China and the United States
This week I provided an update on our thoughts on DWM’s investment strategy moving into the second half of 2021. In this update I discussed the following topics:
- Planning issues
- Tax policy
- U.S. deficits
- Equity strategy
- Income strategy
- 2021 forward looking outlook
Click here to watch this presentation. I think you’ll find it helpful and informative.
China and USA
Tensions continue between China and the United States on trade and human rights issues. This past week, China and the United States met in Tianjin to discuss the current state of affairs between the two countries.
The world economic forum that occurs in Asia is located in Tianjin and I suspect the choice of this city for the meeting was not merely one of convenience. I was there a few years ago at the Asian Economic Forum. Americans would be shocked to see how modern the city is as Beijing continues to ramp up its drive towards infrastructure modernization. China is doing all it can to show the world it is an economic power.
There will not be an easy solution to the China US conflict. China, under the leadership of President Xi, has pivoted towards a more nationalistic perspective. This will impact markets and economies. We keep this in mind as we allocate portfolios. China’s hardline posture is one of the reasons why we have generally reduced our overall international exposure. We seek to be less impacted by this ongoing dispute.
We continue to monitor the situation. At some point, assets will be discounted enough where it may make sense to explore investing additional capital in these markets. We are not there yet.
CNBC highlighted the challenges faced during the meeting this past week. An excerpt is provided below.
“BEIJING — Another high-level meeting between U.S. and Chinese officials — this time in the Chinese city of Tianjin, just outside of Beijing — concluded Monday with criticism from both sides.
Before the talks even ended, China’s Ministry of Foreign Affairs said Vice Foreign Minister Xie Feng told U.S. Deputy Secretary of State Wendy Sherman on Monday the two countries’ relationship “is now in a stalemate and faces serious difficulties.”
“Fundamentally, it is because some Americans portray China as an ‘imagined enemy,’” the ministry’s English-language release said. “We urge the United States to change its highly misguided mindset and dangerous policy.”
The statement said, however, that China still wanted to work with the U.S. on the condition its leaders “change course” and adhere to Chinese interests.
State news agency Xinhua said Xie subsequently told media the Chinese side presented the U.S. with two lists, one of “errors” it needed to address, and the other of issues Beijing considered important.
The first list called for the U.S. to withdraw its extradition request of Huawei CFO Meng Wanzhou, lift sanctions on Chinese officials, remove visa restrictions on Chinese students, and stop suppressing Chinese companies, among other requests.
When asked about the lists on a call with reporters following the meeting, senior U.S. administration officials did not name the items, but said generally that both sides raised issues and the U.S. planned to follow up with the Chinese concerns.”