The top China news of the week has to be the totally off-the-wall but-what-else-is-new comment Trump made saying, why not just cut all trade links with China, adding that he just had no interest in talking to his buddy Xi right now. Trump is handing the ammunition for free to Zhongnanhai every day. Biden weighed in to accuse Trump of “tough talk, weak action” on China, while the Trump side said that Biden is a “China’s puppet.” All good fun in an election year. China is the main theme because that and Obamagate are the ways that Trump wants to distract people from the awful impact of the virus. If the virus is still to any extent scything its way through the American population and economy come October, then surely it’s curtains for Trump, and his flailings suggest that he knows it. And the best guess would be that the virus is not going to suddenly disappear.
It’s far too early to declare anything close to all-clear, but there are signs that China is elbowing its way out of the virus morass. Industrial output numbers for April bounced up, although retail sales and investment remained weak. The Center ramped up its financial stimulus efforts, and made one of the aspects where China is trouncing the West – mobile payments – to get money into the hands of consumers super-fast.
But the big questions still loom. Unemployment is up big-time in the United States but it’s up big time in China too. Debt of all kinds will undoubtedly balloon, even though it is clear that the mad spending in China on any and all projects regardless of viability that was a part of the stimulus packages in 2008-9 will not be repeated. The markets to watch for signs of what’s really going on, as always, are the property market and the RMB exchange rate, where the rubber really hits the road, domestically and internationally. Today, it is at 7.10, which is not 6.9, the level it maintained for several years until it slipped late last year past the magic 7.
So when does travel resume? The first sign of opening came this week with talks of German engineers maybe being allowed in. When will foreigners be allowed in to Beijing and Shanghai from, say, Hong Kong – three pretty virus-clean cities? The answer perhaps is after the National People’s Congress – mid-June maybe? At some point, people need to start moving again, and with precautions in place and proof of not having left those three cities for 14 days, for instance, why not make that a first step?
Summertime, and the living ain’t easy.