China slams Trump, US over response to George Floyd protests

Trump must lead the world in changing China: Milken Institute analyst

Milken Institute Asia Fellow Curtis Chin discusses US-China relations amid rising tensions in Hong Kong and investing in China’s military.

Chinese officials and state media clobbered the Trump administration's response to violent protests sweeping the U.S., comparing the widespread unrest that began last week to the pro-democracy demonstrations in Hong Kong.

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In a Sunday tweet directed at her American counterpart — Morgan Ortagus, who had previously criticized Beijing's crackdown on Hong Kong protests, China's foreign ministry spokespersons, Hua Chunying posted "I can't breathe."

Her message is a reference to some of the final words uttered by George Floyd, the African American man who died while being detained by Minneapolis police after a white officer pressed his knee into his neck for several minutes. His death, captured in a viral video as he pleaded that he could not breathe, ignited angry protests across the country that escalated over the weekend amid increasingly aggressive clashes between police and protesters.

CHINA'S TEPID TRADE-DEAL SPENDING LEAVES US FARMERS IN LIMBO

In some instances, police responded with teargas, pepper spray, rubber bullets and ramming protesters with vehicles; protesters have been accused of looting stores and burning buildings, and several major U.S. cities have implemented curfews.

"I have a question for violent protesters in Hong Kong and their supporters there: Would you stand with angry Minneapolis demonstrators who attacked police station, or would you stand with President Trump who threatens to shoot 'These THUGS'?" Hu Xijin, the editor-in-chief of the state-run Global Times, wrote in a tweet.

CHINA WIELDS CURRENCY AS WEAPON WITH TRUMP TENSIONS RISING

Hu also took a swipe at House Speaker Nancy Pelosi, who once described the Hong Kong protests as a "beautiful sight to behold."

"Now they can witness it by their home windows," he wrote. "I want to ask Speaker Pelosi and Secretary Pompeo: Should Beijing support protests in the US, like you glorified rioters in Hong Kong?"

"Why did the U.S. glorify the so-called pro-independence forces in Hong Kong as heroes, but call the protesters disappointed with racism in the U.S. rioters?" Zhao Lijian, a spokesman for Chinese foreign ministry, said during a Monday press briefing, according to the South China Morning Post. "Why did the U.S. criticize the very restrained Hong Kong police but shoot its domestic protesters and even mobilise its National Guard troops?"

Twitter is officially blocked in China, although state officials and state-sponsored entities have accounts on the social media platform.

CHINA TO HALT SOME US AGRICULTURAL BUSY, PUTTING TRADE DEAL AT RISK: REPORT

The comments come amid growing tensions between China and Hong Kong, as well as between Washington and Beijing.

One year after last summer's chaotic and frequently violent anti-government protests, the Chinese government announced plans to pass a controversial national security law to outlaw secession, subversion, terrorism and foreign interference in Hong Kong. The decision not only resuscitated the protests, but prompted President Trump to strip Hong Kong of its special status in a bid to punish China.

Hong Kong, a former British colony, was returned to China in 1997 under an agreement known as "one country, two systems," which allowed the city to retain a "high-degree of autonomy" for 50 years. The agreement expires in 2047.

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China’s Factory Outlook Slips in May Amid Slow Recovery

A gauge of China’s manufacturing activity slipped in May, underlining the slow pace of recovery from the first quarter slump.

The official manufacturing purchasing managers’ index declined to a worse-than-expected 50.6 from 50.8 a month earlier, according to data released by the National Bureau of Statistics on Sunday. The non-manufacturing gauge rose to 53.6. Readings above 50 indicate improving conditions.

The data indicate that China’s recovery from the pandemic shutdowns risks faltering after an initial rebound supported by pent-up demand. While industrial firms are mostly back at work and output is rising again, a collapse in orders has sent a shock-wave through the sector.

“Global demand is still weak even when lockdowns are relaxed in some major cities around the world,” said Iris Pang, greater China chief economist with ING Bank NV in Hong Kong. “The employment level was in contraction again in May, and that highlights the layoff of factory workers after factories have faced continual withdrawal of export orders.”

