Never mind the impeachment inquiry, Donald Trump’s biggest problem right now is Hong Kong

On the one hand, he has to be seen as a protector of the people; on the other, he has to get a trade deal with China. Whatever he does, his decision will impact future presidents for decades

I have just returned from two weeks in Washington and there are two stories that dominate American media at the moment. One is the effort to impeach the president, and that inevitably gets most of the attention. But the other is ultimately more important, and it concerns the evolving relationship between the US and China, the world’s largest and second largest economies.

Until last week, it was mostly about the trade war – will there be a deal, won’t there be a deal?

But then it suddenly took on a new twist as a result of the upheavals in Hong Kong.

Congress toughened its line against China. Last week, the House of Representatives suddenly passed the Hong Kong Human Rights and Democracy Act, passed a day previously by the Senate. The Senate vote was unanimous, and there was one dissenting vote in the House. This requires the president to review the trading status of Hong Kong if human rights there are not respected. He now has to decide whether to veto the legislation, and he has been dithering about what to do.

Vetoing it would probably be pointless because congress would almost certainly have the two-thirds majority in both Houses to override the veto. There is also an argument that this legislation is not in the long-term interests of Hong Kong itself. After all, the Hong Kong economy needs its special economic status, and its open trading relationship with the US, to function as China’s window on the world. Its entire prosperity is built on that. But you can see why Donald Trump is conflicted.

On the one hand, he has to be seen as a protector of the Hong Kong people and a supporter of their aspirations. He has even claimed that it is thanks to him that China has not flooded Hong Kong with red army troops.

On the other hand, he has to get a trade deal with China. That is partly because he is under huge pressure from US business, and particularly the country’s farmers, to do so. But it is also that he needs to be seen as a successful negotiator with his so-called friend, Xi Jinping, the Chinese president. Not only has congress made that negotiation more difficult, but arguably it is “virtue signaling”, in the sense that passing this legislation doesn’t actually help the Hong Kong people at all, but merely annoys Beijing.

So what should we make of all this? I think the best way to see it is as an early spat in what will be an increasingly difficult relationship between the two superpowers. There has already been a reset of the way the US and China deal with each other, and while that was triggered by Trump, it will continue with future presidents.

The fact that congress is taking this aggressive stance on Hong Kong is a sign that the toothpaste will not go back into the tube. The relationship between the US and China will inevitably be a mixture of cooperation and competition. But as China grows in relation to the US, the balance will shift from cooperation to competition. In absolute size, though not in wealth per head, China looks like it will pass the US in about 10 years’ time.

Looking further ahead, the relationship may well calm down. China is ageing fast and will soon have a falling population, hastened by the now abandoned one-child policy. At some stage it will feel less eager to assert itself on the world stage and turn its attention to ensuring a secure and reasonably comfortable life for an increasingly elderly society.

The US will, by contrast, remain vibrant, with growth driven by immigration as well as technological advances. But getting from here to there will be difficult and there is inevitably the possibility of either side miscalculating, resulting in something worse than a trade war.

Meanwhile, there is the problem of Hong Kong. The Brookings Institution, the Washington-based research body, has just published a gloomy assessment of its future. The author, Richard C Bush, argues that the “one country, two systems” agreement under which sovereignty was transferred from the UK to China in 1997 has not worked and while Beijing initially supported political and economic freedoms in Hong Kong, it is now likely to impose tight controls to prevent this sort of crisis happening again.

“We are”, he writes, “likely witnessing the end of Hong Kong as we know it”.

A glum assessment indeed. But a poor outlook for Hong Kong is also a poor outlook for China as a whole. Aside from the other former colony of Macao across the Pearl River Delta, Hong Kong is the one part of China that has a GDP per head that is that of a fully developed economy. It is slightly richer per head than the UK, France or Germany. That is a wonderful achievement. If the great cities of mainland China are to attain the wealth of Hong Kong, can they do so without the political freedoms that many Hong Kong people now seek?

If Hong Kong presents a dilemma to Donald Trump this week, it will be a much bigger challenge for Xi Jinping in the months and years ahead.