Capital Inside

WASHINGTON (Reuters) - A confidence shock driven partly by the U.S. trade war is at the center of an increasingly persuasive argument for Federal Reserve policymakers seriously considering cutting rates for the first time in a decade.

Federal Reserve Chairman Jerome Powell on Wednesday set the stage for the rate cut this month, as records from policymakers’ latest meeting showed increasing fear that a U.S.-China trade war that has done little to directly restrain growth is indirectly causing businesses to hold back on buying equipment, giving workers a raise and hiking their prices.

Those factors have conspired to pose a serious risk of ending the economic expansion by pushing growth and inflation lower. The Fed is getting closer to lower rates to take out “insurance” that does not happen.

Powell used an appearance here before his congressional overseers on Wednesday to confirm that the U.S. economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war.

Those are the kinds of uncertainties that "many" policymakers called out here as suggesting the need for a rate cut "in the near term," according to records from the Fed's rate-setting meeting, which were released shortly after Powell concluded several hours of testimony before the U.S. House of Representatives Financial Services Committee.

“Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. outlook,” Powell said.

At that June 18-19 meeting, some Fed policymakers worried that they may need act to lift inflation that is failing to meet the U.S. central bank’s 2% annual target and to combat a pervasive pessimism among corporations that they see holding back business investment. Lower rates could “cushion the effects” of shocks from the trade war, according to the minutes’ summary of the case for a cut.

“Powell’s really making the case that an insurance rate cut is important so July is looking much more likely despite the fact we had a pretty good jobs report,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

SEOUL (Reuters) - North Korean leader Kim Jong Un and U.S. President Donald Trump agreed at their meeting on Sunday to push forward dialogue for making a new breakthrough in the denuclearization of the Korean peninsula, North Korean state media said on Monday.

Trump became the first sitting U.S. president to set foot in North Korea on Sunday when he met Kim in the Demilitarized Zone (DMZ) between the two Koreas and agreed to resume stalled nuclear talks.

“The top leaders of the two countries agreed to keep in close touch in the future, too, and resume and push forward productive dialogues for making a new breakthrough in the denuclearization of the Korean peninsula and in the bilateral relations,” KCNA news agency said.

The meeting, initiated by a tweet by Trump that Kim said took him by surprise, displayed the rapport between the two, but analysts said they were no closer to narrowing the gap between their positions since they walked away from their summit in February in Vietnam.

U.S. Secretary of State Mike Pompeo told reporters shortly before departing South Korea that a new round of talks would likely happen “sometime in July” and the North’s negotiators would be foreign ministry diplomats.

In a photo released by KCNA on Monday, North Korean Foreign Minister Ri Yong Ho and Pompeo are shown sitting next to Kim and Trump respectively in Freedom House, the building in which the two leaders had their one-on-one talks.

KCNA said that during the chat between Trump and Kim, the two leaders explained “issues of easing tensions on the Korean peninsula,” “issues of mutual concern and interest which become a stumbling block in solving those issues,” and “voiced full understanding and sympathy.”

Kim said it was the good personal relationship he had with Trump that made such a dramatic meeting possible at just one day’s notice and that the relationship with Trump would continue to produce good results, according to KCNA.

The two leaders’ “bold, brave decision” that led to the historic meeting “created unprecedented trust between the two countries” that had been tangled in deeply rooted animosity, KCNA said.

U.N. Secretary-General Antonio Guterres welcomed the meeting between Trump and Kim and “fully supports the continued efforts of the parties to establish new relations toward sustainable peace, security and complete and verifiable denuclearization of the Korean Peninsula,” U.N. spokesman Stephane Dujarric said in a statement.

“The fact that the nuclear talks have jump-started is very encouraging, but that doesn’t mean that the two sides have already adjusted their positions and set the conditions for successful working-level negotiations,” said Kim Hyun-wook, a professor at the Korea National Diplomatic Academy.

NEW DELHI (Reuters) - The United States has told India it is considering caps on H-1B work visas for nations that force foreign companies to store data locally, three sources with knowledge of the matter told Reuters, widening the two countries’ row over tariffs and trade.

미국은 인도에게 H-1B

The plan to restrict the popular H-1B visa program, under which skilled foreign workers are brought to the United States each year, comes days ahead of U.S. Secretary of State Mike Pompeo’s visit to New Delhi.

