Doldrums

When Donald Trump signed the bill supporting the democratic aspirations of the people of Hong Kong, he did not do it out of strong conviction. The ultimate transactional politician, Trump is never swayed by profound conviction.

He signed that bill reluctantly. That shows in the apologetic cover letter sent to Chinese President Xi Jinping.

Trump simply had no choice. The US Congress passed the bill by overwhelming majorities. That made this piece of legislation effectively veto-proof. Trump would not dare seriously political injury rejecting this bill.

He, of course, would not dare antagonizing the Republican majority in the US Senate. With impeachment looming at the House of Representatives, Trump’s political life literally hangs by the whim of Republican senators. From hereon, Republicans could ask anything of Trump and the American president can only grudgingly oblige.

With impeachment looming, the Trump presidency is at its most vulnerable point. All the Twitter bluster he unleashes could not conceal this. Signing on to that piece of legislation that would surely infuriate Beijing is evidence of Trump’s political weakness.

If he were more adept at his job and actually had leverage, Trump might have aborted this bill while it was working its way through the legislative mill. But with diminished political leverage, Trump found himself with no choice but to sign it when it got to his desk.

No deal

For weeks, Trump tried to manipulate the behavior of the stock markets by promising a deal that would end the trade war with China was forthcoming. The deal never materialized.

Now, with Beijing interpreting the Hong Kong bill recently signed by Trump as hostile act, a new hindrance to a trade deal emerges. The bill was signed only days after pro-democracy groups won 90% of all contested seats in these elections. Beijing was still reeling from this major setback when Trump signed the Hong Kong bill.

The trade tensions between the US and China take a tremendous toll on the whole global economy. Oil prices zip back and forth, depending on fresh indications about a trade deal. Stock markets are under pressure from distressing manufacturing data. Investment decisions are on hold until there is clarity about trade prospects.

Contrary to what goes on in Trump’s mind, American consumers pay for the tariffs imposed on Chinese imports. American farmers suffer from the retaliatory measures Beijing undertook in response to Trump’s tariff war.

Although he may not want to admit it, Trump should be wishing for an end to the trade war. It will hurt his reelection chances next year.

China, too, suffers from the effects of trade tensions. Her economic growth has slowed. Manufacturing data in the world’s second largest economy distresses. Now there is a real possibility of disinvestments happening as large companies try to avoid the tariff barriers by moving plants elsewhere.

Yesterday, our own stock market was lackluster – threatening to continue three weeks of losses. The poor performance is blamed on discouraging manufacturing data from Japan and South Korea.

For as long as trade tensions remain, the entire global economy will be kept in the doldrums. There are no strong positive leads to guide investors. There is little optimism in the air.

Yet, there is little anyone can do to break out of this deadlock.

Trump has imposed difficult conditions on the trade talks with China. Beijing, of its part, appears to be willing to ride out a long period of difficulty rather than yield to what it perceives to be prejudicial demands made by the Americans.

Bad timing

The law supporting the pro-democracy movement in Hong Kong could not have come at a worst time.

Negotiations between the American and Chinese panels on ending the trade war appear to be on its advanced stages. But with Beijing’s indignant response to what it sees as intervention in its domestic affairs, the talks will at the very least suffer delay.

To be sure, the bill reaffirms America’s commitment to democratic values. It is the only foreign policy initiative of the Trump years that is actually driven by values concerns – even if the American president himself might not be animated by the same values.

But this bill does throw a monkey wrench into the complicated negotiations that could bring down tariff barriers and reinvigorate trade. This is the reason why the response from most countries have so far been muted.

American politicians may emphasize the aspect that this bill represents a strong statement on behalf of democracy in a city-state that has become the most visible flashpoint in the struggle between tyranny and freedom. But most Asian capitals are really more concerned about winning some relief from the adverse effects of the trade war between the world’s two largest economies.

Note that the Philippine government has made no comment on Hong Kong people’s struggle for democracy. We have not commented either on the US Congress’ latest act to reinforce democratic practices in Hong Kong.

We are following a most pragmatic course on this matter. We hope for the continuity of the status quo in Hong Kong and the continued warm relations we have with Beijing. Like most everybody else in the region, we wish the trade tensions to subside so that we can all revive our growth engines.

Suddenly, it seems, democracy has become an inconvenient concern in the face of Beijing’s obsessive reaction to anything that might distantly resemble interference in her internal affairs. The stakes are stacked against a foreign policy position that is sustained by values.