May 27 2020 0
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The Trump administration is considering a series of sanctions on Chinese officials, businesses and financial institutions in response to Beijing's crackdown. The Ministry of Finance may impose controls on transactions and freeze the assets of Chinese officials and businesses for enforcing a new national security law to limit rights and self-sufficiency by Hong Kong citizens.
Discussions between agencies are ongoing and no decision has been made yet on whether sanctions will be used. This news rocked the stock market. Meanwhile, President Donald Trump believes that Hong Kong will lose its position as Asia's financial center if the new law is implemented. And perhaps Hong Kong will prepare for days of violent protests every month as pro-democracy groups call for a total strike.
Asian stocks are likely to have a tumultuous start after the Trump administration looked at sanctions on Chinese officials - another sign that the relationship between the two sides is deteriorating. Dollar and Treasury Bond dropped. S&P 500 index futures also fell. The futures market in Japan and Hong Kong is little changed, while the Australian market goes down. The S&P 500 closed at an 11-week high, but gave up nearly half of the previous gain in the last half-hour of trading due to a drop in Chinese chip makers' stocks. The yen fluctuated. Oil prices fall.
Running from downfall
China's economy continued to recover slowly from the coronavirus-induced decline when the sentiment of businesses in May improved over the grim global outlook. This is an assessment from the earliest available indicators and still has to wait for more data from April to fully evaluate. However, global demand is very weak and last week, the financial market went down in part due to the disappointment of the government's modest stimulus plans. According to a survey by Standard Chartered Plc, small businesses were more confident with the production and new orders in May than when the outbreak.
About the outbreak
New York City has hired 1,700 contact followers who will be working by June 1, and Governor Andrew Cuomo said he will now focus on reopening the most populous city in the United States, the only area still blocked by order of the state. Wuhan, the center of China's coronavirus outbreak, said it tested nearly 7 million people in 12 days after several infections sparked concerns about a second wave of spread. A British government minister resigned to protest after his top aide Boris Johnson refused to apologize for violating the blockade rules, adding to the pressure on the prime minister. The UK government is planning to start lifting restrictions in June.
The race to vaccine
The government of Xi Jinping is trying his best to develop vaccines as the whole world is racing to find ways to eradicate coronavirus. The size and speed of China's vaccine search effort has increased pressure on the United States, where President Donald Trump's administration has launched a program called "Operation Warp Speed" to speed up vaccine research and development.
Xi has promised to share any successful vaccines globally and the Chinese president will wield enormous geopolitical power if his country produces the world’s first effective injections. A total of five vaccines developed by Chinese companies are already being tested in humans. This Asian country faces stiff competition in the United Kingdom and the United States. Moreover, it is still difficult to assess which test product will work and who will reach the finish line first in this race to find the vaccine.