There’s nothing we love so much, dear readers, as a nice, dramatic heel turn. Whether it’s from good to bad or bad to good, there are few things quite so enjoyable as a sudden reversal. And this week has had plenty of them.
This week came out swinging with Beijing’s decision to allow the official figure for Q3 GDP fall below its target of 7% growth. Perhaps, some supposed, the gentlemen in Zhongnanhai were serious about this economic reform thing after all–or they might have done, had regulators not intervened in China’s bond market in an attempt to save state-run Sinosteel from default.
Then came another stunner: The US Treasury softened its longstanding hard line on China’s currency in its semi-annual report to Congress, downgrading the yuan from a notorious state of “significantly undervalued” to a rather less nasty sounding “below its appropriate medium-term valuation”. This shortly after China’s capital outflows were found to have passed US$500 billion in the first eight months of the year, and the country’s forex reserves standing substantially lower at US$3.5 trillion–or so we’ve been told, as some have recently questioned exactly how the latter is tallied.
By any measure, though, few expected hog prices on the mainland to fall quite so suddenly, thanks in no small part to the value of locally grown feed plummeting. Indeed, Chinese-grown corn and wheat have taken an unexpected turn for the worse, tumbling past authorities’ erstwhile price floors to potentially upend an oft-maligned subsidy program that pro-market reformers have criticized for years.
But perhaps no turn has been more marked than that of the UK, which has of late pivoted so dizzyingly in Beijing’s direction as to provoke mild nausea. This week saw the London Metal Exchange give China more input on prices, the announcement of a Chinese currency center in London, and an agreement granting a tremendous stake in an English nuclear plant and rights to build another to a state-owned Chinese nuclear firm whose safety record raised not a few eyebrows, if not Geiger counters.
With a total of nearly US$61 billion in deals signed between the UK and China, it’s little wonder that this week Xi Jinping found himself greeted by the prime minister, riding into town in a literal gilded carriage, bedding down in Buckingham Palace and feted by no less a personage than the Queen of England. But perhaps that last bit was only a matter of course. After all, Her Majesty is already well-versed in the practice of handing over British assets to China.