The Trump administration is holding fast in its confrontation with China over Beijing’s illicit trade practices and other nefarious activities.

A U.S. official tells Inside the Ring that Chinese Communist Party officials in May backed away the 150-page draft agreement that was developed over several months.

Senior Chinese officials realized the agreement would be an admission by Beijing that it was guilty of massive cyber and intellectual property theft, forced technology transfer, currency manipulation and complicity in shipping the deadly opioid fentanyl into the United States. Additionally, U.S. monitoring of Chinese compliance with such an agreement would require large-scale intelligence resources from spy agencies already taxed with monitoring global hot spots and other threats.

A next round of trade talks is expected to take place in Washington this month.

When U.S. and Chinese officials met last month in Beijing, the talks hit an impasse with Beijing officials digging in their heels in refusing to acknowledge past illicit activities.

The administration is under pressure from pro-China elements on Wall Street who are pushing what was described as a “halfway” deal. The pro-China advocates want to make new concessions to Beijing in exchange for President Xi Jinping’s government promising to open up China’s financial markets to American competitors.

China’s strategy also appears to be aimed at waiting out President Trump in hopes he will lose the 2020 election. Beijing influence operations have targeted U.S. farm states and the whisky industry in a bid to undermine the administration’s tough stance toward China.

Mr. Trump on Tuesday tweeted that the United States is doing very well in its talks with China.

“While I am sure they would love to be dealing with a new administration so they could continue their practice of ‘ripoff USA’ ($600 B/year), 16 months PLUS is a long time to be hemorrhaging jobs and companies on a long shot,” Mr. Trump said.

The president then warned the Chinese that he will take an even harder line upon his reelection.

“And then, think what happens to China when I win,” he tweeted. “Deal would get MUCH TOUGHER! In the meantime, China’s Supply Chain will crumble and businesses, jobs and money will be gone!”

China eying Hong Kong crackdown

The Trump administration is increasingly concerned China is preparing for a military crackdown in Hong Kong, despite the announcement by the Beijing-linked chief executive that the controversial extradition bill that triggered the latest mass protests has been tabled.

Recently, American intelligence agencies detected a large shipment of Chinese troops and armored vehicles to Hong Kong, according to U.S. officials. No details of the shipment were provided, but a report from Hong Kong by the defense publication Shephard Media reported that a large Chinese cargo ship delivered troops and equipment on Aug. 28 at the Stonecutters Island Naval Base in Hong Kong.

The report stated that the ship was the Chang Da Long, a vehicle carrier.

The ship was supplying a rotation of forces for China’s 5,000-troop People’s Liberation Army Hong Kong garrison, the force that would likely be called on to conduct a crackdown and imposition of martial rule in the former British colony.

The ship also was tracked from nearby Shenzhen where personnel from the Chinese People’s Armed Police have been photographed assembling.

The report said that the ship appeared to be operating in a disguised mode with its automated identification system turned off.

Another ominous indicator was the comments of Xy Luying, a spokeswoman for China’s Hong Kong and Macau Affairs Office. Ms. Xy told reporters on Tuesday that the PLA garrison in Hong Kong would be used to “safeguard” national sovereignty.

She added that the use of military troops would not end the “one country/two systems” policy designed to protect the city’s semi-autonomous status.

China’s leaders in Beijing are attempting to quell the sometimes violent protests in Hong Kong, over concerns the unrest will upset plans for the major 70th anniversary of the founding of the Chinese Communist Party on Oct. 1.

Hong Kong Chief Executive Carrie Lam announced Wednesday the withdrawal of the controversial extradition bill that would have allowed authorities to send people from Hong Kong to China where courts are controlled by the Communist Party of China.

Pro-democracy protests, including one mass gatherings of up to 1.7 million Hong Kongers, demanded that the bill be withdrawn as a violation of the “one country, two systems” pledge dating back to the days when the colony reverted from British to Chinese rule in 1997.

“Lingering violence is damaging the very foundations of our society, especially the rule of law,” Ms. Lam said in her public address.

Reports from Hong Kong reveal that Chinese security and intelligence forces have been conducting arrests and beatings of protest leaders in an effort to quell the unrest without resorting to military force.

There also were reports that Chinese security personnel were operating undercover as protesters and engaged in provocative activities, including the tossing of Molotov cocktails fuel bombs.

Pentagon on insider threat

The Pentagon announced this week it will continue work to uncover “insider threats,” along with a government entity called the National Insider Threat Task Force. The effort is part of an initiative by the Director of National Intelligence National Counterintelligence and Security Center. The FBI and the Department of Homeland Security also are taking part.

In a statement, the Pentagon said September was designated “insider threat awareness month.”

“Insider threat awareness is about enabling employees to recognize the indicators to deter, detect and mitigate actions by insiders who may represent a threat to national security,” said Garry Reid, director for defense intelligence in the office of the undersecretary of defense for intelligence.

The Pentagon has been victimized by two notorious insiders.

Army Pvt. Bradley Manning leaked tens of thousands of secret cables and other secret documents to the anti-secrecy website WikiLeaks. Manning was court-martialed and imprisoned in 2010 for the leaks but the sentence was commuted by President Obama in 2017, sending a mixed signal regarding the government’s seriousness about insider threats.

Then came National Security Agency contractor Edward Snowden, who leaked downloaded 1.7 million intelligence documents and gave them to reporters. The documents outlined NSA’s electronic spying capabilities.

Snowden is currently in Moscow under Russian government protection.

The Pentagon statement said past compromises of national security information by trusted insiders “made America less safe by allowing adversaries unauthorized access to information.”

“Adversaries have used the knowledge from insiders to change tactics to avoid detection and learn where the nation is most vulnerable,” the statement said. “These actions, coupled with incidents of senseless loss of life perpetrated by insiders, have highlighted the need for uniform engagement.”

• Contact Bill Gertz on Twitter @BillGertz.

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