India, which has upset firms such as Mastercard and irked the U.S. government with stringent new rules on data storage, is the largest recipient of these temporary visas, most of them to workers at big Indian technology firms.

The warning comes as trade tensions between the United States and India have resulted in tit-for-tat tariff actions in recent weeks. From Sunday, India imposed higher tariffs on some U.S. goods, days after Washington withdrew a key trade privilege for New Delhi.

Two senior Indian government officials said on Wednesday they were briefed last week on a U.S. government plan to cap H-1B visas issued each year to Indians at between 10% and 15% of the annual quota.

There is no current country-specific limit on the 85,000 H-1B work visas granted each year and an estimated 70% go to Indians.

Both officials said they were told the plan was linked to the global push for “data localization”, in which a country places restrictions on data as a way to gain better control over it and potentially curb the power of international companies. U.S. firms have lobbied hard against data localization rules around the world.

A Washington-based industry source aware of India-U.S. negotiations also said the United States was deliberating capping the number of H-1B visas in response to global data storage rules. The move, however, was not solely targeted at India, the source said.

“The proposal is that any country that does data localization, then it (H-1B visas) would be limited to about 15% of the quota. It’s being discussed internally in the U.S. government,” the person said.

The U.S. Embassy in New Delhi did not respond to a request for comment. A spokeswoman for the U.S. Trade Representative’s office (USTR) referred questions to the State Department, which did not immediately respond to a request for comment.

IT SECTOR

Most-affected by any such caps would be India’s more than $150 billion IT sector, led by Tata Consultancy Services and Infosys Ltd, which uses H-1B visas to fly engineers and developers to service clients in the United States, their biggest market.

India’s Ministry of External Affairs has sought an “urgent response” from officials on how such a move by the United States could affect India, said one of the two government officials, who declined to be named due to the sensitivity of the matter.

India’s Ministry of External Affairs, as well as the commerce department that is typically involved in such discussions, did not respond to an e-mail seeking comment.

Since last year, the U.S. administration has been upset that U.S. firms such as Mastercard and Visa suffer due to regulations in several countries that it says are protectionist and increasingly require companies to store more data locally.

India last year mandated foreign firms to store their payments data “only in India” for supervision, and New Delhi is working on a broad data protection law that would impose strict rules for local processing of data it considers sensitive.

While governments the world over have been announcing stricter data storage rules to better access data in their jurisdictions, critics say restricting cross-border data flows hurts innovation and raises companies’ costs.

In March the USTR, in a press note, highlighted "key barriers to digital trade", citing data-flow restrictions in India, China, Indonesia and Vietnam, among others. (bit.ly/2YSeQfN)

At a U.S.-India Business Council event last week, Pompeo said the U.S. administration would push for free flow of data across borders, not just to help U.S. companies, but also to secure consumers’ privacy.

rekindle : 감정, 생각 등을 다시 불러일으키다

WASHINGTON (Reuters) - China and the United States are rekindling trade talks ahead of a meeting next week between Presidents Donald Trump and Xi Jinping, cheering financial markets on hopes that an escalating trade war between the two countries would abate.

중국과 미국은 다음 주 미팅에 앞써 무역 회담을 다시 진행하려 한다, 두 국가 사이의 증가하고 있는 무역 전쟁을 줄일 것이라는 희망을 금융 시장에 주기 위해서

abate : 약해지다, 줄이다

Trump said on Tuesday that teams from the two sides would begin preparations for the leaders to sit down at the G20 summit in Osaka. China, which previously declined to say whether the two leaders would meet, confirmed the get-together.

양측 팀은 오사카 G20 회담에 참석하기 위해 정상들이 준비를 시작했다고 화요일에 트럼프 대통령이 말했다. 중국은 모임을 확인했다, 중국은 이전에 두 정상이 만날 지 아닐 지 말하는 것을 거부했다. 

get-together : 비격식적인 모임

“Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting,” Trump said in a post on Twitter.

중국의 시진핑 주석과 긍정적인 대화를 전화로 했다. 우리는 다음 주 일본 G20 회담에서 연장된 회담을 가질 예정이다. 우리의 각 팀들은 회담 이전에 회의를 시작할 것이다. 트럼프는 트위터에 포스트를 올렸다. 

