BE NICE TO YOUR CHINESE BANK

UBS Strategy---"China/US – ‘Agreeing’ to sell arms to Taiwan, talk about meeting the Dalai Lama….these are BAD developments and important ones….I fear the outcome for the West, esp the US, but also the UK, if the idea is to flex muscles in the direction of China. I am sure the US would not take too kindly to China agreeing to sell serious military hardware to Vene or Iran, nor would it take too kindly to the Beijing authorities hosting a global fundraising conference for global jihadists. NO, I am not saying Taiwan is the same as Iran/Vene, and of course I do not think the Dalai Lama is in any way comparable with al-Qaeda. But what I think is NOT the point. It is all about the Chinese leadership, and I reckon they must be seething. We in the old West need to be very very careful here. China funds the US to a meaningful degree. Imagine if China decided to stop buying US govt/agency debt. And then imagine if it decided to sell 300/400/500bn of such debt, say on the same day as the next big auction. The word UGLY comes to mind. My real fear is that PROTECTIONISM might become THE central issue later this yr as a result of all of this. Not good at all."