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US China Relations: Competition Replaces the Era of Engagement

China US News

The top trade negotiators from the US and China held their first telephone call of the Joe Biden presidency, and stressed the importance of improving trade ties. But the rest of the bilateral relationship remained deeply troubled, with defence chiefs failing to talk, and Beijing angry at Biden ordering an investigation into the origins of Covid-19. This article is a summary of important US China news in May 2021. Get used to these ongoing tensions, advised Kurt Campbell, the US coordinator for Indo-Pacific affairs on the National Security Council. “The period that was broadly described as engagement has come to an end,” he said, as US policy towards China will now operate under a “new set of strategic parameters”, and “the dominant paradigm is going to be competition”. One area of potential optimism is trade, after US Trade Representative Katherine Tai and China’s Vice Premier Liu He had “candid” and “constructive”…

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How To Invest in China’s Stock Market

China Stock Market

When shares in an elevator company go limit up because it has the same name as a new adviser to Xi Jinping, there can be little doubt that China’s stock market is a casino. But that would be to jump to the wrong conclusion. True, the Chinese equity market is far from perfect and reform is piecemeal. But it is becoming more professional, less prone to heavy-handed micro-management by the Party-state and of growing interest to overseas equity investors. So here is our take on what foreign investors should know about China’s stock market if they invest in it. Shanghai and Shenzhen Stock Exchanges After a 40-year hiatus, the Shanghai and Shenzhen exchanges reopened in 1990. Today they list around 4,000 companies. State-owned enterprises long dominated the new listings, but in the past decade the two bourses have become a cradle for the sort of innovative technology companies that China…

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United States and China Mark a Critical Turning Point in Their Relationship

Video - Thought of the Day

Enodo’s Nigel Inkster with his thought of the day. https://vimeo.com/529251007 The 18 March top level meeting in Anchorage between the United States and China marked a critical turning point in the relationship between the two countries, which over the last year has undergone a catastrophic deterioration. Expectations were not high, and these low expectations were amply borne out by some very prolonged and ill-tempered exchanges between the two delegations in front of the world’s media. China’s State Councillor, Yang Jiechi delivered a lengthy diatribe criticizing US behaviour towards China and the world more generally, and stated clearly that in his view, the United States did not have the right to talk to China from a position of moral superiority. These exchanges had the effect of laying bare the very real ideological and values differences between the two countries. To borrow from the terminology of the philosopher Karl Popper, the United…

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Democracy vs Autocracy: Biden Sets Out Challenge of US China Relations

China US News

Comparing Xi Jinping to Vladimir Putin, Joe Biden warned this month of “a battle between the utility of democracies in the 21st century and autocracies. That’s what’s at stake here. We’ve got to prove democracy works.” Fireworks at the first bilateral meeting of the Biden era underscored the great challenges facing US China relations. This article is a summary of important US China news so far in March 2021. “I see stiff competition with China,” Biden said at his first press conference as president. “They have an overall goal to become the leading country in the world, the wealthiest country in the world and the most powerful country in the world. That’s not going to happen on my watch, because United States is going to continue to grow and expand.” In Anchorage, Alaska, the top diplomats of both nations levelled sharp rebukes of the others’ policies in a rare public display highlighting…

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Who Sets Monetary Policy in China?

Video - Thought of the Day

https://vimeo.com/527920285 China has slowly started to unwind its emergency pandemic stimulus. Yi Gang, the governor of its central bank, the People’s Bank of China recently reiterated that monetary policy should balance growth against financial risks. How does monetary policy get set in China? It’s institutional design in the context of the Party – state is very different from that in developed economics. So, who sets monetary policy in China? It’s not the central bank. The ultimate authority that has control and determines China’s exchange rate and interest rate policy is the State Council, China’s cabinet. In that sense the PBoC is more of a conduit of monetary policy. It is not an independent central bank in the sense of the Western central banks. The PBoC and the State Council have an understanding as to how this arrangement should work in practice. The details of that are not made public, though.…

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Beware China’s Proposals for a New System of Internet Governance

Video - Thought of the Day

https://vimeo.com/522452949 Amid all the dents and formulaic verbiage that makes up the text of China’s 14th Five-Year Plan, is one particular piece of text that has largely passed observers and commentators by. And it reads like this: ‘’China will promote the establishment of a global Internet governance system that is multilateral, democratic and transparent’’. On the face of it nothing could be more innocuous. But that would be a major misreading of a very important piece of text. And the key to this, is the term multilateral. Currently global Internet governance operates under the multi-stakeholder system. In this system a wide variety of stakeholders get to determine how it works. But China wants to replace this very democratic and informal system with what it calls a multilateral system. In it national governments would determine how the Internet works. In effect China’s multilateral system would be a formula for an Internet…

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How China’s Stock Market Differs to the US – 3 Key Pointers

Video - Thought of the Day

Enodo Economics Chief Economist, Diana Choyleva with her thought of the day. https://vimeo.com/521477532 With Chinese equities correcting sharply after a formidable post-Covid surge, I thought I’d discuss today three important ways in which trading on the A-share market differs from the US market. First, in China there is no day trading. If you buy a stock on Monday, you can’t sell it until Tuesday. All positions must be held overnight. In this context China’s recent trading numbers are impressive. Second, all markets are fully funded. If you want to buy 100 RMB worth of shares you need to have a 100 RMB in your account, before you can do so. The positive flipside of that, is that settlement is almost guaranteed. Third, there is a limit up and limit down – both are 10% but for ChiNext and the STAR board they are 20%. So, you can’t have crazy intraday…

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Beijing Wants Reset of US China Relations; DC Dislikes the Terms

China US News

During his first full month in charge, Joe Biden showed his Chinese counterpart that the 46th US President may prove less confrontational than the 45th, but the White House’s tough approach to Beijing and US China relations looks set to stay. This article is a summary of important US China news in February 2021. After the turmoil of the Donald Trump years, and the trade war that defined the world’s key bilateral relationship, Xi Jinping hoped for a return to calmer times. Senior diplomat Wang Yi called for a reset in relations, if US policymakers “abandon biases” and “give up unwarranted suspicions”. China’s top diplomat, Yang Jiechi, warned the US not to interfere in Hong Kong and Xinjiang, and placed the blame for the deterioration in relations squarely on the US. Washington accused Beijing of trying to avert blame for its actions. On trade, Katherine Tai, Biden’s USTR pick, backed…

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Biden’s China Policy and Team

Video - Thought of the Day

What to watch out for if China and the US are to avoid a Thucydides Trap. https://vimeo.com/511605525 Joe Biden and Xi Jinping finally spoke. If you were hoping for a thawing in US China relations, you will be disappointed. Days before the call Biden described America’s China policy as ‘’extreme competition’’. Enodo Economics just published our deep dive into Biden’s China policy and his team. And our overall conclusion is that this is a hawkish team, but one which is experienced and competent. Now both countries acknowledge that they must cooperate on certain issues, in particular the most important one – being climate change. So I’ll argue that if you are looking for a bellwether on whether China and the US can coexist peacefully and avoid ultimately, each one trying to overpower the other, the thing to watch is the negotiations on climate change. And of course, Biden’s key climate…

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