The pieces of the next phase of history are falling into place. Biden is going to be sworn in as US president on Jan 20, and the world is reconfiguring itself in response. For Beijing, the questions are: What attitude is Biden going to take and what is the best way of dealing with him? Our guess is that their basic and most important response is more of an opening up of the financial system to key players such as Goldman Sachs. That is, they can balance off the negativity in many areas of Washington, and other capitals, by having the money people on-side. It worked in the mid-1990s when Clinton pushed the human rights lines and was firmly swatted down by Wall Street, who wanted to make large amounts of money off China IPOs. And they did. In the next phase, access to China’s financial system will be the key. it’s just a thought, but money talks, as they say.
Another possibly related development is that there are signs that the EU and China are getting close to finalizing their long-delayed mutual investment agreement. If that is signed before Jan 20, it would send a message to Biden that putting together a grand coalition is not necessarily going to be so easy.
Trump still has just over a month to go in the White House and apart from what is surely going to be the greatest list of pardons and commutations in US history, there is still the opportunity for his China team to run some more interference. Particularly aimed at obstructing the finance side, and pushing forward the “de-coupling” process in some other ways. It’s all murky, but the indications are that Biden is likely to leave in place whatever policies and measures have been implemented up to Jan 19, at least for a while.
And so the year draws to a close. This missive will be taking a break for next week. We wish our readers fewer surprises in the year ahead than we have seen in this one, and all of them good.