They resent China's rise because, in their heart of hearts, they hold dear the racist belief that, on one hand, China cannot innovate. On the other hand, their resentment reflects the US fear that China can innovate and has overtaken the US in artificial intelligence (AI), quantum computing and other technology areas.
When they come across a highquality Chinese product, be it a Huawei phone, a car, a drone or a computer, they rationalise that this can only have been produced as a result of theft.
Business must recognise this ugly and inaccurate thinking as a fact because it underpins the way Vance, President Donald Trump and Trade Adviser Peter Navarro think about the global trade environment.
It is said in jest that America is a land of opportunity where every bad idea has the opportunity to grow up and become national policy. It is no longer the jest it used to be and that is an unfortunate reality businesses have to deal with.
See also: China business rests on trust
And it is not just companies that do business directly with the US or China. Trump has proposed very large landing fees on ships operated by Chinese logistics companies like Cosco. He has also imposed landing fees on ships made in China, but owned and operated by other countries.
As a result, this week, not a single international cargo ship was docked at the port of Seattle. This is one of the most important ports for US commerce with Asia. The last ship from China docked at a West Coast port on April 20. The last ship from China will dock on the East Coast around May 10.
This is a disruption to supply chains that is already as significant as the disruption experienced during the Covid-19 pandemic. This is just the beginning as the fees imposed by Trump on China shipping and those who use China-built ships to transport goods begin to bite. There are not enough non-Chinese ships available to replace the required shipping to the US.
See also: Chinese banks recapitalise in the great global rebalancing
Already, major American chains are reporting shelf shortages, not just of made-in-China goods, but on products that would normally have been shipped in containers travelling on Chinesebuilt ships. The consequence will be empty shelves in US stores in a few weeks and Covid-like shortages for consumers and for firms using Chinese products as intermediate goods.
It is beyond our scope to suggest solutions, workarounds, or responses to this environment. However, businesses need to prepare contingency responses that extend beyond the idea that it is only their direct business with China that is impacted by tariffs and Trump's anti-China policies. The collateral damage is much broader than just Singapore-China trade. This has to be acknowledged before business can take appropriate action to protect supply chains and logistics channels.
This self-imposed blockade of America will also impact the US economy, bringing consequences for those funds which have invested in the US.
Technical outlook of the Shanghai market
The Shanghai Index continues to flirt with resistance near 3,300. The index needs to break above the upper edge of the long term group of averages in the Guppy Multiple Moving Average (GMMA) indicator before a trend continuation can be confirmed.
The bulls cite the narrow spread in the long-term GMMA as evidence that resistance at this level is comparatively weak. The bears point to the lack of compression in the long-term group which suggests that bullish momentum is weakening.
Both are correct in the sense that upwards momentum has diminished in the index. However, there is no strong bearish indication and this in itself is marginally bullish. The degree of separation is narrow, so this remains a weak resistance feature.
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A breakout above this feature has a much stronger resistance level near 3,420. 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.
The current value of this uptrend line is very near to the historical resistance level near 3,435. A break above both of this resistance features has the potential to be very powerful and makes the next target near 3,674 more achievable.
It requires considerable market strength shown by the commitment of new money coming into the market, to break above these two resistance features. That money flow would confirm a new level of enthusiasm and bullishness. It is this combination that suggests the breakout would be more powerful and sustainable.
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.
Failure to move above the current resistance features has a downside support level near 3,160.
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
