AGF Management : Still Another Serious U.S. Dispute With China

U.S. RELATIONS WITH CHINA, already near rock-bottom, could deteriorate further in coming days over the visit to America by Taiwan's President Tsai Ing-wen, which apparently will include an unprecedented meeting with House Speaker Kevin McCarthy.

A MEETING WITH McCARTHY would be the first on U.S. soil between a Taiwanese President and a U.S. official of his rank, and it has generated harsh rhetoric from Beijing, which declared that it could provoke a "serious confrontation."

ANY SIGN OF CLOSER U.S.-Taiwan relations infuriates the Chinese, who reacted with massive military exercises after former House Speaker Nancy Pelosi visited the island last August.

MS. TSAI IS TRANSITIONING through the U.S. now on her way to Central America, and reportedly has agreed to meet with McCarthy at the Reagan Library in Simi Valley on her return leg on April 5. McCarthy has invited a delegation of lawmakers to accompany him next week, including members of the House's newly formed China Select Committee, which is expected to aggressively probe China's spying, its treatment of dissidents and its lack of transparency on Covid.

U.S. OFFICIALS, WHO WERE UNSUCCESSFUL in preventing Pelosi from traveling to Taiwan, are concerned that a meeting between Tsai and McCarthy will unleash more military exercises and perhaps result in fresh trade friction between the two countries.

IN RESPONSE to Pelosi's visit, China launched a retaliatory show of military force - firing of ballistic missiles over Taiwan, deploying warships into the Taiwan Strait and conducting a simulated blockade of the island. The risk would be a military miscalculaion that neither side wants.

THIS LATEST CRISIS has prompted national security adviser Jake Sullivan to call Wang Yi, China's top diplomat, to reinforce the idea that the trip is routine and should not provoke an overreaction, the Washington Post reports.

DEFENSE SECRETARY Lloyd Austin, speaking at a House committee hearing yesterday, said that he does not see an attack on Taiwan as imminent or inevitable. He said the Pentagon is working to get Taiwan weapons such as coastal-defense and anti-armor missiles and training for them to deter an invasion.

THIS LATEST CONTROVERSY COMES after Xi Jinping's visit to Moscow earlier this month, which apparently did not result in a commitment by Beijing to send weapons to Moscow. But that threat persists, and fears may grow during April over Chinese military aid to Russia.

MOST GEOPOLITICAL EXPERTS do not consider an invasion of Taiwan as likely any time soon; the military obstacles would be daunting, and an invasion would result in enormous economic sanctions against Beijing. But if Tsai meets with McCarthy, it will be still another reason to believe that U.S.-China trade relations could deteriorate even more.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

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