What’s different this time is that a recent speech by US Vice President Pence, summarising a litany of China’s alleged violations on nearly everything, was a cold hard view from the US political establishment, rather than from the flamboyant outsider President Trump.
The good news is Australia’s PM Scott Morrison seems to have adopted a ‘bird in hand is worth beating around the bush’ stance, telling the US and China to settle their differences on their own.
In the coming weeks, we can expect;
- The US Pacific fleet’s to sail through the South China Sea, challenging China’s territorial claims.
- Possible naming of China as a ‘currency manipulator’ by the US (there is a window for this decision every six months).
- US secondary sanctions on Chinese entities buying Iranian oil after 4 November, when primary sanctions on Iran are applied.
So far, China has responded by having the world’s biggest clearance sale as it moves to clear its US export inventory before 1 January 2019 when the 25% tariffs kick in.
So China’s manufacturing industry and US exports for 2018 will look great, before a slump in 2019.
But President Xi Jinping’s inaugural ‘signature’ import expo in Shanghai on 5-10 Nov will be an opportunity for China to declare plans to ‘pivot towards imports’ rather than exports.
A consequence is that China will start strengthening its currency against the USD by selling its US$1.2 trillion US treasuries portfolio. China will say, ‘given US actions, if we have no choice but to sell’.
Learn more from my Crazy Rich Asians in a Trumpian World seminar, sponsored by Deloitte
Click here to register Monday 22 October, 12 noon to 2.30pm
Deloitte. Level 9, Grosvenor Place, 225 George St, Sydney. Seats are limited to 130 delegates.
- 12 noon registration and lunch served (stand-up buffet style with networking)
- 12.30 Opening comments. Vera Ou-Young, Partner and National Chinese Services Group Leader, Deloitte
- 12.35 David Chin. Managing Director, Basis Point. Crazy Rich Asians, market impacts, capital flows and tactical moves by China-US-Australia. Outlook for Australian property, agri, financial and wealth services, VC, education, tourism, consumer goods and migration
- 1.15 Tim Cheung, Co-Founder, LSL Partners. What is the outlook for Chinese consumption and technology during this time of Aus-China-US volatility? Why we are long/short on Chinese stocks and Australian stocks with Chinese revenues. How we conduct ‘deep dive’ analysis on China
- 1.55 Q&A, closing comments from Deloitte, and networking coffees
- 2.30 Close
Early Bird cost $90 plus GST. (early bird ends Thursday)
I will explain further at this event, and what it means for Australia.
- China’s US treasury sales will be at a small profit although its actions will ‘move the market’ also.
- Its selling will drive up US interest rates just as the US economic sugar hit from US debt expansion starts fading, putting pressure on the US economy.
- It will buy Euro short term debt to lessen the CNY rise against the Euro to continue its European exports.
- China’s debt will also rise as it moves to shore up its domestic economy with more spending, despite its de-leveraging. It will be a double challenge due to its stock market slump impacting on collateralised local debt.
I will also be addressing;
- Crazy Rich Asian (CRA) lessons for Chinese wealth in Australia. Bananas, globalists and sino-ization
- The Marie-Antoinettes amongst CRA; the rising role of Chinese philanthropy, not ‘let them eat cake’
- A bird in hand is worth beating around the bush; how Australia can still win from China’s growth and US alliance pressures
- Why Islamic State has ‘saved’ the Chinese (til now) in Australia and the West
- Outlook for Chinese capital flows and impact on Australia
- China’s demographics and its AI/tech saviour. 100-50-25 population decline in three generations, and industry specific opportunities for Australians
I hope to see you on 22 October.