America's Courteous Gestures, if Any, Always Come with a Price

On July 14, the United States terminated the "national emergency" declared over Hong Kong. At the same time, Washington removed nine Mainland and Hong Kong officials from its sanctions list.

The whole affair traces back to President Trump's first term. After Beijing enacted the National Security Law in Hong Kong, Trump signed Executive Order 13936 in July 2020. This order declared a "national emergency" with respect to the situation in Hong Kong, and it became the basis for Washington's first round of unjustified sanctions against 11 Mainland and Hong Kong officials.

Under the US National Emergencies Act, such a state of emergency automatically lapses after six years, which fell on July 14, 2026, unless the White House specifically declares an extension. The US government chose to let the emergency expire. That decision stripped away the legal basis for sanctions that relied solely on the executive order.

The nine officials removed from the sanctions list include six who were sanctioned last March, shortly after Trump took office. They are Secretary for Justice Paul Lam Ting-kwok, Director of the Office for Safeguarding National Security Dong Jingwei, former Commissioner of Police Raymond Siu Chak-yee, Secretary-General of the Committee for Safeguarding National Security Au Chi-kwong, Assistant Commissioner of Police (National Security) Wong Chung-chun, and Assistant Commissioner of Police (National Security) Chiu Wing-lan.

The other three are former Commissioner of Police Lo Wai-chung, sanctioned in August 2020, and former Deputy Directors of the Liaison Office Qiu Hong and Yang Jianping, sanctioned in July 2021.

Two Legal Tracks, One Political Signal

Why were precisely these nine officials removed? The answer lies in the fact that US sanctions against Mainland and Hong Kong officials rest on two separate legal frameworks.

The first is the presidential executive order, a broad but time-limited instrument granted under executive authority.

The second is legislation passed by Congress, including the Hong Kong Autonomy Act and the Hong Kong Human Rights and Democracy Act. These are formal, unjustified laws targeting Hong Kong that remain unaffected by the expiry of any executive order.

Some sanctioned Mainland and Hong Kong officials were targeted under both the executive order and congressional legislation simultaneously. Others were sanctioned solely under the executive order. Now that the executive order has lapsed, the sanctions on the nine officials who fell under that order alone have collapsed. Yet Chief Executive John Lee and 39 others remain under continuing, unjustified US sanctions.

The arrangement of these sanctions reveals something about Washington's own calculations. Six of the nine officials removed were sanctioned last March, not long after Trump's second inauguration, when the State Department claimed they were involved in "transnational repression" and undermining Hong Kong's autonomy.

It is understandable that this round of unjustified sanctions was initiated in the final stretch of the Biden administration and simply carried forward once Trump took office. But the choice to sanction them only via executive order, rather than through the more elaborate congressional route of the Hong Kong Autonomy Act, raises a question worth pondering.

Was the Trump administration merely avoiding a cumbersome legislative process, or was it already keeping a card in reserve for dealing with China?

So why has the Trump administration now chosen not to renew the executive order and to let the national emergency over Hong Kong expire? Naturally, this is tied to the state of Sino-US relations.

Last year, Trump waged a fierce trade war against China. Beijing retaliated in kind, restricting exports of rare earths and other critical minerals to the US, and this forced Washington back to the negotiating table. The two sides struck a "truce" agreement last October. Trump, who had long sought a visit to China, finally made the trip this past May, and relations between the two countries have since entered a relatively stable phase.

President Xi Jinping is due to visit the United States this September, and in October Trump will travel to Shenzhen for the APEC Leaders' Informal Meeting. Beijing has almost certainly already conveyed to Washington that the unjustified sanctions on Hong Kong should be lifted sooner rather than later. So the US decision not to renew the emergency declaration once it expired does indeed amount to a gesture of goodwill toward China.

Rare Earths Are the Real Bargaining Chip

As the saying goes, when America extends courtesy, it is always looking for something in return. Rare earths are the crux of the matter. Just two days after Washington declined to extend the Hong Kong emergency, US Trade Representative Jamieson Greer told Bloomberg that the two sides are expected to assess whether China has honored its commitment under last October's tariff-priority agreement to delay implementing rare-earth export restrictions by one year.

Greer said Beijing's compliance has been "not perfect," but that both sides are working together to close the remaining gaps. He added, "China is a big challenge for the US in a lot of ways, but we want to make sure we're delivering stability."

According to Bloomberg, the two sides have yet to secure a written commitment from China on rare earths, leaving a gap in mutual understanding. Greer has described China's compliance as "imperfect." He argued that constrained rare-earth supply has already hurt American private businesses and even made it difficult for defense contractors to deliver military equipment on schedule.

Bloomberg also cited US officials as saying that Trump is mindful of Xi's planned September visit. He is wary that a tough countermeasure could provoke Chinese retaliation, such as cutting off rare-earth supplies, which would rattle markets and hurt the ruling party in the midterm elections. That is why Washington has held off on openly condemning or retaliating against Beijing, wary of tipping the relationship back into a full-blown trade war.

