Encouraging news out of the G20 meeting so far.
The meeting between the presidents of the US and China appears to have gone reasonably well. Perhaps with some renewed understanding around Taiwan. Which would be a welcome development for all of Asia and from a global geo-political risk perspective as well.
Of course, all is not resolved, but talks with good intentions feel like a step back up, compared with some of the recent tensions between the two super powers.
From an Australian perspective, today’s meeting with President Xi by Prime Minister Albanese is a fantastic opportunity for some badly needed improved understanding. Appropriately, PM Albanese, to his credit has not created any advance agenda publicly. This will allow a very open airing of both leaders.
It would be wonderful for Australia’s long term economic outlook should mutual reassurances be substantial enough to bring some goodwill back to what had become a somewhat toxic relationship.
There is no debate that the previous Morrison government appeared to go out of its way to publicly alienate Beijing. The response has been reduced opportunities for Australia’s exports.
The Australian dollar may even benefit on the day should some significant post-meeting press conferences be given.
The Asian region is witnessing a very serious arms race now, and this looks likely to intensify. Japan is building a major military capability and the basing of US nuclear-capable long-term bombers in Darwin has occurred rather suddenly.
Perhaps, the most important benefit to come out of G20 will not so much be the expected condemnation of the war in Ukraine, but a greater understanding regarding the delicate politico-military situation in Asia.
While condemning one war, this G20 meeting has the ability to prevent a major conflict in the local region. And this may be its greatest achievement.
Overall, this G20 should prove to be a positive for global financial market sentiment.
Market insights and analysis from Clifford Bennett, Chief Economist at ACY Securities