The sub-index of new export orders climbed to 35.3, manufacturing employment softened to 49.4, while non-manufacturing employment was at 48.5.

The government unveiled its stimulus package for the year at the National People’s Congress meeting which concluded last week, and scrapped a hard growth target in light of the uncertain global economy, while pledging targeted monetary easing and trillions of yuan in extra infrastructure spending.

Domestic factories have brought some workers back to staff production lines after the shutdowns in the first quarter and are increasing production, but many are facing a build up in inventories and uncertain orders. Others have not recovered, meaning bankruptcies and unemployment are expected to rise.

“The current global epidemic situation and the world economic situation are still grim and complex, and foreign market demand continues to shrink,” Zhao Qinghe, an economist with the statistics bureau, said in a statement accompanying the data release. Despite small increases in the manufacturing new export order index and import index this month, they “remain at historically low levels,” he said.

— With assistance by Sharon Chen, Yinan Zhao, and Lin Zhu

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Trump Weighs China Sanctions Yet Won’t Quit Phase One Deal

President Donald Trump has discussed punishing China’s financial sector through targeted sanctions and trade measures in retaliation for Beijing’s moves to curb Hong Kong’s autonomy — but won’t withdraw from his “phase one” trade deal with the country, according to people familiar with the matter.

Trump is expected to announce a U.S. response to China’s plan to impose a new national security law on Hong Kong at a White House news conference scheduled for Friday afternoon in Washington. Trump has also sought to blame Beijing for the coronavirus pandemic as criticism of his handling of the outbreak has mounted.

The president may also impose unspecified visa restrictions on Chinese travelers, the people said. They asked not to be identified discussing Trump’s plans ahead of his announcement and declined to detail the new policies.

The financial sanctions the White House is expected to announce Friday will be targeted in order to leave the U.S. room for escalation if necessary, according to a fourth person familiar with the matter. Trump officials crafting the sanctions are wary of the impact on global financial markets and retaliation from Beijing, the person said.

The retaliatory measures won’t include withdrawl from the “phase one” trade deal Trump signed in January, two of the people said. The White House declined to comment.

China’s legislature has approved a plan to draft legislation that Hong Kong democracy advocates say will curtail freedom of speech and undermine the city’s independent judiciary.

That prompted Secretary of State Michael Pompeo to announce earlier this week that the administration no longer considers the city sufficiently autonomous under a 1992 law that allows for easier travel and trade between the U.S. and Hong Kong. The law also allows companies based in the Chinese territory access to American technologies deemed sensitive to national security that face export restrictions in mainland China.

Chinese officials earlier Friday called potential U.S. actions over Hong Kong “purely nonsense,” saying the matter was an internal affair and that essential freedoms in the city would remain intact.

Beijing urged the U.S. to stop its “frivolous political manipulation,” Chinese foreign ministry spokesman Zhao Lijian told reporters at a daily briefing, reiterating Beijing’s support for Hong Kong police in upholding the law. Chinese officials have indicated they may retaliate against U.S. firms over the president’s decisions.

Trump’s announcement follows weeks of growing anger toward Beijing within the White House. The president and his advisers have repeatedly blamed the Chinese government for the coronavirus outbreak that began in the country’s Hubei province but has killed more than 100,000 Americans — a far greater death toll than China has publicly reported.

“Frankly the U.S. government is — I’ll use the word ‘furious,’ at what China has done in recent days, weeks, and months,” Kudlow said. White House economic adviser Larry Kudlow told Fox News earlier on Friday. “They have not behaved well and they have lost the trust I think of the whole Western world.”

The U.S. outbreak and the associated economic collapse from social distancing practices adopted to curb the virus’s spread have damaged Trump’s prospects for re-election, public polling shows.

Trump has also expressed frustration that Chinese purchases of U.S. agricultural goods are lagging behind levels agreed to in the “phase one” trade agreement he signed with a delegation from Beijing in January.