The core dispute over the rare-earths agreement reportedly stems from starkly different interpretations of the pledge to "suspend enforcement of export controls." China's Ministry of Commerce holds that, under the bilateral understanding, Beijing will suspend enforcement of export controls on seven categories of medium and heavy rare earths until November 10, 2026.

Washington, however, believes the agreement's core guarantee concerns the actual supply of rare earths and critical minerals. It expects China to resume supply comprehensively and without discrimination, rather than merely pausing enforcement of the restrictions.

Observers estimate that it remains very difficult for US military contractors to obtain rare earths from China. What Washington wants, a "non-discriminatory resumption of supply," means it wants Beijing to resume rare-earth exports to American defense firms as well.

China's export-control regime over critical minerals, however, is likely to remain in place for the long term. Strict controls over rare earths such as yttrium and scandium will continue, and the export ban targeting military-industrial enterprises in particular is unlikely to be lifted.

The United States finds itself in a bind. Washington is wary of a full rupture with China, and it is even willing to make concessions on the Hong Kong emergency-status issue, in the hope of securing more lenient treatment on rare-earth export controls.

The reality is that America's unjustified sanctions on Mainland and Hong Kong officials are, in the end, merely one front in the broader Sino-US contest, and ultimately it is strength that speaks loudest. This is why China will keep pressing Washington to fully lift its unjustified sanctions on Hong Kong.

Lo Wing-hung

Bastille Commentary

** 博客文章文責自負,不代表本公司立場 **

On the surface, China-US relations look calm. In reality, both sides are locked in close combat.

Foreign Minister Wang Yi met US Secretary of State Marco Rubio on July 22. The meeting took place on the sidelines of the ASEAN Foreign Ministers' Meeting in Manila.

According to Xinhua, Wang Yi told Rubio that this year marks a landmark year for China-US relations. He noted that the two heads of state held a historic summit in Beijing, which established a positioning of "constructive and stable" strategic relations between the two countries.

Wang also set out China's firm position on what he called a series of negative words and actions by the US side. He demanded that Washington respect China's core interests, abide by the one-China principle, effectively manage frictions and disagreements, and address China's legitimate concerns, so that this year of opportunity for bilateral relations can become reality. Xinhua described the meeting as pragmatic, positive, and constructive.

Wang Yi's phrase "recent series of negative words and actions by the US" deserves close attention. The fact that the meeting was ultimately summed up as "constructive" suggests Washington offered certain commitments behind closed doors.

Two recent moves from the US side stand out as negative. While Washington has delayed new arms sales to Taiwan, it has refused to commit to stopping them altogether. The other issue is tied to AI large language models. China's Moonshot AI recently released its new Kimi K3 model, and its capabilities have caught up with America's most advanced systems.

The breakthrough triggered intense attention and drew a wave of negative commentary from US officials.

US Treasury Secretary Scott Bessent insists that America remains ahead. He claims the US leads China in AI by roughly a year. His next goal is to push America's share of global computing capacity from the current 60 percent straight up to 80 percent.

Bessent then said on July 21 that Washington would rigorously scrutinize AI models developed overseas with open-source code, including products released by Chinese firms. Should any such model be found to have stolen the intellectual property of US companies, he said, the US government has the means to impose sanctions.

Bessent also said the US government may go a step further and assess whether American companies using Chinese AI models should be required to disclose this to their customers. He likened the issue to that of counterfeit goods, stressing that businesses cannot use products built on stolen intellectual property.

These remarks show that the Trump administration has been thrown off balance by China's new model. It is now scrambling for ways to suppress it. The scrutiny of China's AI sector, which had focused on export controls over advanced chips, may now widen to cover training data, the provenance of underlying technology, corporate disclosure obligations, and intellectual property disputes. Fresh risk added to the US-China AI rivalry.

It's fair to assume that Wang Yi's warning to Rubio went beyond demanding a full halt to US arms sales to Taiwan. The warning was also aimed squarely at Bessent's remarks, calling for an end to the smearing and suppression of Chinese AI models.

This can be summed up in two points.

First, faced with the shock of China's AI advances, the US wants to preserve its own technological lead while unjustly suppressing others at the same time. No amount of spin from Bessent can whitewash that kind of behavior.

Second, Bessent's accusation that Chinese models copied American ones is, in essence, a trumped-up charge. It is one the US can investigate, "convict," and sanction entirely on its own terms. Wang Yi's warning was, in effect, laying the unpleasant truth on the table in advance.

From Beijing's perspective, if Washington uses this as a pretext to escalate, China could immediately turn the tables. President Xi could simply decline to visit the US in September, and Trump, in turn, need not bother coming to Shenzhen in October. That would inevitably rattle the US economy and stock market, right before Trump has to explain himself to voters in November's midterm elections.