Asian markets plummeted after a bill supporting Hong Kong protesters was signed by US President Donald Trump, in a move that is expected to complicate the Washington-Beijing trade talks.
China's Shanghai Composite (COMP) fell 0.5%, while Hong Kong's Hang Seng Index (HSI) dropped 0.2%.
This was followed by South Korea's Kospi index (KOSPI) and Japan's Nikkei 225 (N225) moving down 0.1% and 0.4%, respectively.
The development came after the White House said in a statement on Wednesday that Trump had signed into law the Hong Kong Human Rights and Democracy Act which, in particular, prohibits US exports of specified police equipment to Hong Kong.
Additionally, the document allows for sanctions against officials involved in human rights abuses in the territory and could result in the removal of special trade benefits.
China Pledges to Respond to Trump Signing HK Protests Law
The Chinese Foreign Ministry, for its part, pledged in a statement on Thursday to retaliate against Trump signing the law, saying that “such an action has seriously interfered in Hong Kong's affairs and China's domestic politics.”
“We suggest that the United States does not put its foot down because otherwise China will have to take serious countermeasures and the United States will have to bear full responsibility for their consequences," the statement noted, adding that “such plainly bullying behaviour is firmly opposed by the Chinese government and Chinese people.”
Earlier, the ministry summoned US Ambassador to Chinas Terry Branstad to voice protest against the US Congress passing the law.
The Hong Kong authorities, in turn, slammed the document as obvious unfounded meddling in the region's affairs, saying that it might harm US-Hong Kong relations and interests.
A lovely older gentleman shared with me, “Great performance tonight! Although I only know this song.” This is “Do You Hear the People Sing”, now a protest anthem in Hong Kong. Fun fact: the song is now banned in China. pic.twitter.com/Xp5QEJKADI— Karen Tse (@ktse852) November 26, 2019
The Hong Kong unrest, initially triggered by the now-withdrawn extradition bill, has been on since June. Beijing views the situation in China’s Special Administrative Region as a result of foreign interference in the country’s domestic affairs, expressing full support for the actions of the local authorities.
Beijing-Washington Trade Talks
Trump’s decision to sign the Hong Kong Human Rights and Democracy Act comes amid the ongoing US-Chinese trade talks which reportedly hit a snag earlier this month over Beijing's reluctance to increase its purchases of US agricultural products.
Last month, Trump announced that Washington and Beijing had agreed on a “phase one” deal to scale back the bilateral trade war that has been raging since last summer, when the US began introducing tariffs on tens of billions of dollars' worth of Chinese goods. The move led to a tit-for-tat escalation and tariffs on hundreds of billions of dollars' worth of products.