Home About Archives RSS Feed

The Independent Investor: U.S. and China Square Off

By Bill SchmickiBerkshires Columnist

In Beijing this week, the annual Asia-Pacific Economic Cooperation summit is winding down. As representatives from its 21 member nations return home, one thing is certain.  China has become America's main rival for influence in that region.

Depending on who you talk to, China's Gross Domestic Product (GDP) is expected to overtake that of the United States sometime in the next five years. Some argue that it may be sooner than that. But while we Americans might fret over falling to second place economically, China's communist leaders could care less. They are eyeing a far larger prize — control of much of the world's natural resources and the means to transport them back to China.

There is nothing underhanded or dishonest about their ambitions. For the last decade, China has been investing, purchasing and partnering with countries and companies worldwide. Whether developing a Peruvian mountain loaded with copper or inking an energy deal with Russia's Vladimir Putin, China is methodically expanding its control over the means of production worldwide. This week's tariff and free-trade deals among Asian nations and the United States is simply another step in their long-term plan.

Much has been made of President Obama's agreements on Tuesday to reduce tariffs on a range of technology products worldwide including videogame consoles, semi-conductor chips and even prepaid cards. The media also applauded an agreement by the two nations to further reduce greenhouse gases and expand the duration of visas for education and business. There was even some progress on developing some military and defense initiatives.

However, in my opinion, China's real objective was to convince Asian members that their plan to extend their economic influence to energy-rich Central Asia was good for everyone concerned. The Chinese are dangling a host of goodies from a free-trade deal in competition with one of our own, and $90 billion in infrastructure investment funds as well as additional investment from an army of Chinese private and state corporations. It is tempting.

You see, China wants to create a "Silk Road Economic Belt." Their objective would be to establish a far-reaching network of transportation, distribution and logistics that would bind China, Central Asia and Europe into one vast economic network. No one is laughing. Asian members only have to look at China's track record in South America and Africa, among other places, to understand just how serious the Chinese are. Strapped for investment, struggling with anemic economies and high unemployment rates, many of these nations would just love to invite the Chinese into their parlors.

If there is a fly in this Chinese ointment, it is of China's own making. Territorial disputes instigated by China with the Philippines, Vietnam and Japan over the last few years have made many nations wary of China's true intentions. Fortunately, all sides have backed off from a shooting war but China's increasingly aggressive military stance has many neighbors troubled.

It is one thing to invite an investment partner into one's country, but quite another to risk occupation by such an acquisitive Big Brother such as China. In light of these fears, China's willingness to talk turkey with the U.S. on military issues may simply be a ploy to alleviate these concerns among some nations.

The bottom line here is that while we at home continue to debate a pipeline that should have been built long ago, China is focusing on sewing up most of the world's natural resources. It is that kind of long-range planning that we need here in America. Unfortunately, we neither have the will nor the leaders to implement such a strategy. And we will regret it.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Scoil Rince Bréifne Ó Ruairc Participated in North American Open Championships
Pittsfield Police Participating in US 20 Speed Enforcement Project
MassDOT Project Will Affect Traffic Near BMC
Dalton ADA Committee Explores Expanding
Milne Public Library Trustees Announce New Library Director
Clark Art Presents Free Thematic Tour on Music in Art
BCC, Mill Town Partner to Support Philanthropy Through 40 Under Forty
SVMC' Wellness Connection: March 15
Pittsfield Community Meeting On Rest of the River Project
Slavic Easter Egg Decorating At Ventfort Hall
 
 


Categories:
@theMarket (480)
Independent Investor (451)
Retired Investor (183)
Archives:
March 2024 (5)
March 2023 (4)
February 2024 (8)
January 2024 (8)
December 2023 (9)
November 2023 (5)
October 2023 (7)
September 2023 (8)
August 2023 (7)
July 2023 (7)
June 2023 (8)
May 2023 (8)
April 2023 (8)
Tags:
Banking Election Banks Deficit Europe Selloff Debt Ceiling Energy Economy Congress Jobs Federal Reserve Debt Euro Stock Market Recession Stimulus Crisis Retirement Pullback Commodities Rally Stocks Taxes Employment Markets Europe Metals Bailout Fiscal Cliff Greece Oil Currency Japan Interest Rates
Popular Entries:
The Independent Investor: Don't Fight the Fed
Independent Investor: Europe's Banking Crisis
@theMarket: Let the Good Times Roll
The Independent Investor: Japan — The Sun Is Beginning to Rise
Independent Investor: Enough Already!
@theMarket: Let Silver Be A Lesson
Independent Investor: What To Expect After a Waterfall Decline
@theMarket: One Down, One to Go
@theMarket: 707 Days
The Independent Investor: And Now For That Deficit
Recent Entries:
@theMarket: Sticky Inflation Slows Market Advance
The Retired Investor: Eating Out Not What It Used to Be
@theMarket: Markets March to New Highs (Again)
The Retired Investor: Companies Dropping Degree Requirements
@theMarket: Tech Takes Break as Other Sectors Play Catch-up
The Retired Investor: The Economics of Taylor Swift
@theMarket: Nvidia Leads Markets to Record Highs
The Retired Investor: The Chocolate Crisis, or Where Is Willie Wonka When You Need Him
The Retired Investor: Auto Insurance Premiums Keep Rising
@theMarket: Melt-up in Markets Fueled by Momentum