It’s summer, and Those in Command are preparing for their annual trip to the seaside town of Beidaihe. Strangely, just as in 2015, there have been some rumors floating around the periphery in the past week about the situation of the Leader, but on balance we believe them to be untrue or possibly misinformation aimed at providing a basis for measures. Who knows.
Anyway, there has been little to say this week about the US-China trade war, which is not surprising given the distracting nature of Trump’s trip to Europe. But the general sense of how the China markets are reacting to this situation is clear – not positive. The RMB was at 6.78 against the USD last time we looked, and the Shanghai stock market sagged all week, to be rescued, as is so often the case (one presumes), by the National Team in the Friday afternoon session. A 2% rise in the final hour or so. The message was clear – bet against us and you risk losing. And maybe it’s true. Maybe they have come up with an entirely different and more effective model for running an economy under which a strong center can offset entirely market forces.
We would be pondering that by the beach, if we were going to Beidaihe.