The week was dominated by the protests in the US, played up on China media to compare with similar protests in other places and in other eras. But some incidents of looting, the demonstrations and the Trump reaction pointed to an ever-greater likelihood of him losing in November. Silver linings appear from strange places. Biden is now well ahead in the polls and there is a prospect of Team Biden taking the full trifecta, including the Senate. This has huge implications for not only the US-China relationship but also for the US-world relationship, and the China-world relationship.
Meanwhile, the virus is marching on, and the full force of the economic impact has yet to be felt. China’s economy is coming back, and Beijing is reported to be pouring money into the private sector to key unemployment in check. This is going to be the toughest year for Chinese school and college graduates in a very long time. Exports and consumer demand continue to be very weak. People are saving rather than spending. The massive property group Vanke announced it was going to do a share listing in Shanghai to raise funds to meet foreign debt obligations amounting to $1 billion, which is not a good sign. But the overall poverty eradication goals, due to be met this year, will be declared as having been met. When China will open its borders again is an increasingly important question. A special flight arrived last Friday from Germany carrying engineers needed to maintain production at factories in China. But for others? Who knows? August, maybe?
The US-China relationship became even more rocky, with Hong Kong and Huawei being among the top irritants. But there are indications both sides have decided to agree that the first phase trade deal will remain in place, with China placing at least some orders for US agricultural products in spite of rhetorical battles raging alongside. There were signs of the financial relationship also heading for a ruction – and HSBC was amazingly thrust into the decoupling headlights. How that makes sense for Those in Command is difficult to fathom, but there it was, an ultimatum, which presumably will have short-term and long-term implications. But is either side in a position to try a financial nuclear option? Unlikely. Nevertheless, the decoupling continues apace, with consequences that can only be guessed at. This year of surprises has more in store for us yet.
Have a good weekend.