Short Selling China? The US-China Financial War Escalates, The Federal Reserve Suddenly Shifts, Biden Makes One Last Push

Since 2024, the US-China financial war has shown signs of escalation, with numerous actions taken by the US, perceived as an intention to 'short sell China.' Specifically, Texas Governor Abbott has issued executive orders for three consecutive days, restricting investment activities by Chinese investors in Texas, prohibiting Chinese companies from purchasing land, and limiting their investments in the energy, communication, and agriculture sectors. Other Republican-led states may follow suit. Furthermore, according to Deutsche Welle, the Biden administration plans to introduce new export restrictions on China to further suppress the development of China's high-tech sector, potentially adding up to 200 Chinese chip companies to a restriction list, with broader export restriction plans targeting the artificial intelligence sector possibly announced next month.

Meanwhile, the Federal Reserve's policy has suddenly shifted, with the minutes from the November meeting indicating a change in its inclination towards interest rate cuts, and the probability of a 25 basis point cut in December has decreased to around 63%. The reasons for this shift include the possibility of greater pressure on the US economy due to high interest rates necessitating preemptive rate cuts, the US debt issue leading the government to pressure the Federal Reserve for rate cuts, and that cutting rates ahead of next year's election could help stimulate capital markets benefiting Biden and others.

Some believe that Biden is making one last push, as his remaining time in office is limited, intending to attack China amid the current uncertainties in the US; if he fails, the cost would fall to the subsequent administration under Trump. In response to a series of actions from the US side, China will also take resolute measures to firmly safeguard the legitimate rights and interests of Chinese enterprises.$SSV