Chinese ambassador Cheng Jingye said that the Australian “pursuit of a global COVID-19 review could spark a Chinese consumer boycott of significant Australian services and products”
Why is it happening?
The rise of Japan post WW2 made them a potential threat which the US attempted to bully through sanctions – which didn’t work. Japan overcame and became an industrial power which today enjoys prosperity that the US doesn’t.
Today the bullying is towards another nation – China. It failed with Japan and we believe it will fail with China. Recall, the US was reliant on Japan and now is reliant on China. The common thread – US bullying is ongoing.
The difference – the bully is about to be bullied. Wolf diplomacy is literally China baring its teeth and asserting itself.
Tensions between the US and China are due to the waning US reacting to the rise of the new Chinese Superpower. This is the new reality.
The rapid industrialisation of China, the increase in living standards and the sheer size of the population is propelling China towards becoming the biggest economy in the world – with no abatement foreseen.
The past 500 years have seen 16 cases in which a rising power threatened to displace a ruling one. Twelve of these ended in war. The current power being displaced is the US, with China the rising superpower. So far we have a trade war (perhaps even a hand in an oil war) – lets hope it doesn’t escalate from there.
As China challenges America’s dominance, it has led the US into a trap first identified by the ancient Greek historian Thucydides (perhaps a relative of Pythagoras!). America should be humble in the face of an undeniable situation. The rise of China to be the Superpower. How long will it be before there are more aggressive moves from China in the South China Sea where they control the shipping lanes?
Wolf diplomacy is making mini powers like Australia choose between their geopolitical relationship with the US and their economic relationship with China. Unfortunately, it appears that our Prime Minister has not been able to give the love required to China.
By Trump pointing the finger at China, calling the pandemic the China flu, he is inciting the rest of the world to discriminate against China. This is nonsense – especially as it appears early versions of the Covid virus are documented in America in years gone by. The Chinese are saying the US military installed it into Wuhan – the Americans are saying the Chinese manufactured it in Wuhan. I will leave it to you to work out which is fake news.
China has continually offered a hand (and at times a stick) to Australia. To reject China could be catastrophic for trade – and now we hear the direct threat from the Chinese Ambassador. Reality is at our door.
Where should we align?
There aren’t many pure political alliances – they are dependent on the time in history. Where is the evidence that these have stood the test of time? There isn’t any. Why not focus on trade – where Australia can really benefit.
Meanwhile Trump has lost any global focus. He is focussed on the USA and only the USA.
Why cut off from China? The only sensible thing to do is to align based on economics not politics….. where our bread buttered.
Some opponents to stronger ties to the China are based on our differing Social, philisophocal, economic and political ideology. What right do we have to say that there should be more democracy in China? Our system is imperfect, and we don’t have the right to impose our views on another. Else we are hypocritical.
If we are worried about being openly manipulated – that is inconsistent also – we have our own Federal Government currently manipulating the states via private school funding.
Make no mistake, China wants to be Number 1.
In all of this there will be winners and losers on the stock market. Timing is everything and when it comes to investing in the stock market, buying the right share at the wrong time (or the wrong share at any time) can end up costing you a lot of money!
Imagine if China boycotted Iron Ore – from 1 company or all. The impact to Australia would be substantial. Which stock? BHP, Rio or Fortescue. We have carefully worked through our stocks on offer to weed out those whose prospects look poor – one of those companies doesn’t make the cut and doesn’t make it to our offering.
Previously, investors have relied on information being disclosed to the market, analysis occurring and then share trades being made in response to that information. Pythagoras uses volatility to predict events and buy and sell accordingly. We operate differently from the rest of the market – using maths, volatility and trading accordingly.
The potential for opportunities for retaliation by China are powerful. We can build hysteria… but if we look at it objectively there isn’t any other correct answer. China is our future.
Get aboard.
If you would like to know how to invest differently contact michael@pythagorasinvesting.com
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