Rabobank: Every Member Of Congress Is Now Open To Arrest If They Visit Hong Kong

Rabobank: Every Member Of Congress Is Now Open To Arrest If They Visit Hong Kong

Tyler Durden

Thu, 07/02/2020 – 10:55

Submitted by Michael Every of Rabobank

Yesterday the Global Daily noted that markets were under a Sword of Damocles in terms of the rapid deterioration in US-China relations. Markets were, of course, happier to focus on what might be a virus vaccine, despite the fact that the actual impact of the virus does not bother them, and on more upbeat US data, which runs against the trend in the virus that they aren’t bothered about.

Around 12 hours after publication came news that the White House plans to proceed with “harsh” Magnitsky sanctions against members of the Chinese Communist Party it sees as responsible for human rights abuses in Xinjiang. That decision may have been prompted by the US seizure yesterday of a cargo of 11.8 tonnes of human hair for wig-making which it alleges may have been sourced from “re-education” centres in Xinjiang holding ethnic Muslim populations: the US does not seem to believe Uighurs are all being taught hair-dressing. Beijing has already made clear it will be furious if this occurs: could it perhaps go so far as to target US firms in response?

Yet within hours that threat was eclipsed by the unanimous passage by the US House of Representatives of the bill already passed in the Senate to impose mandatory Magnitsky sanctions on Chinese banks who do business with officials implementing Hong Kong’s new national security law. Constitutionally, the Senate now needs to pass the bill again, which it appears will take no time at all given the sentiment in DC, and it then goes to President Trump with a veto-proof majority behind it – meaning it WILL become law. Perhaps even as soon as this this week, but certainly in the not-too-distant future. Underlining the present political dynamic, each member of Congress has, in all likelihood, broken said Hong Kong law by their actions and could technically be open to arrest if they were to visit.

The language of the bill, which is now crucial, states: “If the Secretary of State determines that a foreign person is materially contributing to, has materially contributed to, or attempts to materially contribute to the failure of the Government of China to meet its obligations under the Joint Declaration of the Basic Law” then the US is to impose sanctions on it. That is broad enough to cover anyone in the Chinese or Hong Kong government, security services, and/or civil servants. The bill also states any foreign financial institution that conduct “significant transactions” with anyone in the Hong Kong government or the National People’s Congress (NPC), or in the Hong Kong China Liaison Office, will likewise be cut off from the US financial system.

How are these individuals banked now? By Chinese banks. Will the NPC or Hong Kong government really be paid in cash from now on? Hardly. In which case, the Chinese banks that bank them would, under this bill, be cut off from USD in exactly the same way Iran has been. It is there in black and white. There might well be a lead time of a year to allow global positions to be unwound – but that would be the final destination.

Those thinking that in five months Joe Biden will act differently might also want to note that Nancy Pelosi pushed the bill too, and that yesterday he stated: “Beijing’s new national security law –enacted in secret and sweeping in scope– is already dealing a death blow to the freedoms and autonomy that set Hong Kong apart from the rest of China”; that he would “prohibit US companies from abetting repression and supporting the Chinese Communist Party’s surveillance state”; and would “impose swift economic sanctions” if China dared to use the law on US citizens or firms.

The thread holding the Sword of Damocles is fraying faster than any virus vaccine is likely to arrive, and will continue to do so whether we get one or not.

Meanwhile Australia added its name to the list of countries saying they will take Hong Kongers wishing to leave; that after the UK confirmed it will indeed open a path to citizenship for up to 2.9m people. This should matter to markets too, even in their amoral liquidity-addled glory. While there is unlikely to be a sudden flood of exits (it’s hard to say goodbye to home; it’s very hard to travel right now; and it’s extremely hard to find a new job) one only needs to calculate what 500,000 people leaving, each taking USD1m in cash with them –which is a VERY cheap house in Hong Kong– would do to Hong Kong’s USD reserves. Wipe them out entirely. Word on the street is that the HKMA would turn to the PBOC in this case. And who would the PBOC turn to if US sanctions are in place?

“Naturally”, Hong Kong stocks were up 1.5% at time of writing. That is despite daggers drawn, sword threads snapping, and a US-China melee breaking out.

Meanwhile, overnight we saw the Fed minutes underline that the FOMC is, for now, not keen on adopting yield curve control, and is certainly very opposed to negative rates. As our Fed watcher Philip Marey argues, in wanting to avoid the latter, the only logical alternative is the former. And the sooner US-China tensions erupt, the sooner we might be likely to find out how what that will look like in practice.

Quite the melee will ensure, I assure you.


This post has been republished with permission from a publicly-available RSS feed found on Zero Hedge. The views expressed by the original author(s) do not necessarily reflect the opinions or views of The Libertarian Hub, its owners or administrators. Any images included in the original article belong to and are the sole responsibility of the original author/website. The Libertarian Hub makes no claims of ownership of any imported photos/images and shall not be held liable for any unintended copyright infringement. Submit a DCMA takedown request.

-> Click Here to Read the Original Article <-

About The Author

Tyler Durden

Zero Hedge's mission is to widen the scope of financial, economic and political information available to the professional investing public, to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become, to liberate oppressed knowledge, to provide analysis uninhibited by political constraint and to facilitate information's unending quest for freedom. Visit https://www.zerohedge.com

Leave a reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Welcome

Bringing together a variety of news and information from some of today’s most important libertarian thought leaders. All feeds are checked and refreshed every hour and pages auto-refresh every 15 minutes. External images are deleted after 30 days.

Time since last refresh: 0 second

Publish Your Own Article

Follow The Libertarian Hub


Please consider donating using any of the cryptocurrencies below or use the Brave browser to tip using Basic Attention Tokens (BAT). Your anonymous contributions help keep this website running for everyone to enjoy!

Donate

Take Control of Your Domain Names
The Ultimate Managed Hosting Platform

Weekly Newsletter

Newsletter Signup

Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!

Weekly Newsletter SignupTop 5 Stories of the Week

Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!