Behind the puzzling state of the US-China trade dispute, with endless mixed messages emanating from Washington, we sense a growing consensus on how to address the way China interfaces with the Western economies. Plenty of evidence to back that up this week, including a decision by Canada to block a Chinese buyout of a Canadian construction company and rising demands in the US Congress for a robust approach to ZTE and even Confucius Institutes.
China’s investors have got the message that the world may be changing in ways that may not work to the benefit of the system, and the Shanghai stock market has had a bad week. The potential for defaults by some major companies is also weighing on sentiment. But overall, we give China a win on points in the first round of the US-China trade war, simply due to consistency of message. Having said that, there are more rounds to come, and at some point, one day, the systemic disconnect will need to be addressed.
Things have been going well on the Korea front from the perspective of Those in Command. Trump’s decision to cancel the Kim summit seems like a silly move. Why not hold to the meeting arrangement and let Kim cancel? Or make a fool of himself? The cancellation, we would say, puts North Korea back in Beijing’s pocket.
Enjoy the weekend ahead.
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