Beware the Chinese Strategy

John R. Houk

© August 14, 2011

Robert Hsu is an investor connected with Investor Place Asia. He is the person in charge of a pro-China investment newsletter entitled, “China Strategy”. Hsu wants you to pay $300 for his investment advice unless you find a deal which might make the price as low as $100.

Tony Newbill sent me an ad email advertising China Strategy. Newbill’s interest is not to encourage you to invest in Chinese corporations but rather to see how China is undermining the American economy and that America’s rich are falling in line with this undermining by investing in China to get a greater return on their profits.

Now I am actually going to post this long email, but not to encourage you to buy into China markets to make the big bucks that Hsu alleges America’s wealthy does not want Joe American investor to know about. If Hsu is right and China is the new frontier in free market investment enabling you to be rich then you should think how investing in China is not good for America.

Keep in mind China is not a Capitalist free market society. China is a State controlled Marxist nation in which Communist economic models are still idolized yet with a twist. The twist the allowance of foreign corporations operating in China under Communist government rules enabling the creation of Chinese jobs which increases Chinese citizen spending which then logically leads to greater tax revenues for the Communist Chinese government. Trust me, the top-to-bottom ruling Communist Party has no intention of allowing their citizens to enjoy Liberty and Freedom on a personal level just because a touch of Capitalism is making the Chinese government and military stronger. China has definite regional issues to deal with in the same way that Imperial Japan had to deal with in the 1930s leading to war with America in 1941.

That issue is natural resources and regional hegemony that buffers the power of the Chinese government from possible foreign intervention. China’s strategic place in their region is influenced by Russia to the north, India roughly to the southeast, a declining Japan off the coast of China and yes the global reach of the American Navy.

It appears China has learned from the mistakes of militarism of Japan during WWII and the old Soviet Union’s collapse under the weight of the American economy and the Reagan military build-up. This means a Chinese military confrontation with America is unlikely any time soon unless America demonstrates a vulnerable weakness which I have no doubt China would exploit if the occasion presents itself.

The Chinese agenda has to do with the global economy and drawing American wealth toward China. While China waxes stronger economically China also invests in its military could be a competitive problem for the American strategic position in the future.

So what does America need to do?

I am no economist; however it is apparent that America’s economic paradigm must change to reverse the flow of American wealth to contribute to Chinese economic strength. My biggest guess this would mean the diminishing the power of Unions so that a competitive yet sustainable wage occurs that entices American corporations to reinvest in America. That means stopping the paradigm of outsourcing production of services.

This is where some of you who do have knowledge of economics need to step up to the plate with a plan that eschews political correctness which means less government socialism and more of a government agenda to protect and encourage free market Capitalism minus greedy Capitalism. This means less Caveat Emptor (let the buyer beware) and more let the seller beware (Caveat Venditor).

JRH 8/14/11