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Hell Freezes Over
It was predictable: The "stimmy" rally in Chinese equities would be seen, in hindsight, as just another in a long series of false dawns and head fakes.
From September 23 to October 8, a period that included a holiday on the mainland, Chinese stocks rallied a truly ridiculous 35% amid a bevy of policy promises and allusions to multi-faceted stimulus aimed at resuscitating a dying domestic consumption impulse.
I warned repeatedly during that stretch that a lot of the bets on local shares were ho
There’s been attention on how China can retaliate to US trade war/tariffs. Withhold rare earths, pressure US companies’ Chinese sales, disrupt global supply chains, threaten USD dominance, etc.
Something else I’ve been wondering about: what can China concede, bargain, give to ward off US trade war/tariffs? Presumably ambitions of high economic growth, technological leadership, greater geopolitical influence, and regional dominance will not be abandoned. Claims to Taiwan are probably non-negotiable. Xi and his wolf warriors haven’t been good at laying low and presenting the velvet glove. The country has only a couple decades left to get rich before it gets demographically old. Even it develops a robust consumer economy over the next decade+, the primary US exports are energy and non-consumer goods.
Of course, one can wonder what the US actually wants to achieve. Is a resurgence of US manufacturing, slashing trade deficits, unquestioned USD supremacy, muzzling Chinese technology and influence, really the goal? Or is all that just chips to be traded for a few transitory soybean, LNG, and fentanyl deals?
Great question JL. Now that China cannot buy most tech products from the US, what are you left with? Grains. oilseeds and meat. LNG would have to be one-offs since I doubt that Xi would want to back away from existing long-term contracts with more reliable suppliers knowing full well the LNG supplies could easily be terminated on a whim. Perhaps the US side would like to see more access to financial markets? The PRC clearly needs US payday and PNPL lenders.
US BNPL may be a step back from the nude pics as collateral system that was a the rage recently.
True! That was a clever system.