The speed with which decoupling is proceeding is unsettling. It’s like watching a slow-motion video of something nasty happening.
There was a meeting in Hawaii between top Chinese representatives and Pompeo, and we know little about what happened, which suggests that both sides simply reiterated their positions. Who called for the meeting, we don’t know. What each side does with the information that there is presumably no flexibility on the other side … we will find out soon enough, in this awful year to end all awful years. There is tech decoupling and financial decoupling, and the financial side is more high profile at the moment. Chinese companies are moving to re-list in Hong Kong, which will be a boost for that cramped enclave. But the world’s biggest liquid pools of capital are still in the US.
The virus suddenly raised its ugly head again in Beijing, and that is going to push back opening efforts. Beijing was the fortress, and it was breached. How bad this year is going to be overall for the Chinese economy is still unclear. Much of the rest of the country is at least superficially looking pretty normal, although international borders are still firmly shut, and even domestic travel can be highly problematic, with green virus passes turning color if you stray too far from base. One researcher at the Academy of Social Sciences took a deep breath and predicted the GDP growth rate for the year will be 3%. They are spending lots of money on stimulus, and the end result will definitely be a declaration of victory, is all we can say with confidence right now.
Worrying times. Roll on November. The revelations in John Bolton’s new book make it clear which horse was and probably is still being backed, but Trump’s prospects of reelection are looking progressively dimmer. God knows what scorched earth approach he is likely to take before and after Election Day. Horrible year.
Meanwhile, enjoy the sunshine.