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Kudlow Says China to Be ‘Held Accountable’ for Hong Kong Move

China has made a “huge mistake” in passing a new national security law curbing freedoms in Hong Kong and will be held accountable by the U.S., President Donald Trump’s top economic adviser said.

“Essentially they have robbed Hong Kong of their freedom,” Larry Kudlow, the director of the National Economic Council, said in a CNBC interview on Thursday. “We can’t let this go unnoticed and they will be held accountable for that. If need be, Hong Kong may now have to be treated the same way China is treated.”

“China has made a huge mistake,” he added.

Trump told reporters later that he’ll hold a news conference on Friday to discuss China.

Secretary of State Michael Pompeo said Wednesday that Hong Kong has effectively lost its autonomy and no longer warrants special treatment under U.S. law. The declaration opens the door for Trump to impose penalties ranging from modest sanctions to try to curb China’s actions against its territory to revoking Hong Kong’s special trading status with the U.S.

The latter step would likely reorient global trade, plunge U.S.-China relations deeper into crisis and end any hope for a new trade deal between the world’s two largest economies.

Kudlow said that the “phase one” trade deal Trump signed with Chinese officials in January “does continue to go on for the moment and we may be making progress there. But I think their moves on Hong Kong are a very, very big mistake.”

— With assistance by Nick Wadhams, and Justin Sink

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Luckin Sold Vouchers to Companies Tied to Chairman, WSJ Reports

Luckin Coffee Inc., the fast-growing Chinese chain that’s at the center of an accounting scandal, inflated its sales by selling vouchers to companies that were tied to its chairman and controlling shareholder, the Wall Street Journal reported.

A fictitious procurement employee also processed more than $140 million of payments for materials and services, the newspaper said, citing internal documents and public records.

Luckin, which had billed itself as a rival to Starbucks Corp. in China as it expanded rapidly, is trading at a fraction of its former value after announcing investigations into fraudulent transactions representing a significant portion of its revenue. The company is being probed by regulators in both the U.S. and China, including the U.S. Securities and Exchange Commission, and has ousted its chief executive officer and other senior officials.

Representatives for Luckin did not immediately respond to a request for comment from Bloomberg News. The SEC declined to comment.

Nasdaq is looking to delist Luckin, although its shares are now trading again after being suspended for weeks.

After the company raised $645 million in an initial public offering in 2019, the company announced ambitious growth targets. Employees were already engineering fake transactions before the IPO, the Journal reported, citing people familiar with the matter.

The newspaper said 200 million to 300 million yuan ($28 million to $42 million) of sales were fabricated by employees using individual accounts to purchase the vouchers, according to the Journal. This then evolved into bulk voucher sales to little-known companies, including one that was linked to a relative of chairman and founder Lu Zhengyao, the report shows, citing corporate registry records.

Luckin grew quickly by employing a strategy used with CAR Inc., a vehicle rental business also founded by Lu, more than a decade ago: burning money — $130 million in a year — from investors to grab market share quickly. The company lured patrons with generous discounts: first-time customers got a free cup of coffee and six vouchers for 50% off future purchases.

— With assistance by Jesse Westbrook

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China votes to override Hong Kong’s autonomy on national security

America must stand with Hong Kong: Rep. Jody Hice

Rep. Jody Hice, R-Ga., says Americans must support the people of Hong Kong after China proposed a new national security law in its territory.

China’s legislature approved a resolution to impose national-security laws on Hong Kong, overriding the territory’s partial autonomy in a bid to crush anti-Beijing protests that have challenged Chinese leader Xi Jinping.

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The vote on Thursday, the end of a weeklong session of Beijing’s rubber-stamp legislature, the National People’s Congress, approved a decision to “establish and enhance the legal framework and enforcement mechanisms for national security” in Hong Kong, state broadcaster China Central Television said.

Some 2,878 lawmakers voted for the motion, with only one dissent. Six others voted to abstain, and one didn’t cast a vote.

