China isn’t the only story out there with market moving potential but it is the “ripest.” We won’t have anything but anecdotal accounts of the collapse of social distancing at events across the country this weekend and we won’t know how much in retail sales the economic re-opening actually produced this weekend for weeks yet. Say two to three weeks to see if the growth in the number of of official reported coronavirus cases accelerates. Say about the same time to get retail sales numbers that reflect any of the opening.
But in the case of China we’ll know stuff this week.
We’ll know if the House of Representatives goes along with the Senate (I’m betting it will) and passes legislation that could bar most Chinese companies from listing on the New York Stock Exchange or the NASDAQ.
Will the Chinese react? Almost certainly.
Will China continue it’s “big stick” approach to Hong Kong? You bet. President Xi Jinping has decided that the United States and the European Union are too pre-occupied with the coronavirus pandemic to respond so it is lighting brush fires everywhere. Legislation that will let China security forces operate more freely in Hong Kong is only one measure. China’s Coast Guard rammed and sank a fishing boat in disputed waters off Vietnam, and its ships swarmed an off shore oil rig operated by Malaysia. Chinese troops clashed with Indian forces along their contentious border in the Himalayas. And I have to assume that the new reports of missile tests out of North Korea wouldn’t be happening without art least a nod and a wink from China
But the war has moved beyond words. On Friday the Commerce Departmen added 24 organizations, including Qihoo 360 Technology, FiberHome Technologies Group and Beijing Cloudmind Technology, to its “entity list” for activities that run counter to America’s national security interests, including supporting the Chinese military. An additional nine companies were added to the list for aiding human rights violations in the Xinjiang region, home to members of the Uighur minority. China has promised retaliation against U.S. technology and aviation companies. The designation will bar American companies from selling them certain high-tech items without first obtaining a special license.
The U.S. Secretary of State Mike Pompeo has also said that the he is looking at revoking Hong Kong’ special economic status in reaction to China’s restrictions on Hong Kong’s already limited self-rule. Revoking that special status would mean that Hong Kong imports and exports would be subject to the same tariff schedule as imports and exports from mainland China. This would be a big blow that would hinder Hong Kong’s growth as a global financial and trading center.
And finally there’s the tit for tat sanctions war on Chinese and U.S. officials. Put U.S. sanction my officials, will you? How about it, then, if China sanctions U.S. Senators and the attorney general of Missouri who is leading a court effort to sue China for the coronavirus epidemic?
