Senate majority leader McConnell: Further China crackdown on Hong Kong will intensify US-China relationship

Senate majority leader Mcconnell has commented on China’s crackdown on Hong Kong and said that it will intensify US-China relationship. This follows the news that the State Department accused China of turning its back on commitments to keep Hong Kong semi-autonomous, after Beijing announced it was proposing national security legislation that would effectively limit opposition activity there.

The legislation, which would effectively bypass Hong Kong’s own legislative process, is expected to ban all seditious activities in the semi-autonomous city, the South China Morning Post earlier reported. The proposal on the legislation will be formally introduced in the National People’s Congress on Friday, the first day of the legislature’s annual session.

The Wall Street Joiurnal has reported that US senators are “introducing a bipartisan bill that would sanction Chinese officials and entities who enforce the new national-security laws in Hong Kong, and penalize banks that do business with the entities.

Sen. Chris Van Hollen (D., Md.) and Sen. Pat Toomey (R., Pa.) said they had been working on the bill, which aims to defend human rights in Hong Kong and pressure China to preserve the territory’s special status. They said Thursday’s developments made the legislation more urgent.”

Market implications

The trade war saga continues…This time, trade wars are just the half of it. There is anger in the United States for the depression caused by an epidemic that might plague the country for years to come and potentially bring about the largest depression in the history of capitalism. More on that here.

A war of words is under war. Against this backdrop, US President Trump on May 14 threatened to cut diplomatic ties with China and there have been political unpleasantries exchanged ever since. Continued spats over civil liberties and Taiwan, and conflicts over Beijing’s territorial claims in the South China Sea should be paid attention to. At some stage, this will be factored into equity markets which are all too complacent to the pending ramifications.