Trump v China: Why Australia should keep an eye on Hong Kong

The huge protests filling the streets of Hong Kong matter not just for China. Their impact on Australian jobs and wellbeing is profound.

We should all pay attention to the protests in Hong Kong. They matter a lot for our jobs and wellbeing — but also for something much bigger.

You’ve probably seen the photos by now. Citizens of the tiny city-state of Hong Kong holding umbrellas, protesting peacefully outside their parliament, and getting bombarded with tear gas.

Protesters in their thousands march in Hong Kong. Picture: Anthony Kwan/Getty Images

They are protesting the latest step in China’s takeover of their once relatively free society. The government had proposed a law that would allow citizens to be extradited to China

The protests come at a very complicated time, when America is already in conflict with China. The trade war has already gone on longer than most people wanted and it looks like it will be very tricky to resolve. China has one advantage over US President Donald Trump — its politicians don’t face elections. If the conflict is still roiling during the 2020 presidential election campaign it will be hard for Mr Trump to insist he is really the deal-maker he claims to be, and China could potentially get the upper hand.

TRADE’S TROUBLES

Global trade is already at risk, which is a significant contributor to the recent problems in the Australian economy. Australia’s exports to China depend, of course, on China’s exports to the rest of the world. And as the next graph shows, those exports have got the wobbles this year as Mr Trump has played fast and loose with tariffs.

Chinese exports dropped markedly at the start of the trade war with the US.

We need the trade war to be over so the global economy can regain its footing. But the ongoing negotiations about the trade war are only made more complex by the trouble in Hong Kong.

USA V CHINA

The US speaker of the House of Representatives — basically America’s opposition leader — has taken the side of Hong Kong’s citizens. The proposed new law shows “Beijing’s brazen willingness to trample over the law to silence dissent and stifle the freedoms of the people of Hong Kong” US House Speaker Nancy Pelosi said last week. That’s a sharp challenge to China.

Will Mr Trump also take the side of the Hong Kong protesters? On the one hand, he should. They are fighting for freedom from a communist dictatorship. And if America stands for anything, it should be freedom from communist dictatorships.

MIXING MONEY AND POWER

But if Mr Trump suddenly stands up for Hong Kong, the trade wars will become far more complicated. The negotiations will take on a whole other dimension — not just economic, but political. And while China has proven to be quite flexible economically, it is famously rigid politically.

Mr Trump’s trade negotiators certainly don’t want the two issues blended together. They are already finding it hard to get a deal with China. If Mr Trump opens his mouth and makes the Hong Kong issue part of the trade issue, their lives will become impossible. Luckily for them, Mr Trump’s temperament seems unlikely to lead him to take the side of the protesters. He seems naturally more inclined to side with powerful governments than their oppressed citizens.

That is good news for them. And for us in Australia, where we’re hoping for a swift end to the trade wars that damage our biggest trade partner. But we should also step back and ask: is it good news in the big picture?

PART OF A BIGGER CONFLICT

The conflict in Hong Kong in the last week can be seen as a flashpoint in a contest between China’s way of doing things and the way of doing things in the West. On the one side you have an autocracy with no free press; and on the other you have Western liberties (or what remains of them).

China’s success over the past 30 years has made its way of doing things look seductive. It is a dictatorship that has made billions rich. China has successfully raised living standards and won the apparent support of most of its population. Never mind the Uighurs are being put in re-education camps and ignore the fact that Xi Jinping has made himself president for life, and you can almost see China as a role model for how a country should be run. China’s rise can make messy, untidy western democracy look unnecessary.

And in Hong Kong we see the expansion of China’s domain — little by little, step by step. If Mr Trump ignores Hong Kong and China wins the political fight there, then the forces of state surveillance and autocracy will expand their territory while the ideals of democracy will have recorded another defeat. And that might one day seem more costly than even a trade war.