Hong Kong’s universities may have been cleared, and the student rioters dispersed, but Chinese President Xi Jinping’s troubles with the territory are far from over. To begin with, he cannot be certain that there will not be renewed protests and more violence. He faces international condemnation for permitting, if not ordering, the Hong Kong police to shoot at demonstrators. And he continues to confront resistance from the people of Hong Kong in more subtle ways: witness a Hong Kong court’s decision to overturn the government’s ban on masks that many protesters were wearing, on the grounds that the ban was unconstitutional.

In addition, Xi faces the prospect of sanctions by the U.S. Congress that could jeopardize the negotiations for a trade agreement between Washington and Beijing. Both the House of Representatives and the Senate overwhelmingly condemned the crushing use of force by police. The Senate version of the Hong Kong Human Rights and Democracy Act was approved unanimously; the bill provides for sanctions such as the blocking of visas and property restrictions against officials responsible for human rights violations. These bills represent a major slap in China’s face and its ability to market its authoritarian political/economic system as one that is an attractive rival to those of the West.

A second Senate bill would ban the export of tear gas, pepper spray, rubber bullets and stun guns to the Hong Kong police. Of far greater consequence, both versions of the bill require the State Department to certify annually that Hong Kong maintains sufficient autonomy from Beijing’s control, in terms of the rule of law and human rights protections, to merit its unique status as China’s commercial outlet to the world. Beijing’s increasingly tight control over governance in Hong Kong renders such certification increasingly unlikely.

President Trump has remained silent regarding the protests and the violence, presumably to maintain the momentum for the trade deal that he seeks. No doubt he would prefer to veto the congressional legislation; the overwhelming votes in both Houses of Congress point to a veto override, however. An override, or even Trump’s failure to veto, would guarantee the end of the trade talks, at least for the time being. Moreover, given China’s unpopularity with Americans of all political persuasions, Trump certainly recognizes that a presidential veto would not enhance his electoral prospects. 

Xi faces an even more serious challenge, however. Hong Kong is critical to the health of the Chinese economy, which by Beijing’s own admission has fallen off its previous levels of strong GDP growth. Foreign companies have used Hong Kong as a base for doing business on the mainland. Its equity, debt and currency markets, combined with its reputation for upholding the rule of law and enforcing contracts, have made it a far more attractive alternative to Shanghai and other potential Chinese financial centers that can be manipulated by the authorities in Beijing. 

The loss of the territory as a financial center, therefore, would compound China’s growing economic difficulties. In turn, it would undermine the social contract between the Chinese populace and the Communist Party that is heavily dependent on increasing economic prosperity and the ongoing expansion of the Chinese middle class. That is a development Xi can ill afford. It leaves him open to criticism — and even removal — by those in the Communist Party who resent his one-man rule and his determination to be leader for life. 

All told, China may not be the formidable force that it once seemed to be. Its economy is not the powerhouse that it was as recently as five years ago; it suffers from the consequences of its now discarded one-child policy; riots take place regularly throughout the country; and it has a restive Muslim population that increasingly is being relegated to concentration camps. All of the foregoing forebodes trouble, not only for President Xi, but for the Communist Party, and perhaps for China itself. 

It is a pity that the Trump administration seems oblivious to the many warning signs of unrest that could threaten not only the stability of East Asia but also the many American interests that have flourished in what, until now, has been the world’s most dynamic region.

Dov S. Zakheim is a senior adviser at the Center for Strategic and International Studies and vice chairman of the board for the Foreign Policy Research Institute. He was under secretary of Defense (comptroller) and chief financial officer for the Department of Defense from 2001 to 2004 and a deputy under secretary of Defense from 1985 to 1987.