HONG KONG'S 'ONE PARTY, TWO SYSTEMS' RULE IS DEAD, ACTIVIST WARNS

Chinese officials have said the resolution is necessary for safeguarding national security, saying unrest in Hong Kong that started last summer has severely threatened China’s sovereignty. They said Beijing had no choice but to step in to close legislative and enforcement gaps in Hong Kong after the city failed to enact its own legislation against separatist and subversive activities.

Opposition politicians and rights activists in Hong Kong have decried the resolution as a move to undercut the territory’s system of self-governance, known as the “one country, two systems” framework, under which Beijing had pledged to keep Hong Kong’s “capitalist system and way of life” unchanged for 50 years after Britain returned the city to Chinese rule in 1997.

The U.S. and other countries have voiced concern over the move as well. On Wednesday, the State Department said it no longer regarded Hong Kong as enjoying a high degree of autonomy from mainland China.

That declaration paves the way for U.S. measures including ending trade privileges for Hong Kong and imposing sanctions on individuals seen as suppressing civil liberties in the territory.

The resolution approved Thursday authorizes senior lawmakers in Beijing to write legislation to prevent and punish separatist, subversive and terrorist activities in Hong Kong, as well as foreign interference in the city’s affairs, according to the official Xinhua News Agency. The laws would then be promulgated by the city’s leader.

The resolution also allows mainland Chinese state-security agencies to operate officially in Hong Kong, according to Xinhua.

The Basic Law, Hong Kong’s mini-constitution, requires the city to enact its own legislation against secessionist, subversive and other activities that threaten state security. Hong Kong authorities attempted to do so in 2003 but abandoned the effort after half a million people took to the streets in protest. Local officials haven’t put forward any similar bills since.

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The resolution approved Thursday allows Beijing to bypass Hong Kong’s Legislative Council by tapping a provision in the Basic Law that allows China’s legislature to apply national laws to Hong Kong through promulgation by the city’s leader in matters of national unity or security.

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China Defends Tariffs on Australia Barley’s as Relations Sour

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China was “prudent” and “restrained” in its use of trade remedy measures according to the nation’s commerce minister, who defended the recent decision to impose anti-dumping duties on Australian barley as being based on evidence.

“We have found out that Australia has subsidized the grain, and there has been dumping in the Chinese market which caused damage to local producers,” Commerce Minister Zhong Shan said in a briefing on the sidelines of the ongoing national parliament sessions on Monday.

Australia has rejected the Chinese claim of dumping, with Trade Minister Simon Birmingham saying last week that “China’s decision is one that does concern us deeply, because it appears to have been based without a proper understanding of the facts or the evidence.”

Australia’s call for an independent investigation into the origins of the coronavirus outbreak has led to a worsening of relations between the two countries, with China’s ambassador saying last month that this could lead to a consumer boycott of Australian beef or wine. The barley tariffs and the banning of beef exports from four meat plants this month added fuel to the debate in Australia over whether China was trying to punish the nation for calling for an investigation.

A Chinese foreign ministry spokesman later said that the meat bans were a health and safety issue, and denied any link between the action and the call for a probe. China imposed an anti-dumping duty of 73.6% and an anti-subsidy duty of 6.9% on Australian barley, effective from May 19.

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China is considering targeting more Australian exports including wine and dairy, people familiar with the matter told Bloomberg last week.

Zhong didn’t mention the deterioration of bilateral relations and didn’t indicate if any more measures are on the way. Instead, he said the investigation into barley imports, which started 18 months ago, was a lawful action.

This is the first trade-remedy investigation China has launched against Australian goods since the establishment of bilateral relations, according to Zhong. During the same period, Australia has made 100 actions against Chinese goods, with three started just this year, he said.

Diplomatic relations between two nations have worsened in recent years, with Australia saying Beijing’s “meddling” in its government, media and education system was a catalyst for new anti-foreign interference laws in 2018. Like the U.S., Australia has also banned Huawei Technologies Co. from building its 5G network.

Zhong called on the members of World Trade Organization to use trade remedy measures “with caution” as the spreading pandemic is damaging global commerce.

