So much news this week, it’s history on steroids. It started with the first phase US-China trade deal getting back on the rails, with China agreeing to buy an unprecedented amount of American soybeans, which it needs anyway, and which in no way impacts on issues of systemic incompatibility. Plus, trade is the last thread of normalcy in the relationship and they must have decided it was important to hold on to it. But otherwise decoupling appeared to be proceeding apace.
In the tech arena, TikTok seems to be close to a sale with WalMart and Microsoft being seen as the joint purchasers at what is expected to be a knockdown price. The question is whether the Trump administration will then go after any other Chinese apps on the grounds of inappropriate collection of data or other issues. Looking at you, WeChat?
On the financial decoupling side, HSBC was roundly criticized by Sec of State Pompeo for what he called caving to Chinese pressure, and as we have discussed before, the world’s most international bank is looking unlikely to remain that.
China’s economy seems to be doing pretty well, all things considered, and the property market in particular is bubbling, perhaps too energetically. But in international affairs, things got more tricky on several fronts. The Japanese defense minister asked China to refrain from activities around disputed East China Sea islands, the US placed restrictions on Chinese officials it identified as being related to South China Sea activities, a US U-2 spy plane crossed a Chinese line, and the PLA navy fired some missiles into the sea, missiles billed as “aircraft carrier killers”, Chinese diplomats are doing a lot of meeting and greeting in European capitals to try to offset the growing US-China freeze, and India decided to say no to Huawei. There’s lots of other stuff going on, but it is the US election on Nov 3 that is going to be most crucial in terms of how it all plays out. Two very long months and a bit to go.
Have a good weekend.