Original Liu Xiaobo
At around 1 a.m. Beijing time today, Biden announced that he would withdraw from the 2024 United States election and instead support his vice President Kamala ·· Devi Harris (Kamala Devi Harris).
In a letter posted on his personal social media, Biden said that he had intended to seek re-election, but in the best interests of the Democratic Party and United States, he decided to withdraw from the presidential race and will focus on fulfilling his presidential duties during his term. Biden said he would elaborate his decision to the nation later this week.
Trump told reporters after hearing the news: It is easier to defeat Harris than to defeat Biden. And Time magazine in United States immediately put Harris on the cover.
How will Biden's withdrawal and Harris's election affect the United States election and how will it affect the global economy?
My view is that this will only make Trump's election more certain, and the volatility of global markets, especially RMB assets, will increase, and everyone should fasten their seat belts.
Let's start with the woman Harris.
Harris has a widely known Chinese name - He Jinli. But in fact, her father is black Jamaica and her mother is Indian. Born in October 1964 in Oakland, California, United States, she is about to turn 60 and has been the United States vice president for the past four years.
Many people think that Harris comes from the grassroots, but in fact, her father is a professor of economics at Stanford University; The mother is Indian, of noble birth, and a well-known cancer specialist. Her parents divorced at an early age, and she grew up with her mother.
She graduated from Howard University in United States and the University of California Hastings School of Law with a Juris Doctor degree. For a long time after graduation, Harris had no political backing and could only serve as a deputy district attorney in Alameda. Until she met Brown, a 26-year-old California political tycoon who was 26 years older than her, a long-time speaker of the California State Assembly and a two-time mayor of San Francisco. The two quickly developed into a romantic relationship, and since then, Harris has soared, rising in position and becoming well-known in the political arena.
Biden chose Harris as his running mate, mainly because she is a woman, has a dual minority status, and can win many votes that Trump has difficulty getting.
Now that Harris is poised to be the Democratic-backed candidate, her advantage remains that she is a woman + dual minority.
Judging from the results of the general elections in various countries, it is taboo to change generals on the spot.
A change of leadership would indicate that something is wrong with the original candidate, either in the polls or in health or prestige. The person who replaced it must have not had enough prestige before. The substitution itself is a practice of lack of confidence and self-chaos, and it is a taboo in elections.
If it's a big taboo, why do Democrats do it?
Because the performance of Biden's dementia is becoming more and more obvious, making United States seriously worried about whether he can perform his duties normally, more and more people have lost confidence in Biden, which has even affected Democratic election fundraising.
Trump shot a god, making United States more and more convinced that he was the chosen one.
Continuing to let Biden run may greatly drag down the Democratic Party's support and eventually lose the election altogether.
The election to be voted on November 5, 2024, will not only elect the president, but also change the parliament. All members of the House of Representatives, one-third of the Senators are up for re-election, and several states are up for governor.
The Democrats' calculation is that even if Trump is elected president on an interim basis, he can at least compete for a majority in the Senate or House of Representatives, win elections in some states, and lay the groundwork for the next presidential election. It's better than total defeat.
If the Republicans win a majority in the Senate and the House of Representatives, Trump will really "hang up", and it is difficult to say whether the democratic system in United States can be maintained.
Therefore, the Democratic Party is changing people, and it is to use the position of the president to exchange more things to avoid losing everything.
With Biden's withdrawal, the probability of Trump's election has risen to 9 percent. Of course, he had to keep himself safe before voting day to avoid a second assassination.
United States society is becoming more and more divided, and even if Trump is elected, he may be assassinated again at any time during his term.
Trump's second term may strike another blow to the United States political system and change the long-held consensus of many Americans. It is difficult to predict what will happen to United States towards the end of its second term.
Trump's second time in office, the impact on China is mainly as follows:
First, Trump will push for peace in Ukraine and focus on dealing with China.
In the process, Trump may demand that NATO abandon further eastward expansion and provide Russia with buffer zones and security guarantees. Ukraine's dream of joining the EU and NATO will probably be difficult to realize. In addition, Ukraine may also be forced to give up some territories, such as Crimea. And Putin, after gaining face and some inside, is of course happy to stop the war, after all, Russia is very tired.
This is conducive to Putin's maintenance of his position in the country, in the circle of friends. Subtle changes will take place in Sino-Russian relations. Of course, this also avoids China being sanctioned by the West because of the Ukrainian-Russian conflict.
