It’s the middle of summer and Washington is obsessed with the virus, the economy and the election, while China’s leaders are all heading for meetings by the beach. But that doesn’t mean nothing is happening. An enormous amount is going on, both on and off the radar, and it’s all pointing in the direction of decoupling and whatever could come after that. There is the argument that decoupling is impossible because the whole world is now too intertwined to create a clean divide, but it would appear that this argument is likely to be stress-tested in the months ahead.
Of all the stuff out there, one thing that strikes us is phraseology from Beijing, with the use of the metaphorical phrase “protracted war” to describe the difficult situation the nation finds itself in, and the phrase “dual circulation”, to refer to the view that to a certain extent the size and diversity of the Chinese economy allows it to support itself, while of course maintaining links to the outside world. Self-reliance updated. The two phrases feel like theoretical struts underlying the new normal.
On the US side, China remains a prominent part of the election campaign, but the most significant developments there this week were Trump raising the possibility of delaying the election and Attorney-General Barr declining to comment on whether the November Election Day could be moved. This is of relevance because of how the period from November to January next year could therefore become a period of great distraction for the United States, with potential consequences elsewhere.
Another interesting situation right now is HSBC, one of the world’s largest banks, and surely the most international. But while it operates just about everywhere, a sizeable portion of its revenues and profits come from Hong Kong and mainland China. Is it possible that the bank, now headquartered in London, is being placed in a situation where it has to make a choice? And if so, what decision would it make? And with what consequences either way? That’s a potential biggie that is worth paying attention to.
Enjoy the sunshine but keep the sunscreen handy.