The world’s two largest economies are in the middle of a costly trade dispute that has pressured financial markets and damaged the world economy.

세계에서 두 번째로 큰 경제대국(일본)은 비용이 많이 드는 금융시장을 압박하고 세계 경제에 손상을 준 회담 논쟁 중간에 있다.

Talks to reach a broad deal broke down last month after U.S. officials accused China of backing away from previously agreed commitments. Interaction between the two sides since then has been limited, and Trump has threatened, repeatedly, to slap more tariffs on Chinese products in an escalation that businesses in both countries want to avoid.

넓은 협상에 도달하기 위한 회담은 지난 달 결렬되었다 미국 당국이 이전에 합의한 약속을 지키지 않은 중국을 비난한 후에. 양측 사이의 상호작용은 그 때 이후로 제한적이었다, 그리고 트럼프는 두 국가 모두 비즈니스에서 피하고 싶어하는 단계적 확대 속에서 중국산 상품에 더 많은 관세를 매기겠다고 거듭 위협해왔다. 

In a speech Tuesday night formally launching his 2020 re-election campaign, Trump said he had taken “historic action to confront China’s chronic trading abuses.”

트럼프 대통령의 2020년 재선 캠페인을 공식적으로 화요일 밤에 시작하는 연설에서 트럼프는 중국의 만성적인 무역 남용에 대항하기 위한 역사적 행동을 위해왔다고 말했다. 

“It should have been done a long time ago, but the days of stealing American jobs and American companies, American ideas and wealth - those days are over,” Trump told the packed rally in Orlando, Florida.

이건 오래전에 했어야 하는 일이지만 미국인의 직업과 회사, 아이디어, 부를 빼앗는 날은 이제 끝이다, 트럼프는 플로리다 올란도에 사람들이 많이 온 집회에서 말했다.

packed : 사람들이 꽉 들어찬

rally : 집회.....반등. 회복

White House officials declined to go into detail about the preparations or expected outcomes of the talks in Japan, but both sides reiterated long-held positions: U.S. officials called for structural changes in the Chinese economy and in how Beijing treats U.S. businesses; China called for dialogue instead of expensive tariffs.

백악관 공식입장은 세부사항을 언급하기는 거부했다, 일본에서 열릴 회담의 준비 혹은 예상하는 결과에 대해서.

그러나 양측은 장기간 고수한 포지션을 반복했다 : 미국 당국은 중국에게 경제와 미국 기업을 대하는 방식에 대해서 구조적인 변화를 주문했다; 중국 당국은 높은 관세 대신에 대화를 주문했다.

reiterate : 반복하다

“The key is to show consideration to each other’s legitimate concerns,” Xi said, according to Chinese state media. “We also hope that the United States treats Chinese companies fairly. I agree that the economic and trade teams of the two countries will maintain communication on how to resolve differences.”

핵심은 서로의 법적인 관심에 대해 배려심을 보이는 것이다. 시진핑이 말했다. 중국 주 미디어에 의하면.

우리는 또한 미국이 중국 회사를 공평하게 대우하길 원한다. 나는 두 국가의 경제팀과 무역팀이 어떻게 차이점을 풀어나갈 것인가에 소통을 유지할 것이라는 것에 대해 동의한다. 

Washington has already imposed 25% tariffs on $250 billion of Chinese goods, ranging from semi-conductors to furniture, that are imported to the United States.

Trump has threatened to put tariffs on another $325 billion of goods, covering nearly all the remaining Chinese imports into the United States, including consumer products such as cellphones, computers and clothing.

Trump had made no secret that, despite his threat to escalate the dispute, he wanted to meet with Xi while they are both in Japan. China’s confirmation of the meeting avoids the possibility of a snub to Washington that could have triggered another round of tariffs.

Trump praised his relationship with Xi and spoke optimistically about getting a deal.

“I think we have a chance. I know that China wants to make a deal. They don’t like the tariffs, and a lot of companies are leaving China in order to avoid the tariffs,” he told reporters at the White House.

제 생각엔 아직 기회가 있습니다. 저는 중국이 협상을 하고 싶어한다는 것을 압니다. 그들은 관세를 좋아하지 않습니다. 그리고 다수의 회사들이 관세를 피하기 위해 중국을 떠나고 있습니다. 그는 백악관에서 기자들에게 말했다. 