After the Ukraine issue was resolved, the United States focused its efforts on dealing with China. Both Trump and his vice presidential candidate, Vance, believe that China is United States' greatest adversary.
Second, China and the United States may fight a second round of trade war.
I've shown you the following picture before.
If not combined (e.g. EU, ASEAN), China's (mainland) largest single trading partner is still the United States, and the largest source of surplus is still the United States. In 2023, Chinese mainland received a surplus of US$336.1 billion from the United States, which is the cornerstone of maintaining the stability of the RMB exchange rate.
It is estimated that many people wonder: aren't the rich people moisturizing, why hasn't the country tightened foreign exchange controls? The RMB exchange rate is also relatively stable?
This is because China's foreign trade surplus continues to hit new highs, and it is bearable to run out of "hard currency". But if the surplus decreases, there will be a problem.
Trump has publicly stated that, if elected, he will impose tariffs on imports, especially Chinese goods by up to 60%.
Regardless of whether China retaliates or not, the renminbi will fluctuate (depreciate) against the US dollar as a result.
In fact, a moderate abandonment of the exchange rate target is conducive to China's economic recovery and to reducing capital outflows. The RMB exchange rate is currently undervalued, because the trade war depreciates a little more, and the undervaluation is even more obvious. If you run out, it is equivalent to an intensified discount, and it doesn't mean much.
The depreciation will make it more expensive for Chinese to travel, shop, study abroad and seek medical treatment abroad. The depreciation of the exchange rate mainly affects the wealthy, but it is good for the middle and low income classes.
Third, it is further difficult for Chinese to study in United States and stay in United States after graduation, and the social status of the United States Chinese population may be further reduced, and the probability of being discriminated against and attacked will increase.
Fourth, it is more difficult for Chinese companies to go public in United States and obtain Western venture capital.
For example, Shein, a unicorn company headquartered in Guangzhou and engaged in cross-border e-commerce, is said to be abandoning the United States to the United Kingdom for an IPO in London, the United Kingdom. In recent years, in order to avoid political risks, more and more Chinese companies have given up listing in United States and turned to Singapore and London. The West, especially United States venture capital institutions, will also invest in Chinese companies because of Trump's rise to power.
Fifth, Trump supports traditional energy and will cancel policy support for new energy and new energy vehicles. This will make Europe, which has already regretted a bit on the carbon peak policy, also follow suit.
Since China can't play in new energy and new energy vehicles, then change the policy. This, in turn, affects the development space of China's related industries.
Sixth, Trump likes to fight over words and cares about face. He will often provoke China in an attempt to affect the stability of China's financial markets through a war of words. Therefore, after he takes office, the volatility and uncertainty of A-shares will also increase.
Seventh, there are uncertainties in the Taiwan Strait.
Some people predict that Trump is a businessman and does not like war, so he is "transactional" rather than "ideological" on the Taiwan Strait issue.
This is standing in the water 4 years ago, touching the sword that I lost.
In order to consolidate domestic forces and avoid high-level divisions, Trump will also make adjustments and changes. He's so good at change, so it's hard to predict what he's going to do. However, he will certainly increase his bid on the Taiwan Strait issue and seek higher bargaining chips, which will make both sides of the strait uncomfortable.
Eighth, the timing of United States interest rate cuts has become confusing.
Judging from the United States inflation rate and CPI, significant progress has indeed been made in curbing inflation. In order to highlight their achievements and win the election, the Democratic Party will definitely want to cut interest rates before the election. And Trump has publicly threatened Fed Chairman Jerome Powell: If you cut interest rates before the election, you will choose a side and bear the consequences. The implication is that not only will you not be re-elected, but it is difficult to say whether you will be "found faulty", anyway, I have political power after being elected, and I still have a chance to do so.
The Democratic Party has just experienced a change in the election, and the election is sluggish, so it naturally hopes that the Fed will cut interest rates. What the outcome of the game will be, uncertainty increases. Even the International Monetary Fund seems to have taken sides, supporting Trump's claim that it would be appropriate to cut interest rates at the end of the year (after the election).
Today is the time for China to announce the LPR (Loan Prime Rate, which is today's benchmark interest rate) for July, after a number of institutions were predicting a rate cut. Let's wait and see what the outcome will be.
Will real estate stocks fall due to the "improvement of the real estate tax system" in an important document released yesterday? It remains to be seen.