Here is a summary of the most important events that unfolded this month, and which may affect economic, financial and geopolitical issues in the months ahead: 

North America

At the beginning of May, both President Donald Trump and top Chinese officials reaffirmed that the phase one trade deal was still on track. Now, the status of the trade deal hangs in the balance as China challenges Hong Kong’s autonomy with its new national security bill, Covid-19 accusations rage on, and US Congress passed a human rights bill that will punish Chinese officials for detaining more than one million Muslims in internment camps. 

President Trump has announced he will be withdrawing the US from the World Health Organization. In a speech last Friday afternoon, the President stated, “China has total control over the World Health Organization” and said it is no longer worth it for the US to be a member. President Trump previously accused the organization of mismanaging the coronavirus response and failing to warn the world of the danger it posed. Given that the US was the largest single donor, giving nearly $400 million last year, the withdrawal will most certainly have an effect on the multilateral organization’s ability to fight Covid-19 and coordinate a global response to the pandemic. 

President Trump has signed an executive order targeting social media and tech companies. The order is expected to curb the legal protections, known as Section 230, that shield tech companies from liability for the content posted on their platforms. However, the legality of the order has been criticized and legal experts have said the directive will almost certainly be challenged in court. If legal, the order would open the door for federal officials, and others, to punish social media companies, which would in turn expose tech companies to more lawsuits. President Trump’s action comes after Twitter labeled some of his Tweet’s with fact checks. 

Protests have flared up across the US after an African American man, George Floyd, was killed by a white Minneapolis police officer. Floyd’s death has re-ignited the movement against racial injustice and police brutality. While most of the protests have been peaceful, rioting and looting has broken out in several US cities. As a result, the National Guard has been deployed. Today marks the 7th day of nationwide unrest since George Floyd’s death. 

Though US Covid-19 deaths reached the grim milestone of 100,000 this month, all states and US territories have eased Covid-19 induced restrictions to some degree. Many of the re-openings came just in time for Memorial Day weekend. Hundreds of millions of people are moving around again as stay-at-home orders are being lifted. Even New York City, the city hardest hit by the virus, plans to re-open on June 8th. In other US Covid-19 news, the White House is fast tracking 14 potential vaccines in hopes of meeting the January goal to have a vaccine available for use. Optimism is running high and markets are reflecting it as US markets continue making gains. 

Europe

The European Commission has proposed a stimulus package worth €750 billion (most of which will represent grants rather than loans) to combat the deep recession that has been caused by the coronavirus pandemic. The move might be perceived as a first step towards debt mutualization in the EU, a challenge that will very difficult to overcome. The package would bring relief especially to the hard-hit nations of the South. Previous to the European Commission’s proposal, German Chancellor Angela Merkel and French President Emmanuel Macron presented a joint position on an EU recovery fund worth €500 billion. German Chancellor Angela Merkel has already said that negotiations will not be easy. The proposal will be discussed at the next European Union summit on June 19th. Commission President Ursula von der Leyen has a hard road ahead of her as she tries to win the backing of the member states. 

Earlier this month a fresh round of Brexit talks stalled, raising concerns of a no-deal Brexit. Great Britain and the European Union are headed to another round of trade talks before the European Union summit on June 18th and 19th. London will have to make up its mind about asking for an extension to the transition agreement by the summit. The sterling pound is close to its lowest point in nearly three decades thanks to the Brexit rollercoaster, the prospect of negative interest rates and a deep recession. 

French President Emmanuel Macron lost his parliamentary majority this month after 17 environmentalist and feminist ministers created a new political group in the National Assembly called the Ecologie Démocratie Solidarité (EDS). The new group’s proposals include a temporary wealth tax and universal income payments to every citizen over the age of 18 in order to help the country through the coronavirus crisis. Macron’s party, La République en Marche (LREM), is now one person short of the absolute majority in parliament. Though the move threatens the LREM’s power in the parliament, the dissidents are not establishing a formal political party. 

Asia and the Pacific

China will impose a new national security law on Hong Kong which will severely limit the freedom and autonomy of the region. Under the law, activist groups can be banned, courts can impose lengthy jail sentences on national security grounds, and mainland security agencies can operate in the city. Additional security forces have already been sent to Hong Kong to monitor the streets. The act has drawn international condemnation from countries such as the US, the United Kingdom, Canada, and Australia, among others. President Trump has announced the end of Hong Kong’s special trading status due to the fact it can no longer be considered autonomous from mainland China. 

Pro-democracy protests began to gain momentum once again in Hong Kong after the city was re-opened. Since then, hundreds of protesters have been arrested by Chinese authorities who have cited a ban on mass gatherings as their justification for the arrests. The movement has been severely wounded by the mainland’s national security law. Pro-democracy activists are now afraid to take to the streets and are forced to think of a new strategy against their oppressors. 

Chinese and Indian soldiers have been clashing on the countries’ shared border in the Himalaya region. In early May, Chinese forces moved into territory that has long been considered Indian territory by both nations. Some say the tensions are rising because of a road India has recently built in the Galwan valley near the Line of Actual Control. The road could boost India’s ability to mobilize forces rapidly in the case of a conflict. The events of this month have escalated a long-standing border dispute between India and China who share a border that is 2,100 miles long and poorly demarcated. 

In yet another scene of renewed aggression, China recently threatened to attack Taiwan and “smash separatists” if the nation prevents reunification. While convening at Beijing’s Great Hall of the People on the 15th anniversary of the Anti-Secession Law, General Li made it very clear that military action is not out of the question. China has also continued its aggression in the South China Sea this month. Most recently, China sank a Vietnamese fishing vessel. China has been using its naval forces to infringe upon disputed territory and pressure nations, especially Vietnam and the Philippines. 

The US Justice Department has charged twenty-eight North Korean and five Chinese citizens with laundering more than $2.5 billion to support North Korea’s nuclear program. US officials are calling this the largest sanctions violation case brought against North Korea. 

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