“I think the meeting might very well go well, and frankly our people are starting to deal as of tomorrow. The teams are starting to deal. So we’ll see. China would like to make a deal. We’d like to make a deal, but it has to be a good deal for everybody.”

제 생각에는 회담은 매우 잘 흘러갈 것이로 생각됩니다. 솔직히 우리 사람들은 내일부터 협상을 시작할 것입니다. 팀은 협상을 시작하고 있습니다. 그래서 지켜볼 것입니다. 중국은 협상을 하고 싶어합니다. 우리도 협상을 하고 슾지만 모두에게 좋은 협상이어야 할 것입니다. 

as of tomorrow 내일부터

Trump’s tweet offered fresh fuel to a rally on Wall Street as investors bet renewed talks could diffuse the trade war. The S&P 500 gained nearly 1%, while the Nasdaq and Dow Jones Industrial Average both gained around 1.4%. All closed at their highest levels since early May when Trump knocked global stock markets by ratcheting up tariff rates on $200 billion of imported Chinese goods.

트럼프의 트윗은 월 스트리트에 반등이라는 신선한 연료를 주었고 투자자들은 재개하는 회담이 무역전쟁을 사그러들게 할 것이라 베팅했다. S&P500 지수는 1퍼센트 올랐고 나스닥과 다우존스 산업평균은 둘 다 1.4%씩 올랐다. 모두 5월 초 고점에서 마감했다, 트럼프가 수입산 중국산 물품에 1000억 달러의 관세를 단계적으로 부과하기 시작할 때 세계 주식 시장이 충격을 받았을 떄.

rachet up : 단계적으로 증가시키다, 하다

“This is a very positive development,” said Clete Willems, a former trade negotiator with Trump’s team.

“Leader level engagement at last year’s G20 was critical to jumpstarting the talks,” he said, citing last year’s meeting between Xi and Trump at the G20 in Argentina. “It will be essential to managing the current political dynamic and getting the talks back on track once again.”

White House economic adviser Larry Kudlow declined to give details on how the two countries would prepare for the Xi-Trump meeting and said the United States would continue to press for China to change its practices on intellectual property theft and requirements that U.S. companies share their technology to do business in China.

“Our position will continue to be (that) we want structural changes. We want structural changes on all the items ... theft of IP, forced transfers of technology, cyber hacking. Of course trade barriers. We’ve got to have something that’s enforceable,” he told reporters at the White House.

The two sides were close to a deal in May that addressed many of those concerns. But China sought to soften the legal requirements in the text of the deal, and the United States balked.

According to Chinese state media, Xi told Trump that the China-U.S. relations had encountered difficulties. “If China and the United States cooperate, both benefit. If they fight, both get hurt,” state media paraphrased Xi as saying.

Beijing wants the United States to lift its tariffs, but U.S. Trade Representative Robert Lighthizer, who has spearheaded negotiations, said on Tuesday that talks alone were not enough.

“I don’t know if it will get them to stop cheating, tariffs alone. I think you don’t have any other option,” Lighthizer told a congressional hearing. “I know one thing that won’t work and that is talking to them. Because we’ve done that for 20 years.”

TOKYO (Reuters) - Investor caution ahead of the Federal Reserve’s interest rate meeting capped Asian stocks on Tuesday, while crude oil prices retreated as global growth worries overshadowed supply concerns stemming from recent Middle East tensions.

화요일 연방준비제도이사회(FRB)의 금리 회의를 앞두고 투자자들은 조심스러운 반응을 보였으며, 국제적인 성장 우려로 최근 중동 긴장에서 비롯된 공급 우려가 무색해지면서 원유 가격은 하락세를 보였다.

The Shanghai Composite Index lost 0.25%, Hong Kong’s Hang Seng rose 0.15% and Japan’s Nikkei dipped 0.3%.

상하이 종합 지수는 0.25% 하락했고 홍콩 항셍 지수는 0.15% 상승했으며 니케이 지수는 0.3 떨어졌다.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2%.

Bucking the trend were Australian stocks, which rose 0.3% after minutes from the Reserve Bank of Australia’s (RBA) last policy meeting pointed to the possibility of another interest rate cut.

