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Washington: Six months into his presidency, Joe Biden is revealing a hard-edged China policy that suggests relations between the world’s two biggest economies are only going to get worse.
A spate of U.S. actions in recent days including a planned warning to American businesses in Hong Kong, new import controls for the Xinjiang region and talks about a digital trade agreement that would exclude Beijing underscore that Biden plans to extend and deepen President Donald Trump’s more confrontational approach.
Biden administration officials say the U.S. strategy is a reaction to China’s own aggressive behavior. That stance will force tough choices for investors and companies caught in the middle of what Biden himself has defined as a defining battle of the 21st century, and may come as a surprise to those who expected a softer touch under the Democratic president.
Here’s why the global reflation trade can survive China’s credit slowdown MarketWatch 4/30/2021
MARKET EXTRA
Could a tightening of China’s lending spigots put an end to the global reflation trade in global stock markets this year as the world economy recovers from the coronavirus pandemic?
Though previous slowdowns in Chinese lending have sparked market volatility, some argue this time will be different as the U.S.’s fiscal largesse may be replacing China as the engine of global growth for the first time in two decades.
The International Monetary Fund predicted as much in its latest forecasts, estimating the U.S. economy to expand 6.4% in 2021.
American Rescue Plan: US stimulus seen widening trade deficit that sparked Trump’s trade war with China The US$1.9 trillion American Rescue Plan is poised to attract more Chinese imports. Photo: Reuters
The US$1.9 trillion American Rescue Plan is poised to attract more Chinese imports, and analysts expect it to widen the United States contentious trade deficit with the world s second-biggest economy.
The stimulus will add about US$30 billion to US imports from China this year, estimates Derek Scissors, chief economist at China Beige Book International, a data-collection platform tracking the Chinese marketplace. And if all of the stimulus dollars were to be spent rather than saved, Societe Generale estimates it would pull in as much as US$40 billion in additional Chinese imports.
Analysis: Investors resigned to Trump’s China ban, with Biden seen changing little
Financial executives are settling in for the long haul over the Trump administration’s investment ban on Chinese securities, expecting the rules to be lasting but hoping to have more clarity after President-elect Joe Biden takes office.
Trump’s executive order requires U.S. investors to completely divest from the securities of 44 companies deemed to be linked to the Chinese military.
Confusion over the order, which has been amended and interpreted via different guidance from separate agencies, has roiled Asian markets, led financial institutions to purge potentially affected companies from funds and asset managers to sell positions at depressed prices.
By John McCrank, Ross Kerber and Alun John NEW YORK/BOSTON/HONG KONG (Reuters) - Financial executives are settling in for the long haul over the Trump.