China this week launched off into the murk of the pig year with quite a few uncertainties hanging over it. The economy is slowing, and while it is unclear by how much and with what consequences, the situation seems atmospherically less fraught than it did in January. The caveat, as always, is the opaqueness that hangs over everything.
The latest analyst guesses put this year’s GDP rate in the 6% range, the indications are that the lunar new year break saw quite weak consumer spending and the impact of the slowdown on jobs and unemployment could be bigger than we thought. Exports in January did better than many expected, but it could be mostly a last-minute front-loaded rush to beat any hike in US tariffs. The US-China trade talks continue, and it’s easy to speculate and impossible to know how they are really going. The general sense of the US side is that the forces for holding out for something solid from China are holding firm, while Those in Command of course don’t want to give up anything fundamental. We saw one report indicating the US trade talks is the single most-censored online topic, so it must be tricky situation. On the other hand, there was talk this week of the deadline being pushed back, which gives us the opportunity of being both optimistic and pessimistic.
Internationally, things got more fraught during and after the break. The EU is moving towards more stringent controls on inward investment, Huawei is under growing pressure all around the world, Ms Meng remains in suspended animation in Vancouver, and even little New Zealand is being forced to make the big choice – China economic ties or Western security ties. It’s a tough call.
Stay warm over the weekend.