The Chinese side said: “The meeting achieved substantial progress and reached an important consensus. The two sides agreed on establishing a consultation mechanism for trade and economic issues.”
That does not quite match the headlines about the “trade deal, total reset” coming from the White House.
We may not be operating at the heights of diplomatic trade deals, nor be involved in negotiating multi-million-dollar deals with China, but if we are doing anything more than basic business in China, then we need to be aware of these cross-cultural hurdles.
Better listening and understanding of what is said is an essential skill in any business discussion.
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In meetings, it is very easy to assume you have agreement and understanding when, in fact, there is no agreement and no understanding. People on both sides of the table have a tendency to nod their heads in agreement even if they do not fully understand what has been said. It is essential to use a confirmation technique to ensure key points have been understood. This means rephrasing the question so the original answer is confirmed. The Chinese side will use this method frequently, which drives many Westerners to distraction. They will complain “we have already covered this area and agreed”, not realising this is the Chinese way of reconfirming if their understanding is correct.
Take this simple statement: “The project must be completed by March 15,” and the reply “Okay. We will do our best.”
Do you have confidence that the deadline has been understood? Probably not. Do not ask for the conclusion to be repeated back to you, as this implies a loss of face. You can reframe the original question in different ways:
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• Do you see any problems with the March 15 deadline?
• Are there any other factors or projects which might influence your ability to finish this project on March 15?
• Is the March 15 deadline convenient?
• Do we need to talk to anyone else or organisation about this March 15 deadline?
The answers to these supplementary questions achieve two things. First, the answers confirm the correct understanding of the original question. Second, the different approaches used in the supplementary questions may reveal problems that would not otherwise have been mentioned. This may include the need to get approval from another person, department or authority.
By inviting people to let you know that the March 15 deadline is inconvenient, you give them the opportunity to say this without losing face. If it is inconvenient, then you can be certain the March 15 deadline will not be achieved, despite everybody doing their best.
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Technical outlook of the Shanghai market
As anticipated, the Shanghai Index is moving steadily towards resistance near 3,435. Although the breakout does not have three anchor points for a trend line, it can be defined as a new uptrend. The steady behaviour, with low volatility moves, has the characteristics of a trend rather than of a rally.
The narrow spread in the long-term Guppy Multiple Moving Average (GMMA) is evidence of a weak resistance feature that can be relatively easily overcome. A wide separation would show heavy investor disagreement. The narrow separation shows investor caution, so they are ready to quickly jump on any new trend development.
The index had paused, but it was not overwhelmed by selling. The narrow degree of separation showed the market was biding its time. The narrow separation made it easier to push into a new uptrend as there were fewer sellers clustered at this level.
This is confirmed by the new relationships shown with the GMMA indicator. The short-term group of averages is well separated, showing strong trader support for the breakout. The lower edge of the short-term GMMA is above the upper edge of the long-term GMMA. This is confirmation of an uptrend breakout.
The current value of the historical uptrend line is above the historical resistance level near 3,435. A break above both of these resistance features has the potential to be very powerful and makes the next target near 3,674 more achievable.
However, a breakout above 3,435 has a new resistance level near 3,475. This is the updated value of the uptrend line that defined the previous up trend and which from January to March acted as a support feature. Now, the projected trend line acts as a resistance feature.
A close above the value of the uptrend line means the line will act as a support feature. This breakout would also confirm the continuation of the uptrend with longer-term targets near 3,670.
Applying the trading band projection method, the next technical upside target is near 3,710. This is also an important historical resistance level. It acted as resistance in 2014 and 2015. It was a strong resistance level three times in 2021.
The key feature to watch is a sustained breakout above 3,435 as this has been a significant resistance feature in the past.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a former national board member of the Australia China Business Council
