A grey rhino in the market square

IN JANUARY, China President Xi Jinping warned of grey rhinos, adding yet another animal to the lexicon of economic critters like black swans, bulls and bears. Unlike a black swan event, the grey rhino event is where the potential event is known, but the timing and development path are unknown.

This week, the grey rhino charged when US President Donald Trump sent another off-the-thumb tweet threatening to raise tariffs on all Chinese goods imported into the United States. China had a well-prepared response and that saw the yuan partially unleashed so it could surge towards free market levels above seven to the dollar.

Somehow, this response appeared to catch President Trump by surprise and he foolishly quickly declared China a currency manipulator.