daily and U.S. President Donald Trump has only just begun the consequence phase.

China has never faced a structural economic challenge so comprehensive and simultaneously so consequential.  Decades of central planning by Beijing is being deconstructed by President Trump, and the Chinese have yet to see the worst of it.

Historically the totalitarian Chinese response has been to drop the panda mask and turn to their Red Dragon authoritarian nature.  However, until now they have only faced internal challenges to their systems….

President Trump is applying external pressure, external challenges, and Beijing is discovering when they unleash the Dragon approach into an external global market that is adverse to Dragon instability, the economic systems do not acquiesce.  Instead, with more antagonism and threats the free West responds by quietly discontinuing the relationship.

Beijing has no frame-of-reference, culturally, to understand this dynamic.  Economic systems, based on freedom and capitalistic markets, are like free people… neither like to be threatened and controlled by oppressive regimes.

Stunning how consequential this is in the larger dynamic.

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