The US-China trade talks rumble on, and the details are pretty irrelevant beyond the following – it looks like progress is being made, it looks like an overall structure of a deal is emerging, it looks like it will take the heat off China for a while and involve promises of purchases of lots of American goods. But the really meaty stuff will involve what requirements the US side has with regard to leveling the playing field – that is, ways in which the China system provides an advantage for China players and disadvantages non-China players. And means of enforcement. We don’t know. The wild card, of course, is Trump, and the Trumpian tweet atmospherics of recent days, particularly highly puzzling references to 5G and 6G, suggest he may thinking of undercutting the policy line being taken on Huawei by other portions of the US administration. The Secretary of State Mike Pompeo, for instance, stated that the US would not be able to partner with or share information with countries that installed Huawei telecoms systems. Is Trump also planning to get Ms Meng off the hook somehow? Anything is possible.
Meanwhile, the Shanghai stock market has been doing well in the past couple of weeks, and the RMB remains stable, especially with – again, puzzling – suggestions that the US are making it a condition that China maintains a stable currency rate – i.e. intervene actively. There is talk of the China market being on the brink of a return of the bulls. Depending on the US trade agreement, it’s entirely possible. The linkage between the market and the real economy has always been tenuous at best anyway.
Have a good weekend.