Academy Securities asks the question. I don’t think the Dems are stupid enough to abandon the One China policy so the wolf warriors are getting awfully overexcited.
What has Happened:
•China has issued harsh warnings regarding the prospect of House Speaker Pelosi visiting Taiwan as part of her Congressional Asia tour.•While not confirmed by the U.S. or Taiwanese officials, Taiwanese media has announced her visit to the island.
•A Chinese foreign ministry spokesperson called the potential visit “a gross interference in China’sinternal affairs.”
•In 1997, Newt Gingrich was the last U.S. House Speaker to visit Taiwan and Speaker Pelosi’s visit would be the highest-level U.S. visit in 25 years.U.S. intelligence is closely monitoring Chinese military activity and China announced on Saturday that it would conduct live fire drills in the waters off the southeastern Fujian Province, which is 80 miles fromTaiwan.
•In addition, on Sunday, a Chinese Air Force spokesperson said the Chinese Air Force would be flying“around Taiwan” to demonstrate its “ability to defend its territory.”
•The USS Ronald Reagan Strike Group left Singapore last week and is now in the South China Sea.
Why it Matters:
“The Chinese have stated that they would attempt to deter her flight using Chinese aircraft creating a threatening situation which could escalate. I seriously doubt they would shoot it down as also threatened. I suspect the Taiwanese would be threatened as well with provocative demonstrations of air and naval actions. I don’t believe these are just threats. I believe some action will occur with the potential for unintended consequences.” – General Frank Kearney
“China will be diplomatically aggressive…tough talk, little likelihood China will militarily interfere with Pelosi’s visit should she get the green light from President Biden to go. China, not unlike the Russians and Iranians in the Persian Gulf, may threaten Pelosi’s aircraft or possibly US naval ships which are underway in the vicinity. The risks are too high for the Chinese to interfere and not expect (and wargame) the worse possible outcome.” – General Spider Marks
“Bond markets seem to pay attention to this news. We are seeing yields drop (though ISM prices paid helped yields lower too). Equities, so far, seem to be higher on lower yields rather than manifesting any fear of the trip. If anything does flare up, this could disrupt supply chains and undo some of the progress of recent months, which would hit the economy and likely ramp up inflation.”–Peter Tchir, Head of MacroStrategy
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
Latest posts by Houses and Holes
(see all) YOU MAY ALSO BE INTERESTED IN
CoreLogic's auction results for July are out,
CoreLogic's daily dwelling values index, which
Veteran bank analyst Jon Mott warns a $250
The Economist has published an interesting report
