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China’s Retaliation Over Hong Kong Bill Threatens US Stock Market Slump, Crypto Coins News

China’s Retaliation Over Hong Kong Bill Threatens US Stock Market Slump, Crypto Coins News


According to reports,China plans to retaliateas the U.S. House of Representatives passed a bill on Hong Kong, which is likely to lead to a U.S. stock market slump as it fuels uncertainty.

The bill – called House Resolution 543 – strengthens the relationship between the US and Hong Kong, criticizing China’s “interference” in Hong Kong and sanctioning officials deemed “responsible for undermining fundamental freedoms and autonomy in Hong Kong.”

The U.S. stock markethas seen a large upsurge in the past weekas both the U.S. and China announced significant progress in the trade talks after the agreement of a partial trade deal.

US stock market sees a big upsurge but China’s retaliation presents a new risk. | Source: Yahoo Finance

If China retaliates following the approval of the bill by the House as said by the Chinese government, it presents a new geopolitical risk for the US stock market, potentially placing theprospect of the second phase of the trade dealin danger.

China unhappy, stock market anticipated to be rattled

Prior to the passing of the bill, Geng Shuang, a Chinese Ministry of Foreign Affairs spokesman, said that China urges the US Congress to stop the advancement of the bill to prevent the worsening of China-U.S. relations.

He said:

“China strongly urges certain people in the US Congress to grasp the situation, immediately stop advancing the bill regarding Hong Kong and interfering in Hong Kong’s affairs to avoid further damaging China-U.S. relations. ”

A spokesman for the Hong Kong Special Administrative Region (HKSAR) Government reiterated the stance of the Chinese government on Oct. 14, stating thatforeign legislatures should not interfere with the internal affairs of the HKSAR.

Bad timing for the bill

Even after the agreement of a mini trade deal with China, strategists in the US said that the deal does not include sensitive areas of the trade talks including intellectual property protection, industrial policy reforms, and technology transfer that makes it difficult to warrant a comprehensive deal.

The comments of the official Chinese media and Hu Xijin, the editor-in-chief of the English and Chinese editions of the Global Times, seem to favor the prospect of emergence of challenges in signing a broader trade agreement in the short term, which is yet to be reflected by a US stock market that has rallied in the past two days.

The timing of the approval of the bill amidst relative uncertainty regarding the future of the trade talks and whether China will push through in signing a first phase trade deal is expected tocreate more pressure on the US stock marketdespite its recent rally ahead ofmajor earnings report releases.

China-US relations still the main focus of investors

According to LPL Research, theprospect of the US stock market is anticipated to improveas small steps in the US-China trade talks increase business confidence.

“The US-China trade conflict is unlikely to be resolved anytime soon, but we believe any small steps forward could increase business confidence and spark capital investment, lifting corporate profits,” read the report.

However, the retaliation of the Chinese government over the bill would leave the small steps towards a comprehensive deal in jeopardy, establishing a challenging environment for businesses to expand heading into 2020.

This article was edited byGerelyn Terzo,Samburaj Das.

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