Betting on Biden

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Will a Biden victory in the US Presidential Election in November be good or bad for China? That seems to be the question on everyone’s lips as we hurtle towards Election Day (3rd November) and try to make sense of the avalanche of news and speculation that hits us throughout the day (and night).

If China’s currency is any kind of a reliable guide, the markets appear to believe that a Biden victory will be good for China after the RMB rose dramatically by 1.45% last Friday to RMB6.6930 per dollar, the biggest one-day rise since 2005, and Chinese equities and bonds were buoyed by an increase in confidence and foreign fund flows with US polls predicting an emphatic Biden victory. Some intervention this week by the People’s Bank of China saw the rate fall back to RMB6.754 but the trend is clear – a Biden victory will be positive for US-China relations and perhaps for the global economy as well.

Winston Churchill is quoted as saying, “You can always count on the Americans to do the right thing – after they’ve tried everything else”. I was in China on the day when President Trump was elected in 2016 and the silence was deafening in the boardrooms and restaurants of Guangzhou (at least the ones I went into). The polls got it wrong in 2016. Perhaps they’ll get it right this time – but don’t bet on it.

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