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Hong Kong protests the impact on Chinese economy and US-China trade

Protesters demonstrated in Hong Kong.

Miguel Candela | SOP images | LightRocket | Getty Images

The months-long protests in Hong Kong could soon end, according to strategist David Roche, who said they will be "resolved or crushed" before October 1 – the 70th anniversary of China's National Day. [19659002] How China responds to the situation in the city is crucial in determining how the US-China markets and trade talks will be affected, he told CNBC on Friday.

In fact, politics goes hand in hand with the Chinese economy, Roche said.

"I do not accept that this will be a small problem in a larger economy in China. The reason I am not is because I believe that intervention (from Beijing) to Hong Kong will be immediately linked to what is happening. with trade. talks and international relations globally, "said Roche, president of research and investment consulting firm Independent Strategy.

Roche said "Beijing must weigh two things: the political and economic cause."

Economic Impact [1
9659009] View of the Bund, a beach area in central Shanghai.

Frédéric Soltan | Corbis News | Getty Images

Ray Dalio, founder of the investment firm Bridgewater Associates, said the protests "have gone beyond a demonstration" and have become "a revolution in Hong Kong."

"It is disruptive and has global geopolitical implications," he told CNBC's Christine Tan about "Managing Asia." on a 3 or 4, on a scale of one to 10. From a larger perspective, Hong Kong is just a "small place" in a "very large living economy" that is China.

Wall Street has not yet priced in the events in Hong Kong at this point, according to Tim Seymour, director of investment manager at Seymour Asset Management. He echoed Roche's sentiments and warned investors to be vigilant about the effects, especially on Asian economies.

"Wall Street does not recognize the distraction this may be for any trade resolution," Seymour told CNBC on Friday.

Trade talks "getting worse"

On Wednesday, Trump tweeted that he proposed a "personal meeting" with China's President Xi Jinping over the Hong Kong crisis.

But Roche said he doesn't think the meeting will happen.

He said Beijing is already annoyed by the United States telling Chinese authorities "how to run their country," citing Hong Kong and Taiwan affairs. If the US continues with this behavior, Beijing's frustrations will be reflected in the trade talks, according to Roche.

Investors' biggest fear would come true "if trade talks are expanded to cover political issues in Hong Kong," Roche said. [19659002] "That's exactly why the trade negotiations will be worse," he said.

– CNBC's Weizhen Tan contributed to this report.

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