Much of the world’s attention in the past few days has been glued to Buenos Aires, Argentina…where global leaders met together to hee and haw.
But the main spotlight of the G20 Summit was on China and the US.
Like children in a schoolyard after class, attendees nervously watched to see who’d throw the first punch.
As you’d imagine, there were no bloody noses or scraped knees at this meeting…only thickly-veiled political remarks.
The Americans made sure that nowhere in the official communique was there any mention of ‘protectionism’ — President Trump’s economic tool of choice.
If you’ve followed G20 summits in the past, you’ll know that a pledge to fight protectionism has been a central tenet of the meeting…but apparently no longer. If the Americans say it’s okay…then it must be okay, right?
The Chinese came with their own demands too.
The official communiqué left out any language concerning ‘fair trade practices’, ‘dumping’, ‘industrial subsidies’, ‘abuse of intellectual property rights’ and ‘technology transfers’.
All that was missing was John Cleese shouting, ‘Don’t mention the (trade) war!’
Practically speaking, the US and China agreed to a 90-day ceasefire while further talks take place.
While some might call that a ‘tremendous success’, the results are a disappointment for most.
Think about it. Over two dozen of the most powerful people in the world gathered in a room under the banner of fostering international cooperation…and the best they could do was delay tariffs by a few months?
Even after allegedly pulling an all-nighter on Friday night working on the communique, at best they managed to spit out some barely decipherable politicalspeak on migration and refugees.
I don’t think it’s coincidence that this summit occurred just streets away from the home of author Jorge Luis Borges, who famously suggested that a monkey hitting keys at random on a typewriter will eventually create the complete works of Shakespeare.
Only, in this case, the monkeys barely managed cohesive sentences…
Like this line from the official communiqué, for example:
‘We welcome the strong global economic growth while recognizing it has been increasingly less synchronized between countries and some of the key risks, including financial vulnerabilities and geopolitical concerns, have partially materialized.’
Your classic political poppycock. I wonder how many millions of tax dollars from around the world went into getting that sentence written. Shame.
Now, while the G20 isn’t much more than an annual brunch for the world’s elite, there is something here for normal folks like you and I to consider — when will the red dragon rear its ugly head? [openx slug=inpost]
According to the Hoover Institution, ‘New Zealand is particularly vulnerable to Chinese influence…’
Well, for starters, China is our second-largest trade partner, particularly for our mega-industries of tourism and milk products.
And not to mention the quarter-million Chinese now living in New Zealand.
Or the $1.5 billion in NZ property purchased by Chinese in 2017 alone…
Now, it’s never going to happen, but if China ever decides to cut off trade with New Zealand, we could potentially experience the collapse of our tourism, dairy and property markets overnight.
Or at least a strong downturn. One that could take decades to recover from.
So when the Hoover Institution claims that we’re ‘particularly vulnerable’, I reckon that’s the truth.
At a recent Infinz conference, Sir John Key seemed to echo that sentiment:
‘It might be a bit mercantile but I think that [turning our backs to the Chinese] would be negative for the New Zealand economy, for dairy farmers, and for lots of New Zealand businesses — from tourism to education services — that benefit from us having a strong relationship with China. That doesn’t mean that you don’t raise human rights issues or other issues that are important.’
At the same time, it’s interesting to note how China is regularly cast in a poor light here in New Zealand.
There’s National MP Yang Jian, who has come under scrutiny for his alleged links to Chinese intelligence.
Or the foreign-buyers ban which seemingly targets Chinese buyers.
Or the recent block on Chinese telco Huawei for the contract to develop New Zealand’s 5G network.
The truth is — Kiwis feel threatened by the Chinese…
But at the same time, our economy is somewhat propped up by Chinese cash flow.
And I think this awkward dichotomy is felt around the world, by many other export-dependent countries, even those at the G20 Summit.
Certainly Scott Morrison of Australia, Angela Merkel of Germany, Shinzō Abe of Japan, and Moon Jae-in of South Korea…
They all circled around Trump and Jinping, nervously waiting to see who would throw the first punch…not wanting to pick a side.
Because, frankly, they can’t afford to. Their economies depend on it. Our economy depends on it.
It’s ‘too-big-to-fail’ at a global scale.
And, so far, we’ve seen a little smack-talking, maybe even a bit of shoving…but nothing worth bunkering down for…at least not yet.
Perhaps that’s why this gibberish G20 communiqué is truly a ‘tremendous success’…
Because, at this point, meaningless political statements are a whole lot better than the alternative.
Editor, Money Morning New Zealand
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