Australia’s relations with China have been terrible over the past few years. On July 8, Australian Foreign Minister Penny Wong met with China Foreign Minister Wang Yi. When the Australian media reported the meeting, Wang Yi’s general comments were described as a list of “demands” or “requirements” which were reportedly rebuffed by Australian Prime Minister Anthony Albanese.
This substantial misunderstanding of what was said by Wang and the subsequent rebuff by Albanese is a repeat of the same mistake that Western businessmen often make in China. It was a master class in misinterpretation, which, in this case, has long-term political impacts. In business, the same type of misinterpretation also carries a significant impact.
The confusion often happens because English speakers tend to soften requests by using “Could you please … ”. The Chinese language lacks these constructions and Chinese or English speakers often replace it with “Come ...” or lai. This gives the impression of a brusque command rather than a request. We are all familiar with “can la” in Singlish which is a direct translation from Chinese.
People who have lived and worked in China soon learn to ignore this “brusque” language. They understand it is not a signal of impoliteness but that it stems from differences in grammar construction.
For instance, a simple question asked of a Beijing waitress delivers unexpected results. “Do you know where the toilet is? “ a Western friend asked. She looked at him with disdain. “Of course, I know,” she said and walked off to another table, leaving him wondering how to locate the toilet. Asking “How long before we arrive?” can generate a strange response too. “It’s another 5km” rather than “Another 10 minutes”. Rephrase the question to “How much time before we arrive?” and you get a more accurate answer.
We chuckle at these misunderstandings but in a business meeting, the consequences could be more serious.
See also: China tightens securities lending rule to support stock market
There are very important differences between the language taught in instructional CD programs and phrasebooks and those uttered in real life. Many still list “ni chi le ma?” (Have you eaten yet?) as a standard greeting although it’s not that commonly used today.
It is important to practise your low-level Chinese but be aware that what you learned from the textbook or online language course may not be the same as the language as it is now spoken. Good friends would correct your poor Chinese, just as you would correct a friend’s quaint or idiosyncratic English. However, once you move into even slightly more formal circles, it is important to get even the simplest of phrases correct.
These mistakes may be amusing, or at times, an irritating problem on a personal level. But if we make mistakes like when the language used is more complex, the potential for significant misunderstanding increases. The solution is to make full use of your translator or interpreter to ensure what you say is what you actually mean to say. It is also essential to make sure you understand not just what is said but what is meant by what is said.
See also: Eight reasons why I am still in favour of China stocks
The Australian media and the Prime Minister’s misunderstanding of Wang’s comments illustrate the dangers we all face when working in China.
Technical outlook for the Shanghai market
The Shanghai Index has dropped below uptrend line A. This is a failure of the recent uptrend that started on April 27. The resistance level near 3,380 has proven to be a formidable barrier. The index spent six days trying to move above this level and develop a rally towards 3,480.
The failure to rebound above 3,380 is important because it confirms this will be a formidable resistance barrier for any future rally rebound from lower levels of support.
The index fall has found limited support near the lower edge of the long-term group of averages near 3,260. The long-term group of averages is used to understand the way investors are thinking about the market and its appropriate value. This is not a support feature.
The next historical support level is near 3,220. This is not well defined as the index has oscillated around this level in the past. The upper level of this oscillation is 3,281 and this suggests there is the potential for the market to develop a rebound from near the current level. Again, this is a weak relationship so the balance of probability favours a further fall in the index.
For more stories about where money flows, click here for Capital Section
Uptrend line A remains important. For several months it acted as a support feature. In the future, it will act as an additional resistance feature. If the market can rebound and move above historical resistance near 3,380 the value of trend line A will act as an additional resistance point to slow any future rally.
The fall below trend line A was slow and gave traders ample time to exit and collect profits. The Shanghai Index has a habit of fast rebound rallies so traders will be ready to move quickly as the rebound develops.
The leading indicator of a rebound will be when the short-term group of moving averages compress near the upper edge of the long-term group of moving averages. This is an indication that aggressive traders are entering the market in anticipation of a market rebound and rally. The Guppy Multiple Moving Average indicator is a useful tool for understanding the way that traders and investors are thinking about the market. Trader activity always leads investment activity.
Currently, the key feature to watch is the index behaviour as it approaches the support level near 3,220 and the index behaviour as any rally approaches the 3,380 resistance area.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. He is a national board member of the Australia China Business Council. The writer owns China stock and index ETFs
