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Backlash Against China Intensifies

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Insights and Market Perspectives

Backlash Against China Intensifies

Author: Greg Valliere

April 22, 2020

THE VIRUS VILLAIN: If there’s one issue that unites Washington — and most of Europe as well — it’s the deep antipathy toward China, which undoubtedly will result in new Western supply chains and less reliance on Chinese products.

A LONG LIST OF COMPLAINTS: Fitting for a Communist dictatorship, Beijing concealed the extent of the virus, punishing heroic doctors in Wuhan who issued warnings; the government’s data on infections and deaths are widely viewed as bogus — as speculation grows on where and how the virus developed.

AS THE VIRUS SPREAD TO EUROPE IN FEBRUARY, Chinese offerings of assistance were widely viewed as insincere. And now, as the world focuses on the virus, there’s a crackdown on Hong Kong dissidents; many have been jailed, but Beijing knows that mass protests are unlikely in this new age of social distancing.

THE BACKLASH AGAINST CHINA will be most apparent in two areas:

1. Legislation in the U.S. Members of Congress — in both parties — are likely to
embrace legislation that would seek to shift supply lines back to the U.S. As we wrote on April 14, there’s bipartisan support for reducing reliance on medical and pharmaceutical exports to the U.S., perhaps by offering incentives to American firms to manufacture those goods domestically. New tariffs on Beijing are possible, and some states are even suing China for its lack of transparency as the virus began.

2. A major shift from NATO: There’s an excellent piece on the Bloomberg web site today that details European disillusionment. China has bought much of Europe — even Bordeaux vineyards — in recent years, but “China has lost Europe,” a German legislator says in the Bloomberg article.

Europe will listen as Japan and other countries seek to capture customers that China has in NATO — not just for medical products but technology as well; Europe may re-visit its ties to Huawei. And there’s resentment in Europe that many Chinese markets are still closed to outside investment.

THE POLITICAL ANGLE: Donald Trump surely knows how to play the race card; immigration curbs he announced this week are just the first volley in an election campaign that will target China. Republicans will remind voters that Joe Biden has always been viewed as pro-China on trade, which will be a major albatross for the Democrats’ nominee.

PERHAPS THE BIGGER POLITICAL ANGLE will be in Beijing. If this crisis results in job losses in China and a sagging economy, will Chairman Xi have to worry about
social unrest? The Chinese people are very savvy; they know they have been deceived on the virus. They’ll look the other way — unless the economy begins to falter.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

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©2021 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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