The political tension between the United States and China continues to increase. Hong Kong has once again become the scene of massive protests against China’s infringement upon its independence through a new controversial security law. Despite the protests, China is not showing any signs of backing away from its newest proposal, which will increase the Chinese government’s oversight of Hong Kong and suppress resistance against the Communist Party of China.
The United States is preparing to implement new sanctions against China today. The pretext is China’s mistreatment of its minority Muslim population, but the real reason is the growing number of disagreements between the world’s two largest economies. The US has previously criticized China over its handling of pro-democracy protests in Hong Kong. There is also President Trump’s crusade to blame the coronavirus on China.
The result of these factors taken together is a much weaker Chinese yuan and disturbances on the Asian stock markets.
Meanwhile, the economic outlook is improving in Europe, where the European Commission unveiled a 750 billion euro recovery fund that would allow countries to borrow more money to address the economic crisis caused by the pandemic. The proposal comes just days after Germany and France put forward a joint plan for about 500 billion euro worth of stimulus funds.
Though these two proposals still have to be discussed and voted on, they show that the region is finally taking steps to fight the damage from the pandemic. The euro strengthened across the board on this news.
Oil prices have once again turned volatile, as the escalation in the conflict between China and the US could prompt another drop in demand quite suddenly. Today the WTI fell to $34.01, while the Brent crude decreased to $35.65 per barrel.
