US/China Relations: Are Tensions Easing?
Only a few weeks ago, rising US/China trade tensions were at the forefront of investors minds pretty much every single day.
Whether it was Hong Kong (much to anger of US, China recently passed legislation increasing oversight of the supposedly autonomous city), the US’ crusade to make life more difficult for Chinese companies (such as Huawei and those listed on US stock exchanges), or bickering over China's treatment Uighur muslims (who are locked away in concentration camps undergoing “re-education”), US/China problems were constantly in the headlines.
Not to say that any of these issues have gone away, they haven't, but the flow of negative newsflow regarding these issues has slowed down drastically over the past week or so.
In fact, you could almost say that the newsflow has taken more of a positive turn.
Last week, US trade officials indicated that they are happy with China’s commitment to the Phase One trade deal (regarding agricultural purchases and on issues such as market access and intellectual property protection).
Moreover, since the weekend, news has emerged that US Secretary of State Pompeo is set to meet with Chinese officials face to face in Hawaii on Wednesday.
Pompeo is a notorious China hawk (he is very vocal in his criticisms of the Chinese government), so there is always the risk this meeting goes badly. But the fact that some dialogue between the two sides continues is surely a good sign.
On which note; China’s Global Times reported that the US and China are maintaining close communications via diplomatic channels and more information will be given when it comes available, according to a Foreign Ministry Spokesman.
Exactly what is going on behind the scenes that we will be getting more information on?
Could it be a nice surprise, such as “the US and China will formally begin Phase Two trade deal negotiations”?
Equally, it could be nothing big or exciting.
But just because market focus has shifted back to Covid-19 numbers (as infection rates in various US states spike and Beijing struggles with another outbreak), that doesn’t mean the issues of US/China trade tensions should be forgotten.
Many analysts had expected US President Trump to turn up the heat on China heading into the election to 1) distract from his poor handling of the pandemic and US civil unrest and 2) play on widespread American distrust of the Chinese regime.
Think back to late 2019 - Trump loved to brag about how he was making a deal with China to make America great again.
So could he play things differently by pushing for a big improvement in relations and trying to secure a Phase Two deal before the election?
Risk assets would LOVE that.
WANT TO BECOME AN ALL-ROUND TRADER?!
Fundamentals are not easy to master, which is why we wanted to make them greatly understandable for the everyday person.
Our fundamental course, helps anyone understand them, all curriculum is very much fun, informative and packed with much energy. It will help you transition into an all-round trader, implementing fundamental and technicals to provide the edge when trading.
Click here to get started today!
We cover fundamental and technical analysis every single day for our members. Click here to view our membership packages.