May 23 • 14M

A strategic alliance without freer trade

Aotearoa-NZ joins Biden's Indo-Pacific 'Economic Framework for Prosperity', which is designed to combat China, but doesn't include easier market access to US; Mortgage conditions ease a bit

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TLDR: PM Jacinda Ardern announced this morning Aotearoa-NZ had joined up with US President Joe Biden’s new anti-China Indo-Pacific 'Economic Framework for Prosperity' (IPEF), but the deal doesn’t improve trade access to the key US market. Paid subscribers can see more on this below the paywall fold and in my podcast above.

Also, Biden ratcheted up tensions with China by appearing to commit the United States to militarily helping Taiwan if it was ever attacked by China, which would be a departure from the United States’ previous ‘strategic ambiguity’ on the issue. The US has sold weapons to Taiwan, but has never fully committed itself to a NATO-style defence alliance where if one is attacked, everyone defends the attacked. The strategic ambiguity allowed China to continue to say publicly Taiwan is part of China and not part of a US-led alliance. US officials downplayed Biden’s comments afterwards, given they could destabilise relations with China.

Fresh out of isolation, Ardern has left for the US, although it is still unclear if she will be able to meet with President Biden. Photo: Hagen Hopkins/Getty Images

Elsewhere in the news overnight and this morning;

  • US stocks rallied almost 2% overnight after reports of a big new Chinese Government stimulus plan, talk that Biden may remove Trump’s tariffs on Chinese imports to reduce inflation and a better-than-expected factory production figure in Europe helped soften fears of gathering recessionary forces in the US, Europe and China;

  • European Central Bank President Christine Lagarde gave the strongest signal yet that the ECB would tighten interest rates into positive territory within three months; and,

  • Tony Alexander’s monthly survey of mortgage brokers found another slight easing of lending conditions by banks. See more on this below the paywall fold too.

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