Vice President Mike Pence ended his remarks Thursday at the Wilson Center by saying the U.S. and China were going to work this crisis out. And that there was an “enduring relationship” between the Chinese and American people.
Whew. This could have gone much worse.
Anyone who though Pence would be on the war path, lecturing China for the entire speech with regards to Hong Kong and the Uighur Muslims, ended up disappointed. The takeaway is that China and the U.S. have problems. We’re going to get through this.
Pence was decisively even keeled on China, actually. The most concerning comments he made for a China investor was when he alluded to U.S. corporations thinking that doing business with Communist Party leaders wouldn’t run against American values. This speaks directly to the ongoing pro-Democracy protests in Hong Kong, which Pence supports, and human rights violations of thousands of ethnic and religious minorities in the far western province of Xinjiang, which Congress supports. This means Washington is ready to sanction companies and individuals, a move that could sew distrust within the Communist Party itself, and ultimately hurt the prospects for the Phase 1 trade agreement to be signed by President Xi Jinping this year.
Market expectations are two fold here.
One, Xi and Trump sign an agreement to a tariff cease fire and changes to Chinese intellectual property rules at the APEC Summit in Chile in November.
And two, that geopolitical risks will remain elevated because of trade war uncertainty.