Another roller-coaster ride for US-China relations this week, largely driven by the wild tweeting of Trump, but the feeling at the end of it all is that the Chinese leadership has decided to take to the mattresses and dig in for a long confrontation, presumably betting that the other side will blink first. It is certainly true that the Chinese system and the psychology of Chinese people allow for tenacity and perseverance in the face of adversity, but the question of who can hold out the longest is at least an open one. The US stock market is reacting up and down to the prospects of a China deal, but while the US economy is facing rocky times according to many pundits, it has a depth and resilience and fundamental structural health that is not true of the Chinese economy. China’s marriage rate has just fallen to its lowest level in 11 years, as a small example. The differential in transparency as always makes it hard to take a clear view, but after careful consideration of tea leaves, we still come away with the view that China needs the world more than the world needs China. The Chinese state capitalist model certainly looks tempting when we are faced with the likes of Trump and Boris and Amazon rainforest fires. But there’s a question mark over brittleness and mandated calm. And so we wait. Summer’s almost over and the remainder of the year is going to provide some solid pointers on how all this plays out. Bring it on, is how we’re feeling right now.
Enjoy the weekend.