*Buck the trend : 대세를 거스르다

The Fed, facing fresh demands by U.S. President Donald Trump to cut interest rates, begins a two-day meeting later on Tuesday. The central bank is expected to leave borrowing costs unchanged this time but possibly lay the groundwork for a rate cut later this year.

Fresh hopes for looser U.S. monetary policy have been a tonic for risk assets markets, which were buffeted last month by an escalation in the trade conflict between Washington and Beijing. The S&P 500 has gained 5% this month after sliding in May on trade war fears.

MSCI의 일본 외 아시아 태평양 지역 지수도 0.2% 상승했다.

대세를 거스르는 호주 증시는 지난 호주 준비은행(RBA) 정책회의에서 또 다른 금리 인하 가능성을 지적한 이후 몇 분 만에 0.3% 상승했다.

도널드 트럼프 미국 대통령의 금리인하 요구에 직면한 연준(Fed)이 2일 오후(현지시간)부터 이틀간 회의를 시작한다. 한은은 이번에 차입비용을 그대로 두되 올해 말 금리 인하를 위한 토대를 마련할 것으로 보인다.

느슨해진 미국 통화 정책에 대한 새로운 희망은 지난 달 미국과 중국 사이의 무역 분쟁의 증가로 인해 완화된 위험 자산 시장에 강장제가 되어왔다. S&P 500지수는 5월에 무역전쟁 공포로 인해 하락했다가 이번 달에 5% 상승했다.

“In just a few months, the market has turned from being guided by the Fed to actively guiding the Fed,” wrote interest rate strategists at Bank of America Merrill Lynch.

Focus is now on how close the Fed could be to cutting interest rates amid the raging U.S.-China trade war, signs of the economy losing steam and pressure by President Trump to ease policy.

“The FOMC (Federal Open Market Committee) meeting is the week’s biggest event so there will be a degree of caution prevailing in the markets,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

“Expectations for a rate cut in July have increased significantly, so the markets could experience disappointment if the Fed does not send strong signals of impending easing.”

U.S. Treasury yields dipped on Monday after the New York Fed’s “Empire” gauge of business growth in the state showed a fall this month to its weakest in more than 2-1/2-years, fanning rate cut expectations.

The dollar index against a basket of six major currencies stood little changed at 97.468 after pulling back from a two-week high on the decline in Treasury yields.

The Australian dollar fell to a fresh five-month low of $0.6851 after minutes from the RBA’s June meeting showed the central bank thinks it may have to ease policy again to push down unemployment and revive wages and inflation.

The central bank cut rates to a record low of 1.25% at its meeting earlier this month, to support the slowing economy.

The pound extended an overnight slump and brushed $1.2512, its lowest since Jan. 3. Concerns that arch-Brexiteer Boris Johnson will replace Theresa May as prime minister have dogged sterling. [GBP/]

The euro was a shade higher at $1.1231 after spending the previous day confined to a narrow range.

U.S. crude oil futures shed 0.13% to $51.86 per barrel after retreating 1.1% the previous day and Brent crude lost 0.2% to $60.81 per barrel following Monday’s loss of 1.7%.

Oil prices had fallen on Monday as weak Chinese economic data released at the end of last week led to fears of lower global demand for the commodity. [O/R]

Concerns over weakening demand overshadowed tensions in the Middle East, which remained high following last week’s attacks on two oil tankers in the Gulf of Oman.

Organizers said almost 2 million turned out on Sunday to demand that chief executive Lam step down in what is becoming the most significant challenge to China’s relationship with the territory since it was handed back by Britain 22 years ago.

Sunday’s demonstration came in spite of Lam indefinitely delaying - though not withdrawing - the bill on Saturday in a dramatic climbdown that threw into question her ability to continue to lead the city.

On Sunday, she apologized for the way the government had handled the draft law, which had been scheduled for debate last Wednesday, but gave no further insight into its fate.

Organizers pressed ahead with the protest to demand the bill’s full withdrawal, as well as to mark their anger at the way police handled a demonstration against it on Wednesday, when more than 70 people were injured by rubber bullets and tear gas.

Some of Sunday’s marchers held signs saying, “Do not shoot, we are HongKonger.”

