CNBC made this comment in the context of the upcoming US presidential election and the issue of China could become a bigger issue in this election.
So far, the war between the two nations on the Covid-19 epidemic, U.S. restrictions on Huawei and now Chinese companies listed on US exchanges has not had a major impact. to stocks on Wall Street.
Signals to the stock market
But in China’s current "bipolar" political life, the relationship between nations has shown an impact on the market, especially when China announced new security measures for Hong Kong on Friday and taking an unusual step is not setting its GDP target because of the corona virus.
The United States this week also announced the sale of $ 180 million worth of torpedoes to Taiwan, which added to tensions with Beijing.
Global stock markets fell on Friday and Hong Kong stocks plummeted on China’s poor economic outlook and concerns over new security measures for Hong Kong.
Strategists have viewed the weakening of the Chinese yuan against the dollar as an early warning signal of how the market responds to bilateral political volatility and it is approaching such levels as trade war period in the autumn of 2019.
"I think our election cycle will push the situation to a very high level of decibels," said Marc Chandler, chief market strategist at Bannockburn Global Forex. He said the falling Chinese currency has been a soft warning that China is not happy with the actions of the Trump administration.
Strategists predict that the United States will continue to focus on strengthening legislation to limit China’s ability to acquire American technology as well as invest in strategic industries. They also see bipartisan support for tougher China, which could lead to further separation of the world’s two largest economies.
Another concern of market experts is that the US and / or China will use a new wave of tariffs to make it difficult for both economies, which have become more fragile due to the corona virus.
Factor in the US election
In addition, many political strategists say that US-China tensions are not only an election issue but will have a broad impact on the political field. Cornerstone Macro strategists said bipartisan support for a reconsideration of U.S. economic relations with China, and the Trump administration’s efforts to tighten rules on rejection of China. Access to important technology and their investment restrictions will continue no matter who wins the November election.
These strategists note that Trump is expected to focus on topics like he can rebuild the economy and he will be tough on China, while his rival, former Vice President Joseph Biden do not.
"The fact that Mr. Trump is running for China is one reason: the country is becoming an increasingly rival to the American people," Cornerstone strategists wrote.
Besides, Clifton said that the US-China rift is bigger than people expected and Mr. Trump is being forced to take a stronger stance. "The election is in front of us. The public has really targeted China, he said. The opinion of the community has really changed on this issue. Therefore, Mr. Biden - representative of the Democratic Party. Trump’s presidential candidate - now also taking a tougher stance with China.
Chandler said he expects Democrats will try to create an alliance with other nations to show their opposition to Chinese behavior, while the White House takes a more unilateral approach.
In fact, Mr. Biden told CNBC on Friday that the United States should not be silent about Hong Kong, and that if he were president, he would bring it to the UN. "We should not be silent. We should call on the rest of the world to condemn their actions."
