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China’s Deepening Geopolitical Hole (Project Syndicate, 6 min read) Minxin Pei sees the UK’s action to ban Huawei 5G network as a stand on Hong Kong. China must not retaliate, even though it has leverage; for example, British bank HSBC earns more than 50% of its profit from Hong Kong, and 120,000 Chinese students study in the UK. Reasons for non-retaliation are China’s increasing international isolation and any reprisal hurting China more (i.e. HK loses its status as a global financial centre).
Is China’s Recession Really Over? (JP Morgan Asset Management, 4 min read) Half of the world’s consumption of copper stems from China. With both import volume surging 50% MoM and copper prices rising 10% in July (a good proxy of Chinese manufacturing and infrastructure activity), JP is confident that China is the only V-shaped recovery story in the world. It says, ‘Chinese equities remain one of the most attractive opportunities in the COVID world – and beyond.’ [Bullish Chinese Equities]