This is China . . .

Friend and China expert (and I never call anyone a China expert) Brent Carlson is always saying that the way to know China’s future is to look at the “data points” regarding China’s present. In other words, read the tea leaves in front of you.

Today on Twitter, Sofia Horta e Costa (a terrific financial reporter for Bloomberg) did the China tea reading for me. On her Twitter account, Ms. Costa tweeted a ten-part thread that begins with: “These are the things that happened in China this week” and her threads reek of a country facing existential problems.

Her core tweets were the following:

1. A reassessment. BlackRock is no longer bullish on China, saying Covid Zero is hurting the economy. Beijing’s ties to Russia have also raised concerns, they say. Separately, a Dutch fund’s new responsible-investing tool blacklists some Chinese assets.

2. Biden doubles down. In a new report, the U.S. State Department outlines plans to boost pressure on China over the treatment of ethnic minorities in Xinjiang. The President has put alleged human rights abuses at the forefront of his China policy.

3. Hong Kong’s national security police detains four prominent democracy activists, including a 90-year-old Catholic cardinal. A Vatican spokesman says the Holy See is following the news with “extreme attention.”

4. Heightened financial stress. Sunac defaults on a dollar bond for the first time, one of the largest property developers in China to do so. A yuan bond due Sunday is likely to be repaid, however, Debtwire says. China USD credit yields reach 22%.

5. Spotlight on Hong Kong. A city caught between China’s sputtering economy and the Fed’s rapid withdrawal of stimulus, the resilience of its financial system is being tested from all sides. Small business owners are being crushed.

6. Jobs warning. Premier Li Keqiang says China is facing a “complicated and grave” employment situation. Economists say the urban surveyed jobless rate probably rose to 6% in April, matching the second highest on record. Data is due Monday.

7. Shanghai finally has a lockdown-exit roadmap after nearly six weeks of containing residents. The plan is to stamp out community spread of the virus and start opening up the city by May 20. It’s the first time officials have set a timeline.

8. The WHO chief, who had been accused of pandering to Beijing during the Wuhan outbreak, called on China to rethink its Covid Zero strategy. The remarks don’t go down well in Beijing.

After reading the above, you don’t need a weatherman to know which way the China winds are blowing. All of the news is bad. The sole glimmer of hope comes from Chinese government officials having set a May 20th date for starting to open Shanghai. If anyone thinks that date will change anything for Shanghai or for China, I’ve got some downtown Seattle office space I’d love to sublease you.

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