Impeachment and China-Bashing 2020

Impeachment risk arising from the Ukraine matter is probably exaggerated, but Xi may believe it weakens Trump, making it more likely he can be outlasted. But Warren’s China position is as tough as Trump’s, indeed even broader in scope. Trump may want to defer a deal until after the election, lest he be accused of being “soft on China,” and cede the issue to Warren – and at the same time give up a useful tool to reboot the news cycle as necessary if the present impeachment mania continues. We reiterate that the current risk-back-on mood is premature. Trump is keeping the pressure on, with sanctions on Cosco and rumors of investment restrictions. For both presidents, the risk is that the pressure will throw China into a disorderly recession with global repercussions. RMB remains the canary in the coal mine.