As Beijing ‘Contains’ Virus Outbreak, Markets Warily Eye Trump-Xi Dynamic Amid ‘Book Of Bolton’ Furor

Beijing has contained the outbreak of coronavirus tied to the city’s largest food and vegetable supply center.

That’s according to Wu Zunyou, the senior epidemiology expert at Chinese Center for Disease Control and Prevention. Wu spoke at a press conference in Beijing late Thursday.

The new outbreak caused considerable consternation among market participants and exacerbated existing fears of a second wave in several US states. Wu told the press that the peak for the Beijing outbreak likely came on June 13 and that the number of new cases will be small. All 21 of the cases reported Wednesday were individuals whose infections were dated prior to June 12.

The news helped turn the tide for risk sentiment on a day when Asian equities were mixed, but US futures were wobbly.

The market appears rattled by new revelations that Donald Trump directly linked agricultural purchases by China to the 2020 US election during a face-to-face discussion with Xi Jinping at the G-20 in Osaka last June.

Additional excerpts from Bolton’s memoir paint an extremely unflattering picture of Trump, who Bolton says should have been the subject of a wider investigation in the impeachment probe.

Read more: ‘I Would Print Trump’s Exact Words But…’ Trump Asked Xi For Help In Election, Bolton Says

“Was there anyone who did not think the US-China trade deal was anything but a reelection platform, either if it was adhered to (‘So much winning!’) or if it were broken (‘CHINA!’)?”, Rabobank’s Michael Every writes, in a characteristically incisive note Thursday. “That is how (geo)politics works”, he adds.

Bolton (whose testimony was sought by Democrats during the impeachment proceedings) is fighting with the administration over the release of the book, which the Justice department is desperate to block. The Trump administration also wants all copies already distributed to third parties reclaimed and destroyed. (Because nothing says innocent like the figurative burning of books.)

In his account, Bolton claims that during a conversation with the Chinese, “Xi had explained to Trump why he was basically building concentration camps in Xinjiang”. “According to our interpreter, Trump said that Xi should go ahead with building the camps, which Trump thought was exactly the right thing to do”, Bolton asserts.

It’s not a coincidence that the White House said Trump finally signed bipartisan legislation calling for sanctions on Chinese officials in connection with human rights abuses in Xinjiang virtually at the same time the related excerpts from the book were made public. The sections related to the Uighurs and other Muslim minority groups in China were published by The Wall Street Journal.

The House passed the legislation 413-1 last month, and Trump was expected to sign it shortly thereafter. It’s been sitting on his desk (figuratively speaking, at least) since then.

China again threatened to retaliate on Thursday, although as ever, Beijing did not say what form such retaliation would take. In October, the Trump administration cited human rights abuses in blacklisting a hodgepodge of Chinese surveillance firms and made a similar move against a handful of additional entities on May 22.

Last year, Trump repeatedly demurred when pressed by lawmakers (some from his own party) to forcefully rebuke Xi on human rights. Generally, Trump left that to Mike Pence. On Hong Kong, Trump was similarly reluctant, preferring to outsource support for the pro-democracy movement to the “other” Mike (Pompeo).

The president did sign the Hong Kong Human Rights and Democracy Act into law despite the potential for the legislation to upend trade talks at the last minute late in 2019. Because it had already cleared both chambers, signing the Hong Kong bill in November was a relatively safe proposition for Trump, as he could tell Xi (if only in private or via intermediaries) that he had little choice, especially given the impeachment proceedings unfolding at the time (refusing to sign the bill would have potentially angered allies in the Senate). I’ve argued that the same calculus applied to the Uighurs legislation. He had to sign to it, something that was surely conveyed to Xi.

The Uighur bill is just one among many pieces of legislation floated on Capitol Hill, where lawmakers are keen to push the envelope when it comes to turning the screws on China. The House also considered legislation aimed at delisting some Chinese shares from US exchanges, something Trump is seemingly on board with. The White House moved recently to ban federal retirement savings from being invested in Chinese stocks.

Other recent legislative provocations include a bill championed by Lindsey Graham calling for additional sanctions in the event Beijing doesn’t provide a satisfactory account of COVID-19’s origins and legislation to sanction China in connection with new national security laws Beijing plans to impose on Hong Kong.

All of this speaks to the fact that “Cold War 2.0” is “still a thing”, as I put it last month. In fact, Sino-US relations are easily the worst they’ve been under the Trump administration.

“Crucially, how do Democrats (and Republicans) who might have wanted to pivot back to China in a post-Trump era square the circle above?”, Rabobank’s Every went on to ask Thursday. “Whatever one’s take on the ‘Book of Bolton’, this marks another step deeper into US-China Cold War – unless the meeting in Honolulu between US Secretary of State Pompeo and China’s top diplomat Yang Jiechi went exceptionally well”, he adds. “Did they touch on the US sanctions that are also looming over Hong Kong, or legislation just proposed that would target the US green cards of Chinese CCP members?”

I’m sure they did. But nobody will ever know the substance of those discussions. Until Pompeo leaves and writes a memoir, anyway.

The excerpts from Bolton’s book underscore just how important Trump believes his relationship with Xi really is. It’s also clear that the US president is aware of Beijing’s capacity to impact the election by further squeezing America’s “great patriot farmers” (as Trump is fond of calling them).

Trump has, of course, been keen to scapegoat China for the virus, and he continued to do so during an interview with Fox late Wednesday.

“China should have kept it where it was”, Trump told Sean Hannity. “They could have easily stopped it”. “The worst thing could be if they knew it was going to happen”, he went on to muse.

As for Bolton, Trump called him “a fool” who “broke the law”. Bolton’s book, Trump swears, is “made up of lies and fake stories”.

Somewhere, Xi is chuckling.