China Spares Trade in First Retaliation to U.S.’s Hong Kong Law

(Bloomberg) -- China avoided measures related to trade in its first actions retaliating against the U.S. over a law supporting Hong Kong’s protesters, instead vowing to sanction some rights organizations and halt warship visits to the city.

Chinese Foreign Ministry spokeswoman Hua Chunying told a news briefing Monday that U.S. groups targeted for sanctions included the National Endowment for Democracy, Human Rights Watch and Freedom House. Hua said that China would also suspend further Hong Kong port visits by U.S. Navy ships over the legislation, which Trump signed into law Wednesday.

Hua didn’t provide details on how China would sanction the rights groups, which are already restricted from operating on the mainland. Similarly, China had already refused visits by a pair of American warships in August.

“This seems to be an empty threat because these groups don’t operate inside mainland China,” said Patrick Poon, a Hong Kong-based China researcher at London-based Amnesty International, which wasn’t named. “But if there are more tangible threats on staffers and representatives for these organizations operating in Hong Kong, it would be a serious clampdown on freedom of expression.”

China’s yuan weakened to 7.0449 per dollar, the lowest level in more than a week, following the foreign ministry’s statement. The currency pared that decline to 7.0412 as of 5:20 p.m. in Shanghai.

While China has promised retaliation since it became clear that U.S. lawmakers intended to pass the legislation, President Xi Jinping has limited options for hitting back exacerbating his own economic slowdown at home. China summoned the U.S. ambassador, Terry Branstad, over the law, prompting speculation that its passage could weigh on trade negotiations between the world’s two largest economies.

Hong Kong has become a persistent source of friction between Beijing and Washington since historic protests broke out almost six months ago, leading to often violent clashes between police and pro-democracy demonstrators. The legislation requires annual reviews of the former British colony’s special trade status under American law, as well as sanctions against any officials deemed responsible for human rights abuses or undermining the city’s autonomy.

“China urges the U.S. side to correct its mistakes and stop any words and deeds that interfere in Hong Kong affairs and China’s internal politics,” Hua told reporters Monday in Beijing. “China will take further necessary actions in light of the development of the situation to firmly safeguard Hong Kong’s stability and prosperity, as well as China’s sovereignty, security and development interests.”

The International Republican Institute, one of the groups mentioned by Hua, said China was trying to “scapegoat others for its own failures of governance.” The National Endowment for Democracy didn’t immediately respond to requests for comment, while Human Rights Watch declined to comment.

‘Very Tough’

“The people of Hong Kong may welcome our solidarity, but they do not need our leadership,” Michael J. Abramowitz, president of Freedom House, said in a statement, citing a landslide win for pro-democracy candidates in last month’s local elections. “The Chinese Communist Party’s most recent actions will only strengthen our resolve as we continue to oppose its well-documented efforts to undermine fundamental human rights.”

While signing the bills, Trump signaled that he didn’t want the broader relationship with China to veer off track. He expressed concerns with unspecified portions of the new law, saying they risked interfering with his constitutional authority to carry out American foreign policy.

Hu Xijin, the editor-in-chief of state-run Global Times, said last week that China was considering putting the law’s drafters a no-entry list. Hua made no mention of any such action.

Still, Zhu Feng, the dean of the Institute of International Relations at Nanjing University, called the countermeasures “very tough and unprecedented,” especially the decision to halt port visits. “For the first time in the four decades since China and U.S. established diplomatic ties, China has suspended the review of these requests,” Zhu said.

--With assistance from Tian Chen and Li Liu.

To contact Bloomberg News staff for this story: Dandan Li in Beijing at dli395@bloomberg.net;Shelly Banjo in Hong Kong at sbanjo@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Daniel Ten Kate

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With assistance from Bloomberg