In a news-heavy week, the Singapore meeting between Trump and Kim was the clear winner in terms of both number of headlines and lack of substance. Although that’s not quite true. The Trump announcement to end joint military exercises with South Korea without getting anything in return again raised the question of Trump’s motives, but Those In Command here are just pleased that he is In Command there. Bottom, line, it was farcical and the winner by a mile was the CCP.
The ZTE deal also went through, and the market value of the company dived as people saw the implications of the fine imposed, the restrictions involved and the possibility of the US Senate pushing for the original ban to be re-instated – effectively a death sentence for ZTE in retaliation for its flouting of UN sanctions on Iran. But stock prices can go up as well as down, and at this point the ZTE drama has to be seen as yet another win for Those in Command in the US-China tussle.
Our eyes remain instead on the larger unknowable – the terms of the BRI deals, local government debt, the state of the financial system, and of the property market. In that regard, particularly noteworthy was a comment from Guo Shuqing, head of China’s Banking and Insurance Regulatory Commission (CBIRC), who said the deleveraging drive must be in proportion to what the market can handle. There is what appears to be the shadow of fragility darkly visible behind the opaqueness.