While a bit of sabre rattling ahead of midterm elections is to be expected, this speech changes the world.
By Russell Napier and cross-posted from Zero Hedge
Praise be to Nero’s Neptune, The Titanic sails at dawn
Everybody’s shouting, “Which side are you on?!”
– Desolation Row: Bob Dylan (1965)
While the world watched the Kavanaugh confirmation drama in Washington DC last week, there was something even more important happening at the other end of Pennsylvania Avenue. In a speech at the Hudson Institute, the Vice President of the United States of America clearly spelled out why his country’s disputes with the People’s Republic of China go far beyond the realm of trade. If you think US relations with China can return to where they were eighteen months ago, then it is time to think again. The US has China in its sights and even a compromise on trade will not be a sufficient compromise for this administration.
While a bit of sabre rattling ahead of midterm elections is to be expected, this speech, in the opinion of your analyst, changes the world. It changes not just the world of finance and money but, very probably, the world of geopolitics.
Only by watching this speech can you get a true sense of the belligerence and conviction with which it was delivered.
For those of you who do not have the 43 minutes needed to watch the speech, the following excerpts provide some indication of the extent to which the United States of America now sees itself in conflict with the People’s Republic of China:
The dream of freedom remains distant for the Chinese people. And while Beijing still pays lip service to “reform and opening,” Deng Xiaoping’s famous policy now rings hollow.
China now spends as much on its military as the rest of Asia combined, and Beijing has prioritized capabilities to erode America’ s military advantages on land, at sea, in the air, and in space. China wants nothing less than to push the United States of America from the Western Pacific and attempt to prevent us from coming to the aid of our allies. But they will fail.
America had hoped that economic liberalization would bring China into a greater partnership with us and with the world. Instead, China has chosen economic aggression, which has in turn emboldened its growing military.
As history attests though, a country that oppresses its own people rarely stops there. And Beijing also aims to extend its reach across the wider world.
The American people deserve to know: in response to the strong stand that President Trump has taken, Beijing is pursuing a comprehensive and coordinated campaign to undermine support for the President, our agenda, and our nation’s most cherished ideals.
China is also applying this power in more proactive ways than ever before, to exert influence and interfere in the domestic policy and politics of this country.
And worst of all, China has initiated an unprecedented effort to influence American public opinion, the 2018 elections, and the environment leading into the 2020 presidential elections. To put it bluntly, President Trump’s leadership is working; and China wants a different American President.
There can be no doubt: China is meddling in America’s democracy.
To that end, Beijing has mobilized covert actors, front groups, and propaganda outlets to shift Americans’ perception of Chinese policy. As a senior career member of our intelligence community told me just this week, what the Russians are doing pales in comparison to what China is doing across this country. And the American people deserve to know it.
Next month, it will be my privilege to represent the United States in Singapore and Papua New Guinea, at ASEAN and APEC. There we will unveil new measures and programs to support a free and open Indo-Pacific. And, on behalf of the President, I will deliver the message that America’s commitment to the Indo-Pacific has never been stronger.
More business leaders are thinking beyond the next quarter, and thinking twice before diving into the Chinese market if it means turning over their intellectual property or abetting Beijing’s oppression. But more must follow suit. For example, Google should immediately end development of the “Dragonfly” app that will strengthen Communist Party censorship and compromise the privacy of Chinese customers.
In the context of this speech trade sanctions are a lever for change in many areas well beyond the issues of trade themselves. It is incredibly difficult to see how the Chinese Communist Party genuflects, or perhaps kowtows, to such major and wide-ranging criticisms of their behavior. To bend to the will of the US administration on these multiple issues is to back away from the political control that is at the heart of the Chinese Communist Party and Xi’s Presidency. For all of us as citizens this raises the prospects of a much more confrontational relationship between Washington DC and Beijing, and for investors it means a whole new monetary order must now be developed. The development of that new monetary order will be as important for investors as the breakdown of the Bretton-Woods agreement was for their predecessors…