— With assistance by Sharon Chen, and Miao Han

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China sanctions 'likely' over Hong Kong national security law: White House

Hong Kong residents protest new Chinese security bill

China is looking to pass a bill that would change security rules and criminalize activities ‘subversive’ to the government and allow Chinese security agencies to work in Hong Kong. FOX Business’ Edward Lawrence with more.

National Security Adviser Robert O'Brien warned on Sunday that the United States may impose sanctions if China goes through with a controversial national security law that would put Hong Kong's independence at risk.

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"It looks like with this national security law, they're going to basically take over Hong Kong," O'Brien told NBC's "Meet the Press." "If they do, under the 1992 Hong Kong Policy Act and the Hong Kong Human Rights and Democracy Act of 2019, Secretary Pompeo would likely be unable to certify that Hong Kong maintains a high degree of autonomy. And if that happens, there will be sanctions that will be imposed on Hong Kong and China."

U.S. Secretary of State Mike Pompeo said in a statement on Friday that any decision "impinging on Hong Kong’s autonomy and freedoms as guaranteed under the Sino-British Joint Declaration and the Basic Law would inevitably impact our assessment of 'One Country, Two Systems' and the status of the territory."

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The measure, which goes against Hong Kong’s Basic Law that says such proposals must be passed by the city government, would quash the "one country, two systems" principle that has allowed the global financial hub to flourish since Britain's 1997 handover to China. It also would jeopardize Hong Kong's access to sensitive U.S. technologies it has received under the 1992 U.S.-Hong Kong Policy Act and would subject the city to tariffs from the United States.

National Security Adviser Robert O’Brien. (Photographer: Al Drago/Bloomberg via Getty Images)

O'Brien also said that global corporations could potentially pull out of China's financial markets in response to the security law, making it difficult for Hong Kong to remain "the Asian financial center that it's become."

"I just don't see how they can stay. One reason that they came to Hong Kong is because there was the rule of law there, there was a free enterprise system, there was a capitalist system, there was democracy and local legislative elections," O'Brien said. "If all those things go away, I'm not sure how the financial community can stay there."

CHINA'S TEPID TRADE-DEAL SPENDING LEAVES US FARMERS IN LIMBO

He added that China is dependent on capital from the rest of the world to build its economy and grow its middle class and that losing that financial support over the security bill would be detrimental.

"They're dependent on liquidity and financial markets," O'Brien said. "If they lose access to that through Hong Kong, that's a real blow to Xi Jinping and the Chinese Communist Party side. I hope they'll take that into account as they contemplate their next step."

On Sunday, thousands of Hong Kong citizens took to the streets to protest the measure.

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Pro-democracy protesters march during a protest against Beijing’s national security legislation in Hong Kong, Sunday, May 24, 2020. Hong Kong’s pro-democracy camp has sharply criticized China’s move to enact national security legislation in the semi-autonomous territory. They say it goes against the “one country, two systems” framework that promises the city freedoms not found on the mainland. (AP Photo/Vincent Yu)

O'Brien praised the protestors for standing up for the rule of law.

"I think what we can all be proud of are the people of Hong Kong who have taken to the streets to to show all of us who enjoy democracy and the rule of law in our countries how precious that is," O'Brien said. "They're out in the streets this weekend demonstrating that they want to be free people and they want to elect their own leaders and have the right to worship as they see fit and earn a living the way they see fit."

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He believes that if the bill is passed and Beijing is given control, Hong Kong's people will leave the city.

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"They're not going to stay in Hong Kong to be dominated by the People's Republic of China and the Communist Party," O'Brien said. "So I think if China goes through it and imposes its law, which I think could be a big mistake, I think it's gonna be very difficult for the people of Hong Kong."

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Beijing Urges U.S. to Drop ‘Wishful Thinking’ of Changing China

The U.S. should give up its “wishful thinking” of changing China, Foreign Minister Wang Yi said, warning that some in America were pushing relations to a “new Cold War.”

