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A top Chinese diplomat Yang Jiechi said that the task for both China and the US is to put the relationship back on a predictable and constructive track of development.

Yang said that China is prepared to work with the US to move the relationship forward along the track of no conflict, no confrontation, mutual respect and in a win-win cooperation

Yang said no force can hold back China’s development.

Further comments

Says hopes the US will rise above the outdated mentality of zero-sum major power rivalry.

Says China and US should manage differences properly.

Says urges US to remove stumbling block to people-to-people interactions.

Says China has no intention to challenge or replace the US’s position in the world.

Says expects u.s. to strictly abide by one-China principle.

Says China never meddles with the US’s internal affairs, including its elections.

Says US should stop interference in China’s territorial integrity and sovereignty.

Says any trespassing of China’s red lines will undermine US-China relations and US interests.

Says China will always welcome US business investments in China.

Says China and US can jointly discuss ways to improve global public health system.

Says concept of national security should not be abused in trade.

Says China is ready for closer macroeconomic policy coordination and cooperation with the US.

Says should be closer exchanges and cooperation between China, US militaries.

Says China and US need to keep disagreements under control, expand common interests.

Market implications

The comments are risk-friendly and echo that of a number of recent positive statements from various Chinese officials. 

However, there are always caveats, as read in the above statements and there will always be a tipping point. 

Relatedly, the last few days have seen China militarize its coast guard, so it can now fire on foreign vessels, and again fly bombers and fighter jets through Taiwanese airspace.

This is in response to Biden’s White House sending an aircraft carrier through the South China Sea and firming up a commitment to Taiwan.

Markets are on standby for any deterioration relations that would subsequently send shivers through the stock market and likely lead to capital flight into the Swiss Franc as totally impartial to relations in Asia. 

SNB’s Jordan: FX interventions are very important