The People's Republic of China is a Communist dictatorship that is at odds with many of the basic principles of our nation.
I wrote it.
I do not understand for one minute how China isn't perceived as a rogue nation acting against our national interests. All I can think of is that our policy toward China has been predicated upon selling them lots of goods and services and in return we are stuck with what amounts to some pretty nefarious behavior.
When we learned of the arrest of the CFO of Huawei many observers immediately reached the conclusion that now the talks will be derailed and China won't come to the peace table.
I think that's a totally wrong way of looking at things. It would be one thing if we were the only ones who believe that Huawei is acting as a spy for the Chinese doing their bidding in lots of ways we don't know or understand. Yes, we can see where they may have violated the law we have by trading sensitive technology with Iran.
But for years our policy was dictated by China's admission to the WTO in 2001, which means the liberalization and opening of their markets to our businesses.
We had a dual mandate then: make the Communists less, well, Communist, and sell them a lot of goods and be able to do business with China like any others nation.
The fact is China's been going back on that pledge under President Xi and the idea that he doesn't have to pay a price is pretty much a sign of a U.S. kleptocracy, a craven policy based on earnings per share without much thought to championing American interests. It's as if the companies want their cake - the big sales they make in China - and eat it, too -- not pay the freight of making sure that Chinese companies, largely controlled by the Communist Party, play fair when it comes to national security. We would rather sell them diapers then worry about their use of joint ventures to steal our technology and exploit it against us.
I have no problem with the Belt and Road initiative where the Chinese use their wealth to try to invest in countries all over the world to advance their claims to global hegemony. The party has every right to invest where it wants to. I do wish that it was less of a grab when the nations default.
But I agree with the notion that it is not in our interests to help fund the darned thing, hence my concordance with Vice President Pence's fierce speech about Chinese versus American interests that he gave at the Hudson Institute, October 4th of this year.
The speech lays out the Huawei brief without mentioning Huawei. It talks about how the Communist Party must be held accountable for its actions against our national security.
What I don't get is why would anyone in this country, any citizen, want the Chinese to do what they are doing in this country? We don't let other countries' companies betray us and our nation's sovereignty. We only tolerate it because so many of our companies feast off the Chinese.
Which brings me to the point of this screed. When you talk to the hardline policy makers around the White House, they make it known right up front that they're fighting back is going to hurt earnings of public companies. However, in one fell swoop they say these companies got a huge tax break - totally true - so now they must know that their Chinese earnings are at risk.
Now the real question for me as a stock observer is will it matter to our Federal Reserve that those earnings are at risk. Here's where I side with the Fed. The answer is no. These at risk companies are not going to lay off people here. Their profits aren't even invested here.
Nevertheless, I tire of market pundits who are surprised that companies' earnings could be hurt by Trump's policies. I have bad news for them. When this nation voted this president in you got his China policy, which is to sacrifice American business interests on the altar of national security and U.S. global hegemony. That was part and parcel with the "Make America Great Again." The fact is there are plenty of ways to make money in the stock market that won't be hurt by these policies. So, I say, stop betting that this is about trade. It's about global realpolitik not Earnings Per Share.