Trade War
Welcome to the 147th edition of Trade War.
International media are heralding a ‘China reset,’ or policy pivot in three broad areas: the reopening of China with the end to Covid Zero; a significant move away from wolf warrior diplomacy to a more conciliatory international approach; and a shift away from Xi Jinping’s earlier ‘politics in command’ approach to the economy to a far more business-friendly stance.
Buoyed by what looks like a lot of good news, global investors are sending markets high, embracing what some are calling the new, surprisingly pragmatic Xi. Goldman Sachs is predicting a further 15 percent rise in China stocks. And a top PBOC official has apparently signaled an end to the tech crackdown, saying Beijing’s market rectification policies are “basically complete,” further lifting business spirits.
—Is all of this for real and if so—will it last?
Less encouragingly, the government is expanding control over key private firms, taking “golden shares” in tech giants including Alibaba and Tencent. One economist predicts international capital flows aren’t going to return to China, saying Russia's invasion of Ukraine has caused “a structural break.” And even as Beijing makes nice with Australia and the EU, it’s punishing Japan and South Korea, slapping them with new visa restrictions.
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