Let's talk about the potential impact of China-U.S. trade negotiations on the A-share market.
In the short term, trade negotiations will indeed have a certain impact on the market, but if we extend the time frame, this effect is actually quite limited. After all, China in 2025 is no longer comparable to 2018, and we no longer need to overly consider the opinions of the United States.
Back in 2018, the United States imposed a supply ban on ZTE, and China had no choice but to accept a fine of up to $1.4 billion. At that time, this figure was jokingly referred to as "one dollar per person," but the helplessness and humiliation behind it are understood by everyone. At that time, we were at the mercy of others and could only endure in silence.
However, as time goes by, by 2025, the United States will find it difficult to hold us back, and instead, we will have the ability to counter in certain areas. For example, why are the U.S. F35 fighter jets still unable to be delivered? A fighter jet without an active phased array radar is like a "blind man with eyes" on the battlefield. The India-Pakistan war is a vivid example; you cannot see the opponent, yet the opponent can lock you in from hundreds of kilometers away, and when the missiles come, you won't even have the chance to cry.
Last weekend, our country cracked down on illegal exports of rare earths, with the police and national security departments taking joint action. I heard that a certain company even came up with the "brilliant idea" of using rare earths to make notebook shells, which is truly laughable. But then again, as long as we strike hard, no matter what tricks the other side plays, the issue of insufficient supply still cannot be resolved. The dollar can be printed endlessly, but commodities cannot be printed out.
China has taken a tough stance in the trade war. In addition to being confident, we hope to use this opportunity to accelerate the breaking of the dollar hegemony. Only by ending the dollar hegemony can the United States completely abandon its bullying through trade. How much of the consumption power that the U.S. prides itself on would remain without the dollar hegemony? Some people believe that if Americans don't consume, global consumption will stagnate. But let's not forget that the U.S. has plundered the wealth of other countries through financial means; finance itself does not create wealth, it merely transfers it. The U.S. has squandered the purchasing power of other countries, and once it loses this ability, the purchasing power of other countries will naturally be released.
There are 8 billion people on this planet, with only 300 million in the United States. The so-called consumer countries combined make up only about 1 billion people. Is there more employment created by satisfying the consumption of 1 billion people or by satisfying the consumption of the remaining 7 billion people? This calculation is not difficult. Looking back at our country's policies in recent years, eliminating poverty domestically and promoting the "Belt and Road" initiative internationally are actually efforts in this direction. Regardless of who becomes the president of the United States, this established direction will not change.
Of course, if a different person were to become the President of the United States, the specific implementation of policies might vary. But why, after Biden, who is at odds with Trump, took office, has he not abolished the tariffs imposed? Don't be fooled by the seemingly good agreement signed between the U.S. and us yesterday; does this mean the trade war is really over? Trump can turn on a dime, and although we are currently strong enough to make him wary, he may still come up with all sorts of tricks in future negotiations.
Can we pin our hopes on Trump keeping his promises and honestly conceding? And then naively changing some internal decisions? The answer is clearly no. I have said before that the earth can accommodate both China and the United States, but the U.S. cannot tolerate our continued development, and China cannot stand the U.S. hegemonic oppression; this is an irreconcilable contradiction. No matter who becomes the President of the United States, they will have to face this reality.
The reason Trump sat in the White House waiting for calls every day during the early stages, and allowed Bessent to express unexpectedly strong goodwill in Switzerland, was merely a delaying tactic. If the U.S. can get what it wants from other trade partners, he will definitely turn against us without hesitation and escalate the trade war. But with unreliable allies and an extraordinarily formidable opponent, he has no choice but to endure. However, the fundamental contradictions still exist, with numerous conflicts within the U.S.; how long can he endure?
If I can understand this point clearly, then what reason do we have to change our policies according to Trump's rhythm? It is well known that the A-shares market is purely a policy-driven market. In my paid content this month, I clearly stated that a prosperous May can be expected. Whether it is a prolonged trade war with Trump or reaching a tolerable agreement as we are now, it does not change our development direction here.
The consumer electronics sector may be positive as a result, having over-fallen before and now may rebound. But has the consumer electronics market really changed radically? Have there been any innovations and technologies that have generated to entice consumers to want to change their phones? The answer is clearly no. Therefore, after the rebound, the fall has to fall. Just like I was bearish on the pharmaceutical sector before, because of our centralized procurement and Sanming medical reform, this direction has been determined, and there will be no more the previous pharmaceutical profiteering model. The profit model of medicine has changed, but the previous increase has long overdrawn the normal development of the future, so the opportunity for the sector is slim for a long time.
Now Trump is also learning to implement drug procurement, aiming to benefit the American people. This kind of redistribution is advantageous for his rule, as the medical trusts won't support him anyway. However, with this move, CROs will suffer even more. Starting from Trump, there might develop a global movement to bleed the pharmaceutical interest groups, making it even harder to operate in the pharmaceutical sector.
As for domestic matters, we will also find ways to gradually increase the CPI and stimulate consumption. We will continue to invest substantial resources to support the development of new productive forces, with the goal of leaving our competitors far behind. Even if we impose a 100% tariff, we still have a competitive advantage, so what are you afraid of with tariff increases?
The recent surge in the banks is somewhat beyond expectations. The banks have done their best for the index, but this is not the norm. The overall trend is that RMB assets will rise, and the increase can solve many problems, such as what some people have been saying about the collapse of balance sheets.
In recent years, many people feel that life is difficult and hard to get by. The fundamental reason is the collapse of the property bubble and the decline in housing prices, which has led to a decrease in the money created through real estate, triggering a nationwide panic about debt issues. The wealthy are more inclined to pay off debts, which reduces total assets, right? Although net assets remain unchanged, some accounts are not calculated that way. Therefore, the foundation for stimulating domestic demand still lies in addressing this decline issue. No matter what Trump does, do we not have to solve this problem? So, is there anything wrong with laying out plans in this direction?
There are always people who remember the bear market of 2018 and like to compare it to the present. But do you remember what happened in 2018? De-leveraging and shadow banking investigations were the fundamental reasons for the sharp decline in A-shares that year. The trade war merely intensified everyone's negative emotions, which led to even harsher declines. What is there to compare with today? The biggest taboo in investing is to seek the sword by the boat, and one must analyze specific issues specifically. Since A-shares have reached a critical point where they must rise, regardless of the negotiation results, they will rise, just with a different rhythm.
