Playing the Chinese Trump Card
By John Mauldin
Aug 22, 2015
Before you dismiss this as nonsense, remember that it comes from a Wharton School graduate.
The New York Times reported on Aug. 16 that Chinese government agents have secretly visited expatriates in the US and pressured them to return to China. This behavior would be a violation of US law. The Obama administration reportedly demanded a halt to the activity.
And capital leaving the country doesn’t further Beijing’s larger objectives.
- The PBOC will gradually take its hand off the scale and let the renminbi float freely,
- Beijing will find ways to swing the economy from export-driven to consumer-driven,
- Chinese stock valuations will return to a more realistic level,
- Debt levels will hold steady or shrink, and
- The nations that have been shipping raw materials to China will make their own adjustments.
Those who complied with Beijing’s command to seek domestic revenue instead of exports will feel the squeeze the most.
They might do it again, but their odds are certainly not improving and may be getting worse.