16 August 2019

China’s Xi Sees The Hong Kong Protests As An Existential Threat To The Ruling Communist Party; Brutal Crackdown Likely Coming Soon; Looming Black Swan Event Brewing

With the protests in Hong Kong gaining momentum, and with both sides feeling an existential threat, something has to give as they say. Hong Kong protesters want to maintain Hong Kong’s unique status with respect to mainland China; and the recently proposed extradition law by Beijing sent fear and shock waves throughout the populace. Although the law has been at least temporarily suspended, the protesters rightly fear it will at some point be reinstated, and they also believe Beijing will slowly, but inexorably chip away the cities unique status — and ultimately absorb Hong Kong into the mainland. On the other hand, Beijing fears that if these protests are not put down, that an Asian version of the Arab Spring could blossom into a full blown — existential threat to the Communist Party.

China’s U.N. Mission issued a public statement this afternoon (EDT), stating that the protesters have smashed public facilities, paralyzed the airport, blocked public transport and used lethal weapons — showing a tendency of resorting to terrorism. China’s Central Government soon followed with its own statement: “We firmly support Hong Kong Chief Executive Carrie Lam and her government in discharging their duties and compliance with the law and supports the police force and the judiciary. If the protesters are in fact deemed terrorists by Beijing, it gives Ms. Lam additional powers to subdue the protesters. During a news conference late today, Ms. Lam was twice asked by reporters whether or not she had the authority to rescind the now suspended new extradition law between mainland China and Hong Kong, and twice she did not answer the question — leading protesters to assume she is nothing more than a puppet/figurehead for Beijing.

Brigadier General (Ret.) Robert Spaulding, now with the Hudson Institute and author of the forthcoming book, “Stealth War: How China Took Over While America’s Elite Slept,” was interviewed this morning on CNBC’s Squawk Box about the ongoing protests in Hong Kong and potential Chinese actions. The CNBC commentator posed a question; but first noted that the goal of the Hong Kong demonstrators is to loosen Beijing’s grip on Hong Kong. How does this situation get resolved knowing that Beijing isn’t going to allow that to happen? “I think we all know how this is going to get resolved, China will eventually move in troops” to quash this burgeoning rebellion. “What we have to wonder is, how are we going to respond,” to Tiananmen Square 2.0. The Chinese leadership is sensitive to the imagery of any kind of Tiananmen repeat and, “that’s why they haven’t moved as yet against the protesters,” Gen. Spaulding said. But, many within China’s ruling Communist Party see the protests as a ‘secret,’ U.S.-inspired attempt to overthrow the regime — by inspiring and supporting protests to spread to the mainland. Xi is no fan of former Soviet leader Mikhail Gorbachev — whom Xi believed helped an empire collapse. And, Xi, doesn’t intend to see that happen in China.

Noted China [investment] bear Kyle Bass, Hayman Capital’s Chief Investment Officer, was interviewed on CNBC late this morning on the ongoing crisis in Hong Kong. Mr. Bass said that “Xi is taking the Hong Kong protests as an existential threat to the Communist Party rule in China;” and added that “one of the dates we should start focusing on is October 1. That’s the day which will be the 70th anniversary of the Chinese Communist Party (CCP). My [Mr Bass’s] guess is you are going to see Xi move in and brutalize the protesters at some point. The protesters are actually very, very smart, very well organized, and and very technologically advanced. So, they decided to move into the airport which was a very smart move. It is air-conditioned for one thing. And, it is also a place the police cannot lob tear gas in — with international flights landing and foreigners moving throughout the airport. But, at some point in time, before October 1, China will either move in the police and/or the military in a major/forceful way — and, that will be the end of Hong Kong’s autonomy.”

“China’s agreement with Great Britain in 1982, and with the U.S. in 1994 — was to guarantee Hong Kong’s special status until 2047, it seems like China goes back on just about every agreement it signs,” Mr. Bass said. Mr, Bass acknowledged that the Democrats running for POTUS have spoken out in support of the protesters; but, POTUS Trump has been conspicuously quiet. The free world expects POTUS Trump to speak out on this crisis — and, Mr. Bass said that POTUS Trump will have to say something definitive soon.” Mr. Bass also said that he thought that POTUS Trump blinked by delaying the imposition of additional tarriffs from September 1 to December, and Xi will see this as a sign of weakness on POTUS Trump’s part.”

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