The Day at a Glance | June 1 2020

China stops imports of some US goods

According to recent reports, the Chinese government has requested state-owned agricultural enterprises (Cofco, Sinograin) to stop purchasing American goods in midst of the deterioration of the relationship between both powers because of Hong Kong. Some soy and pork meat purchase orders were suspended, while private companies continue to import as usual. These measures are carried out days after President Donald Trump announced that Hong Kong will no longer receive preferential treatment, will prepare sanctions to apply on Chinese officials, will start ratcheting up accounting and disclosure rules on Chinese companies listed on the stock exchange, will prevent some Chinese students entering the country and will end US relationships with the World Health Organization; all of this in response to China`s poor transparency during the pandemic and Pekin approving a new national security law for Hong Kong. Markets didn`t react negatively to the President`s announcement, as none of the sanctions directly affect China or the “phase 1” of the agreement, which reduces the likelihood of seeing China retaliate. However, if China`s suspension of purchasing of agricultural goods is confirmed, tensions would grow between both countries. China committed itself to purchasing up to 36.5 billion dollars of US agricultural products in 2020 and in the first three months it has only imported 3.35 billion, after the virus`s negative effects; additionally, there is talk of growing demand for Brazilian soy in China.

Protests in the US hinder the economy`s reopening

Over the weekend, protests were held in major US cities demanding justice for the death of George Floyd, African-American citizen who died in hands of police. Some of the protests led to violence and confrontations between protesters and police, in addition to looting in many cases. Civil unrest in the world`s largest economy increases uncertainty regarding its reopening process, which further polarizes the political situation after confinement because of the virus. Economically speaking, the high levels of unemployment are concentrated in the lower strata of society, which is something that increases social tensions in an already delicate situation. The protests have not had a substantial economic impact but have stopped many cities like Chicago – where its reopening scheduled for Wednesday is now dubious – to resume activities due to lack of safety. Other cities have carried out curfews and their mayors have said that large crowds don`t help control the virus. More than 4 thousand people were detained over the weekend because of protests held in 140 US cities.

Activities start to resume in Mexico

Starting on June 1st, social distancing has formally ended and it`s now up to state and local governments to lead activities to normalcy. President López Obrador announced he will resume tours around the country by visiting southeastern Mexico; simultaneously, at least 18,600 companies have reportedly resumed activities on Monday, especially those in the automotive, mining and construction sectors, considered essential in recent weeks. The economy`s graduated reopening system still considers non-essential activities and education to remain at a halt – until a decreasing trend is seen regarding new cases of coronavirus. In the tourism sector, one of the economy`s most important sectors, some guidelines are being prepared for activities to resume, as hotels and restaurants in Quintana Roo may reopen starting June 8th. In Jalisco, non-essential businesses resume activities at 50% of their capacity and an assessment of conditions will take place in the next two weeks to define whether or not continuing to reopen the state`s economy is a sound option – despite the fact that the number of coronavirus cases are still increasing. In Mexico City, a Monitoring Committee has been created, which will publish its “traffic light guidelines” every week for the city`s reopening.