The Chinese yuan fell late Tuesday and Nasdaq futures rallied as markets began to price in the likelihood of victory for incumbent President Donald Trump.
Nasdaq 100 futures rose nearly 4 percent amid a tightening U.S. race in Trump’s favor, according to Bloomberg News, while Reuters reported that at some point the offshore yuan fell about 0.8 percent against the dollar.
While the electoral college vote was still too close to make a decision at the time the currency fell, it coincided with Trump’s rise and in some cases with the overtaking of former Democratic vice president Joe Biden in key states such as Michigan, North Carolina, Ohio and Pennsylvania.
Rebeccah Heinrichs, a senior staffer at the Hudson Institute, was unable to make a definitive connection, but said the available evidence was accumulating.
“It’s only a metric, but it looks like their decline correlates with an increase in Trump’s chances of winning the election,” Heinrichs told Washington Newsday. “There is no indication that a second Trump period would be easier for China – and I mean on different fronts”.
The Trump government has pursued a harsh policy toward the People’s Republic, pushing for tariffs and other measures that would reduce the trade deficit and combat alleged Chinese abuses such as currency manipulation and intellectual property theft.
Biden also vowed to challenge China on certain issues, while leaving ways of cooperation open.
“Biden has tried to talk tough to China over the past year, but it’s just talk, and his long history tells a different story; a story of determined engagement with China,” said Heinrichs, “and some of his deputies have hinted that while Biden could continue to play the trump card against China, it would be an approach that would be much less harsh and intense for the Chinese government and business community.
Relations between the world’s two largest economies have deteriorated considerably under Trump, especially last year when a coronavirus pandemic devastated international markets. COVID-19 was first observed in China, but has been largely brought under control in the world’s largest population, with the United States being hardest hit.
The trump card is to blame Beijing for the intercontinental spread of the disease, while China has demanded that it focus on international efforts to combat the virus. It has also resisted Chinese efforts to make territorial claims on areas such as self-governing Taiwan, semi-autonomous Hong Kong and the waters of the South China Sea.
When the U.S. launched exercises on Tuesday together with Quadrilateral Security Dialogue partners Australia, India and Japan, Chinese Foreign Ministry spokesman Wang Wenbin said: “We hope that the military exercises of the countries concerned could be conducive to peace and stability in the region rather than working in the opposite direction.
Chinese officials have repeatedly denied the preference of a candidate in Tuesday’s U.S. elections and rejected allegations of interference in the competition.