The US Defence Secretary will visit China despite the (trade) war of words

The US Secretary of Defence, James Mattis, is set to visit Beijing on Wednesday, Australian time, according to Bloomberg, marking the first such visit to China in four years. The last holder of that role to visit the Middle Kingdom while in office was Chuck Hagel in 2014.

The visit comes, of course, in the middle of a war of words (and a — so far — limited imposition of tariffs) between the US and Chinese administrations, and amid the backdrop of the US President’s recent summit with North Korean leader Kim Jong-Un. It is the latest in the ongoing unconventional US foreign policy, which is defying convention, either — depending on your perspective — keeping the world on its toes by doing away with established protocol, or evidence of a disjointed and knee-jerk reactionary approach to diplomacy.

Whatever your perspective, though, Secretary Mattis’ visit is a high stakes one, coming in the shadow of Chinese President Xi’s reported comments, in response to the ongoing tariff dispute, that while the West might turn the other cheek, “…In our culture, we punch back”.

It was those comments, at least in part, that saw US markets sink overnight, and our local bourse follow suit today, with the ASX 200 down 0.25% to 6,194.8 points in late afternoon trade. That’s a paring back of early losses, after the market opened down 0.75% — and before news of Mattis’ visit was confirmed early this afternoon, Australian time.

And of course, in light of China’s recent moves in the South China Sea, Secretary Mattis will have a delicate balancing act of pressing the USA’s interests, while being mindful of China’s view on sovereignty. That is, if Mattis’ task is to placate, rather than remonstrate with Xi.

Such are the concerns — and unpredictability — that are keeping global stock markets on the edge of their collective seats. One thing is for sure: the old rules don’t apply while Presidents Trump and Xi are at the table.

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