“China has no intention to change the U.S., nor to mention replace the U.S. It is also wishful thinking for the U.S. to change China,” Wang said Sunday during his annual news briefing on the sidelines of National People’s Congress meetings in Beijing.

The U.S.-China relationship has worsened dramatically in the past few months as America became one of the countries worst hit by the coronavirus pandemic, which was first discovered in the Chinese city of Wuhan. The world’s two biggest economies have clashed on a range of issues from trade to human rights, with Beijing’s latest move to tighten its grip on Hong Kong setting up another showdown between U.S. President Donald Trump and China’s Xi Jinping.

“Some U.S. political forces are taking hostage of China-U.S. relations, attempting to push the ties to the brink of so-called ‘new Cold War,’” Wang said. “This is dangerous and will endanger global peace.”

Cornered China Dares Trump to Hit Back With Hong Kong Power Grab

Tensions also spiked after China announced Thursday that the NPC would write sweeping legislation into Hong Kong law to criminalize the harshest criticism of China and the ruling party. The move drew swift condemnation from pro-democracy activists in Hong Kong, who defied virus-related social-distancing measures and rallied in the city center even as Wang spoke.

Secretary of State Michael Pompeo called the measure a “disastrous proposal” and indicated that it could lead the U.S. to reconsider the Hong Kong’s special trade status.

Wang on Sunday repeated China’s stance that Hong Kong affairs were its internal affairs and said the principle of non-interference must be upheld by all countries. He said implementing the national security law would only affect a small number of people.

U.S. Bills

U.S. lawmakers have advanced several pieces of legislation targeting China in recent weeks with bipartisan support amid mounting calls for lawmakers to punish Beijing for its alleged failure to disclose information early on about the spread of Covid-19. The pandemic has cost almost 100,000 American lives and resulted in tens of millions in job losses.

One of the bills passed by the U.S. Senate would delist from American stock exchanges Chinese companies that refuse to comply with U.S. accounting disclosure regulations, and could lead to the barring of tech giants like Alibaba Group Holding Ltd. and Baidu Inc.

Xi said Saturday he won’t let China return to its days as a planned economy, pushing back against U.S. criticism that the nation has failed to deliver on promised reforms.

Five Flashpoints to Watch as U.S.-China Relations Worsen

“We’ve come to the understanding that we should not ignore the blindness of the market, nor should we return to the old path of a planned economy,” Xi told political advisers gathered in Beijing for their annual legislative sessions, according to the official Xinhua news agency.

— With assistance by Sharon Chen, and Jing Li

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China stands by pledge to implement US trade deal despite tensions

China on Friday repeated its pledge to implement its landmark trade deal with the US amid growing tensions between the two countries.

“China will continue to boost economic and trade cooperation with other countries to deliver mutual benefits,” premier Li Keqiang said at the annual meeting of China’s parliament in Beijing, according to Bloomberg News.

American and Chinese officials agreed earlier this month to forge ahead with the phase-one deal that President Trump signed in January even as the White House slammed China’s handling of the coronavirus pandemic.

US officials touted progress toward implementing the deal Thursday as they added agricultural products such as blueberries and Hass avocados to the list of items that can now be exported to China. Beijing has also updated its lists of American facilities eligible to export meat and dairy products, officials said.

“China has worked with the United States to implement measures that will provide greater access for US producers and exporters to China’s growing food and agricultural markets,” US Trade Representative Robert Lighthizer said in a statement.

But Trump has said the trade pact “doesn’t feel the same” now that the coronavirus crisis has roiled the global economy. He suggested last week that the US could “cut off the whole relationship” after the administration accused the Chinese Communist Party of trying to cover up the outbreak.

China is now threatening to retaliate if the US passes a law that would let Trump sanction the country over its handling of the virus, according to Singapore’s Straits Times newspaper.

“China will never start trouble but will never flinch when trouble comes its way,” Zhang Yesui, a spokesman for China’s National People’s Congress, reportedly said at a news conference. “We will resolutely defend our sovereignty, security and development interests.”

With Post wires

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