If US opinion polls are correct, next month will see Democratic Party nominee Joe Biden take the White House and his party might even win control of both houses of Congress in a “blue wave” election. This might trigger even more demand for Chinese assets and the renminbi. No one can really know how a Biden presidency would handle the crucially important China-US relationship. If the Obama-Biden era is a guide, the emphasis may be more on subtle diplomacy than presidential tweets. That is not to criticise the incumbent US president’s approach but merely to recognise that Joe Biden is not Donald Trump. Trump has previously referenced a possible decoupling of the Chinese and US economies. Meanwhile, Tony Blinken, a senior foreign policy adviser to Biden, said on September 22 that, “Trying to fully decouple, as some have suggested, from China … is unrealistic and ultimately counterproductive.” At the same time, while Trump has embraced tariffs in an attempt to force Beijing to the negotiating table on trade, Biden may be less wedded to such a strategy. In March 2018, Trump rolled out a 25 per cent tariff on imported steel and a 10 per cent tariff on aluminium imports. “We’re going to build our steel industry back and our aluminium industry back,” Trump said, but it hasn’t quite played out that way. Citing pre-coronavirus analysis in December 2019 by the US Federal Reserve, Harvard University’s Lydia Cox and Kadee Russ from the University of California, Davis noted in February that it appears the rise in input costs caused by Trump’s steel and aluminium tariffs “was associated with 0.6 per cent fewer jobs in the [US] manufacturing sector” than if those duties had not been levied. Cox and Russ found “that this amounts to about 75,000 fewer jobs in manufacturing, attributable to the March 2018 tariffs on steel and aluminium, not counting additional losses among US exporters facing tariffs other countries levied in retaliation.” It may be a coincidence but in the swing state of Michigan – which relies heavily on the steel and automotive industries and voted narrowly for Trump in 2016 – Biden was ahead by 8 per cent in a Reuters/Ipsos state opinion poll of likely voters between September 29 and October 6. At the very least, markets might conclude that a Biden White House will be less wedded than Trump to steel and aluminium tariffs , perhaps to tariffs in general. If so, that would have positive implications for China’s economy and its exporters, especially if accompanied by a change of tack in the way Washington seeks to engage with Beijing on key issues. Additionally, in the event of a blue wave, there likely would be renewed US fiscal stimulus that would boost US consumer demand and in turn benefit those countries which sell the most goods to the US. China would be a primary beneficiary of that. That would unfold when China is already showing signs of a return to economic health , a recovery evidenced again in the Caixin/Markit services purchasing managers’ index for September. The index, with its focus on sentiment within smaller, private firms, was well above the key level of 50 that divides contraction from expansion, rising to 54.8 from August’s 54.0. The data also indicated further signs of recovery in China’s labour market, with surveyed companies taking on more people in September for the second month in succession. An October 7 research note from US bank Goldman Sachs noted “greater optimism towards China assets … in client conversations”, reflecting “both domestic and global factors”. It referenced China’s own economic recovery, “the flow implications of China’s inclusion in global bond indices” and the possibility of a Biden-led administration with “a friendlier approach to global trade and a less reflexive use of tariffs”, which would likely produce “helpful tailwinds for Chinese markets”. Goldman Sachs sees value in holding three-year Chinese government bonds without hedging the currency risk and has a one-year target for the US dollar/renminbi exchange rate of 6.5. However, there’s another component in this narrative that has little to do with fundamental analysis but everything to do with human nature. That is the fear of missing out, a powerful driver at any time in the investment world but especially when global investors are searching hard for sustainable returns in an investing environment characterised by low sovereign bond yields in major economies. The arguments for investing in Chinese assets and the yuan are increasingly persuasive. Neal Kimberley is a commentator on macroeconomics and financial markets