There was a general sense of gloom this week. These are strange days, make no mistake. In terms of the US-China trade situation, the messages out of both Washington and Beijing provided us with little clarity on where things are going. There is an obvious desire on the part of both sides to reach some kind of an agreement which can be pitched to the market as the beginnings of a resolution to the problem, but there is no indication of what terms would work. The next talks, it was revealed this week, are likely to be held in China, but both the Chinese and the Americans are looking for some indication that they are going to get something substantial before they meet—which appears to be a real problem. The American side is apparently after substantial comfort in the areas of intellectual-property protection, forced technology transfers and agricultural purchases. None of which impact on Beijing’s bottom line of not compromising on anything that impacts the centralized state-run nature of the economy, but … we still don’t have a deal.
On the other side of the ledger, the telecoms giant Huawei, which has been a focus of the entire US-China standoff over the two years, received yet another license extension from the White House, allowing US companies to provide some products and services to the company, with approval. But a group of 15 US senators from both sides of the aisle signed a letter calling on Trump to stop the extensions, pointing to the declarations regarding national security concerns made by Secretary of State Pompeo and others.
In other news, it was a difficult week for Hong Kong, and the US Congress passed a related bill that is now for Mr. Trump to sign. The dominant opinion in the US media was that Trump is expected to sign the bill into law, but we would say that it is far from being a certainty. It is the sort of thing he could also easily decide to not sign. Because of course, he is Donald J. Trump.
The overall economy feels like it is continuing its slowdown. The property market is the heart of the heart, and the Financial Times had a story saying that a subsidiary of China’s largest construction group had suspended work on a massive tower in Wuhan because the developer, Greenland Group, had failed to make a key payment. That is no small issue.
Enjoy the weekend.