Traditionally, as China moves into July, the leadership starts thinking about an impending bout of sunbathing in Beidaihe, the news flow begins to lessen, and calm falls over the land. Not this year. This last week saw one of the most fundamental shifts we have seen in China for forty years, a change in our favorite policy – one country two systems. The implementation of the National Security Law in Hong Kong will change things, but to what extent is impossible yet to say. The House of Representatives in Washington passed a unanimous resolution condemning the development, but what the US does beyond that will depend on the vagaries of the man who currently occupies the Oval Office, at least through to the election on November 3, and then on to January 20 next year. The assumption from most people now is, as we have predicted for a long while, that Trump will lose. Our American friends are of the view that Trump will not drop out of the race, which will give the American people the opportunity to purge the poison. Many people around the world, it can be safely said, are waiting for him to just go away. How a Biden presidency would impact on China policy we have discussed before, and the assumption is that it will remain robust. A resumption of the appeasement approach of former administrations is not on the cards, and the chance of a more unified approach to policy by various countries seems a likely eventuality.
Meanwhile, the Chinese economy in many ways seems to be heading back to normal, but in other ways, it’s difficult to say precisely how things are. The state of SMEs is not good, unemployment will be a growing problem. It’s all hard to say.
Enjoy the sunshine.