So Trump and Xi met on the edges of the G20 in Osaka, and what precisely came out of it? The answer seems to be almost nothing. We are fundamentally where we were before. Agreement was reached to resume the US-China trade talks, but actually contact never stopped. Trump said something about American companies still being able to sell to Huawei, but exactly what that means is not clear, beyond the obvious point that Huawei is absolutely not off the American hook and the US government staff were told to treat Huawei as blacklisted. US tariffs on Chinese goods have not been upped but they are still in place at the same levels as before the summit. The Chinese may or may not buy more American soybeans. The Shanghai stock market, which was solidly up in the run up to G20, was today hovering back around the key 3,000-mark.
An important development this week was announcements that HP and Dell have both decided to shift production out of China. Meanwhile there were statements in Beijing on further easing of restrictions on foreign ownership of a wide range of businesses from finance companies to city gas lines. The question is, how important is foreign investment in terms of China’s economic growth, and the answer is much less unimportant than it was 20 years ago. Meanwhile, investment the other way is way down as well. Outbound M&A funds in the first half of this year were at the lowest level since the first half of 2013. Is it all part of a de-coupling process? It sure feels like it.
Have a good weekend.