The US and China continued to fence ahead of the G-20 meeting which may or may not include a face-to-face by Xi and Trump. But Those in Command are pulling out lots of stops to stimulate the market and smother negative sentiment. No doubt with short-term speculative motives dominating, the Shanghai stock market and the RMB both eased off lows.
But the longer term prospects remain tough for Beijing’s leaders. Exports have maintained reasonable levels, but a lot of that will be front-loading, which will not carry into 2019. Will private enterprises believe the message that everything is great and investing is good? And will the state banks actually heed the stated policy shift and release funds in any meaningful quantity to non-state enterprises?
What this moment represents more than anything is China’s best opportunity for decades to explore diversity as an alternative. But it seems unlikely to happen any time soon. How the US-China face-off goes will depend on what Beijing offers. Given their position so far, it would seem unlikely the China team in Washington would accept anything short-term and cosmetic. And it is also unlikely that the system is hurting enough yet for Those in Command to offer anything more than that so soon.
Overall, this would be a good time for China to curry friendships around the world, and in terms of sheer tone-deaf slap-on-the-forehead missteps, it was hard to beat this week’s declaration that a 25-year ban on the import of tiger bones and rhino horns had been lifted.
Added to that was Cornell University’s decision this week to cut its ties with Chinese universities due to curbs on academic freedoms. They noticed! But it is a decision that will put the pressure on other universities and programs. Many charged into China a decade ago, eyeing the revenue potential in full awareness of the contradictions implicit in academic ventures in a place where VPN is required for standard web access. Ah, the ironies.
Enjoy the weekend.