The last fortnight has seen a flurry of meetings with the Regional Comprehensive Economic Partnership (RCEP), the G20 and the Asia-Pacific Economic Cooperation (Apec).
In some ways, this saw China re-engaging with a post-Covid-19 world. Many in the media saw this as China coming to the world, but events suggest that the world was coming to China, particularly President Xi Jinping.
Following more than two years of Covid-19 induced isolation, a common narrative suggested the world could not rely on China’s supply chains; the world found that China was indispensable. The fierce competition to meet with President Xi tells us that China is back — even though it never really went away. China remains a gift to the global economy.
In the coming months, it will be easier to engage with Chinese business partners, old and new, in face-to-face meetings. After such a long absence, it will be appropriate to exchange gifts.
Before any meeting takes place, much thought should be given to the type of gift, its quality, and its symbolism. It is best to discuss with others on the Chinese side so that the value of the exchanged gifts is about the same. This avoids loss of face if your gift is of a lower or higher standard than the gift given to you.
Gifts fall into four main categories. The first are state gifts representative of the country or province. It is a protocol that business is usually not involved in.
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The second are business gifts, and these can create a problem. If the gift you give as a business gift is also personal, then the gift may be seen as an invitation to bribery. Great care must be taken to avoid giving this impression, as there are adverse consequences for recipients under long-running anti-corruption campaigns. A business gift should be suitable for public display, so there is no hint of impropriety.
The third are just small tokens of appreciation for staff and delegation members. These include city or state lapel pins or souvenir-style gifts.
The fourth are gifts exchanged to open a business relationship. As China becomes more accessible, there will be a greater need to consider these gifts. The gift should demonstrate sincerity, intent, and purpose. Deciding what is appropriate is a difficult decision.
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Where possible, work with your Chinese contacts to determine what is appropriate. They will also appreciate working with you in the same way to reach an acceptable exchange that gives a face to both parties. This avoids unpleasant surprises.
Gifts give face; in some circumstances, the gifts may be opened in public but only if the type of gift is already known to both parties.
Understand what your choice of gift says about you, your intentions, your sincerity, and your commitment to your Chinese business aspirations. If the gift is treated as ritualistic tokenism, it sends a message that can sour future business development.
Unless previously arranged, gifts are not often opened when they are given. This is designed to preserve face. If the gift is inappropriate, then the recipient is not embarrassed. Gifts may be wrapped in red paper but are often given in a high-quality paper carry bag.
A physical return to China after a long absence is not a resumption of business as usual. Think of it as similar to a Spring Festival homecoming where the relationship is confirmed with appropriate gifts.
Technical outlook for the Shanghai market
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The Shanghai Index has retreated from the value of the long-term downtrend line B. This was expected because it is unusual for a rally to break through long-term resistance at the first attempt. The index is consolidating just below the value of the long-term trend line.
The consolidation is also seen in the Guppy Multiple Moving Average (GMMA) relationships which also suggest that a new uptrend is developing.
The index developed a retreat to nearly 3,040, which is the value of the lower edge of the long-term GMMA. A rebound from this level is bullish.
The long-term GMMA is now moving sideways, suggesting investors have stopped selling. They are not yet strong buyers. However, the limited retreat followed by a rebound shows they support the uptrend. This is confirmed as further compression develops in the long-term GMMA.
The short-term GMMA moved above the upper edge of the long-term GMMA before retreating to find support near the lower edge of the long-term GMMA.
Investors and traders are alert to the development of a 1-2-3 GMMA pattern. This is where the market rallies but falls short of the long-term GMMA. This has already occurred.
The next rally penetrates the long-term GMMA and then retreats. This developed in early November. The third rally breaks above the long-term GMMA and is used to confirm a trend breakout and the beginning of a new uptrend and is the current development with the index using the long-term GMMA for support.
A breakout above trend line A has a resistance level near 3,220, a solid historical resistance level. A break above this level is very bullish. The long-term upside target is nearly 3,400.
Daryl Guppy is an international financial, technical analysis expert and special consultant to Axicorp. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a national board member of the Australia China Business Council. The writer owns China stock and index ETFs