Police said the demonstration reached 338,000 at its peak. Organizers and police have routinely produced vastly different estimates at recent demonstrations.

Organizers estimated a protest the week before drew 1 million while police said 240,000.

“It’s much bigger today. Many more people,” said one protester who gave her name as Ms Wong. “I came today because of what happened on Wednesday, with the police violence.”

Loud cheers rang out when activists called through loud hailers for Lam’s resignation and the cry “step down” echoed through the streets.

“(An) apology is not enough,” said demonstrator Victor Li, 19.

‘SHORTING’ CARRIE LAM

The protests have plunged Hong Kong into political crisis, heaping pressure on Lam’s administration and her official backers in Beijing.

Critics say the planned extradition law could threaten Hong Kong’s rule of law and its international reputation as an Asian financial hub. Some Hong Kong tycoons have already started moving personal wealth offshore.

U.S. Secretary of State Mike Pompeo said President Trump would raise the issue of Hong Kong human rights at a potential meeting with president Xi Jinping at the G20 summit in Japan this month.

In a blog post published on Sunday, Hong Kong Financial Secretary Paul Chan sought to play down the impact of the protests.

“Even if the external environment continues to be unclear and the social atmosphere is tense recently, overall Hong Kong’s economic and financial markets are still operating in a stable and orderly manner,” he wrote.

Activist investor David Webb, in a newsletter on Sunday, said if Lam was a stock he would recommend shorting her with a target price of zero.

“Call it the Carrie trade. She has irrevocably lost the public’s trust,” Webb said. “Her minders in Beijing, while expressing public support for now, have clearly lined her up for the chop.”

In another indication of a possible shift of mood in the Chinese capital, a leader of the pro-democracy “Occupy” demonstrations that galvanized Hong Kong in 2014 appeared set to be released from jail.

Joshua Wong’s pro-democracy Demosisto movement said he would be freed on Monday.

Chinese censors have been working hard to erase or block news of the latest series of protests -the largest since crowds demonstrated against the bloody suppression of pro-democracy activists in and around Beijing’s Tiananmen Square in June 1989 - amid concerns that any large public rallies could inspire demonstrations on the mainland.

Pompeo said in an interview with “Fox News Sunday” he was sure the protests would be among the issues that Trump and Xi will discuss.

“We’re watching the people of Hong Kong speak about the things they value, and we’ll see what Lam’s decision is in the coming days and weeks,” Pompeo said.

Last week U.S. lawmakers introduced legislation that would require the U.S. government to certify Hong Kong’s autonomy from China each year in order to continue the special treatment the city gets under the U.S. Hong Kong Policy Act of 1992.

ONE COUNTRY TWO SYSTEMS

The city’s independent legal system was guaranteed under laws governing Hong Kong’s return from British to Chinese rule and is seen by business and diplomatic communities as its strongest asset.

Hong Kong has been governed under a “one country, two systems” formula since then, allowing freedoms not enjoyed in mainland China but not a fully democratic vote.

Many accuse Beijing of extensive meddling, including obstruction of democratic reforms, interference with elections and of being behind the disappearance of five Hong Kong-based booksellers, starting in 2015, who specialized in works critical of Chinese leaders.

Asked repeatedly on Saturday if she would step down, Lam avoided answering directly and appealed to the public to “give us another chance.”

Her reversal was hailed by business groups including the American Chamber of Commerce, which had spoken out strongly against the bill, and overseas governments.

The UK Foreign Secretary Jeremy Hunt said on Twitter: “Well done HK Government for heeding concerns of the brave citizens who have stood up for their human rights”.

In the self-ruled island of Taiwan, which China claims as its own, about 5,000 people rallied outside the parliament building in Taipei with banners saying, “No China extradition law” and “Taiwan supports Hong Kong.”

Some of the protesters in Hong Kong also waved Taiwan flags.

China’s top newspaper, the People’s Daily, on Sunday condemned “anti-China lackeys” of foreign forces in Hong Kong.

Lam had argued that the extradition law was necessary to prevent criminals hiding in Hong Kong and that human rights would be protected by the city’s courts which would decide on any extradition on a case-by-case basis.

Critics, including leading lawyers and rights groups, have noted China’s justice system is controlled by the Communist Party, and say it is marked by torture and forced confessions, arbitrary detention and poor access to lawyers.