UK and The New Cold War|Brexit|China|Trump|Brief analysis|

Bloomberg: The UK does a U-Turn on China, Forced into an uneven fight.



Quote:
(Instead of opening up the UK to Chinese investment, the government is now looking at protecting critical companies takeovers. Where the country used to welcome Chinese technology—allowing Huawei to supply equipment for its 5G infrastructure at the start of the year—it’s now looking at alternative suppliers.
«As a country we’ve been complacent about the threat from China for too long» said Bob Seely, a Concervstive MP who sits on the parliament’s Foreign Affairs Committee. «There’s a growing realization that the China we wanted to see is not the China that has emerged»)



The new Cold War that I’ve told you about before, is here.There were talks about the new Cold War between Russia and the West, but pretty much everyone agrees on that Russia is not a systemic threat. The "real" new Cold War is the collective West VS China. And it is surprising that it took the West so long to see the Chinese threat for what it is.

The government apparatus direction is hard to turn, but, once turned, the direction stays for a long time. If Donald Trump wins, he will not be constrained by the necessity of winning the next elections and will be able to do pretty much whatever he wants towards China. And by "He" I mean the collective powers behind Trump, not the so common these days demonic depiction of the "Orange Man- bad".

The four more years of “whatever he wants” will have an effect of sealing this foreign policy approach and then, democrat or republican in the Oval Office and the Senate, in the US, Tory or Labor in the parliament in the UK, the foreign policy direction on China will remain the same. Divestment, diversification, trade war, sanctions, etc.


Brexit:

By the way, the coronavirus and now the riots in the US and the UK have almost made the public forget about Brexit, which is far from over, as the new deal needs to be cut. The damage to the economy form the coronavirus, together with the lack of media attention, which is fixated on the virus craze like the eye of Sauron, will either allow the Tory government to cut a softer, closer deal, using the self-imposed crisis as an excuse, making the case for that is the best option for the recovery, with the Tory voters being preoccupied with the attempts of making a living, or, in contrast, emboldened by the fact that one can now blame all the economic and social damage on covid-19, the Tories will go for the hardest deal possible, pleasing its core voting base without much of the meaningful opposition form the left.

To be clear: I do believe, that the UK can be better off outside the UK economically in the long run, should the country make the right choices after the exit, yet the short term economic effect of the hard Brexit will be negative, most likely. A fact that which would have tied the hands of the government in the normal times, but now, paradoxically, when things are at their worst, it might be easier for them to go for the hard deal, for no one will be able to estimate the "damage" done. All fingers will be pointed at the coronavirus. And the public is so exhausted by the covid lockdown, that Brexit is unlikely to re-captivate its imagination again.

This is the current state of affairs:
The UK left the EU on 31 January 2020 and has now entered an 11-month transition period.During this period the UK effectively remains in the EU's customs union and single market and continues to obey EU rules.However, it is no longer part of the political institutions. So, for example, there are no longer any British MEPs in the European Parliament.The transition period deadline is 30.06.2020. The end of the current transition period is 01.01.2021.
Will the UK get an extension, under the corona excuse, or will the EU use the moment to push the weakened UK into signing whatever deal the EU offers, we will see very soon.

The extension seems inevitable to me, but, in case it is denied, or not asked for, it might actually push the pound down. So if there is one, there is nothing to trade, but if there isn’t, then it is reasonable to expect a weaker pound.

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