To Talk, Or Not To Talk
The United States and China are broadcasting mixed signals about whether trade negotiations will continue. According to China's Ministry of Commerce, trade talks between the U.S. and China are back on, however President Trump is claiming the talks are delayed indefinitely. At a campaign stop in Arizona, the President said "I don't want to talk to China," and when asked whether the U.S. might pull out of negotiations, he said, "We'll see what happens." Market data suggests China's agricultural buys are still $200bn below its promised amount of purchases of American goods and services over two years.
President Trump's decision to suspend three bilateral agreements with Hong Kong will likely strain U.S.-China tensions further. U.S. Secretary of State Mike Pompeo tweeted that the Hong Kong decision was in response to the Chinese Communist Party "[choosing] to crush the freedoms and autonomy of the people of Hong Kong." The agreements affected include the transfer of prisoners and fugitives, and some tax exemptions.
A Luxury We Can Afford
While mass-market brands in China are still rebounding from the COVID-19 economic fallout, premium labels are thriving. Some reports indicate that as many as 80 million low-earning Chinese may have lost their jobs during the pandemic, although China's upper-middle class has been largely shielded from an economic downturn, maintaining the stability of luxury item sales.
With travel restrictions impacting their ability to spend money overseas, wealthier Chinese consumers are powering high end multinational companies like Lululemon and LVMH back to pre-COVID sales levels. And, with many choosing to avoid public transportation for fear of contracting the disease, luxury car sales are booming. Second-quarter sales for Tesla, for example, more than doubled in the first half of 2020, compared with 2019.
China's economic recovery could offer a preview of what the global economy may look like after the pandemic. As trade wars and increasing political tensions have hurt Chinese exports, e-commerce is booming, powered by influencers promoting products on live streaming platforms like Douyin and Taobao Live. And while richer households are sustaining, or even increasing, their household spending levels, there are fears that China's wealth gap will continue to widen.
The toes of Leshan's famous Giant Buddha have been submerged in floodwater for the first time since 1949, after another week of heavy rain and floods in southwest China.
The floods have wreaked havoc in the city of Chongqing, where 100,000 residents have already been evacuated in preparation for further landslides and mudslides over the weekend. Further down the Yangtze River, fears have been raised about the Three Gorges Dam, which is dealing with its highest water level since its construction in 2003. Officials have sought to quell fears that the dam will be breached after criticism that the controversial project has failed to prevent multiple floods this year.