The Dragon Gets Fiery
You might think that China and protests go together like Warren Buffett and Dogecoin.
But surprisingly, China is actually no more a stranger to citizen displeasure than you are to trading losses. The thing is, this time - It’s big, like really big.
According to reporting going back years from sources like the WSJ, Al Jazeera, and Bloomberg, minor protests on non-ideological grounds (while certainly not common) are actually not unheard of in the Middle Country. What is unheard of, however, is storming down the streets of Beijing, Shanghai, and plenty of other cities while dropping reams of blank white paper along the way.
The white paper, the protestors’ chosen symbol of anti-censorship, has become a central piece in the uproar seen in recent days. Kind of like the black squares lathering U.S. Instagram feeds, footage of dissenters holding white pieces of paper has taken the nation by storm.
That being said, the longevity of these protests is far from known or even knowable. The only other time period in the history of the People’s Republic of China that saw mass unrest on this scale was at Tiananmen Square in 1989…and we all know how that turned out.
With these competing dynamics at play, markets don’t know what the hell is going on. Mass protests in frontier nations are nothing new, but occurring in China, the world’s second largest (and probably soon-to-be first) economy, is an absolute bombshell.
Initial reactions were somewhat predictable. The most striking, however, is just how far China’s currency has fallen in recent days and the implications of this for global trade. The “World’s Factory” is responsible for not only supplying the rest of the world with valuable inputs and beloved goods, but it also plays a huge role in eating up commodity markets like a pre-teen eats Dairy Queen.
Hence, while the Chinese nation seeks to quell CCP-defying protests, the global oil price sold off in spades, declining nearly 3% on Monday and closing around $81/bbl. Sounds great for the gas bill, but much like the expression “when the U.S. sneezes, the world has pneumonia,” I have a feeling that this sneezing by China could give the world a lot more than just a runny nose.
Either way, there is far more of what we don’t know than what we do. Will these protests cause an easing in the nation’s zero C-19 policy sooner than expected? Will Xi and the gang crack down on the protests like an elbow drop from Hulk Hogan? Why don’t my parents love m-, wait, my bad, wrong question.
Regardless, it will be a fascinating few days, weeks, and potentially months to follow in China. You could - at this very moment - be witnessing one of the grandest political shifts in modern Chinese history, or, of course, this could also be just another Tuesday. Stay tuned.
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