A week is a long time in politics, a wise man once said, and never was it more true than this past week. Brexit has been the topic on top of everything else, and the basic question for us, dear readers, is still whether or not it will actually happen. Our guess? It will not. If Boris doesn’t have the confidence to lead the cause he championed, then why should anyone else?
For China, the noise and confusion caused by the Brexit vote fallout provided the perfect cover for a sly devaluation of the RMB, by 1% on Monday. That brings to nearly 3% the amount of value lost by China’s currency since March. The indications are, we would say, that the authorities want a weaker RMB to support the economy – a measure of the importance of exports even now – in spite of the extra incentive it provides for capital flight. It’s getting harder to change the people’s money into the cash of capitalists elsewhere, but money will always find a way.
And so what does Brexit mean for China, you ask? It provides a neat opportunity for the Propaganda Dept. to launch smug broadsides about the failings of western liberal democracy, although they said the same in 2008 and 2009 when the world financial crisis hit. You can argue it both ways. Maybe China is now the best political system and economic system in the world, or maybe the Western system is in the process, yet again, of proving its flexibility and resilience. We’re rooting for the latter, but let’s not take too long about it, shall we?