The Shanghai stock exchange closed down sharply on Monday, after a crackdown on their stock-market manipulating insurance industry last Friday, followed by comments Sunday night from US President-elect Donald Trump regarding trade.
As reported earlier, Fox’s Chris Wallace asked the President-elect how he feels about China, following Trump’s acceptance of a congratulatory phone call from the president of Taiwan. While Trump said he recognized the “One-China” policy, he questioned why we’re honoring it when China treats us so poorly. Trump then railed against China’s currency manipulation, tariffs they impose on US exports, and building a giant fortress in the middle of the ocean.
The message is clear; Trump is willing to play chicken. Would China risk war (economic or otherwise) with their largest customer? I suspect their economy would immediately collapse and their recent inclusion into the IMF’s SDR (special drawing rights), basket would be revoked – cutting off the newly established flow of steady demand for the Yuan.
