China Prepares for War: A Timeline

come on I'm the director of a China Center here at the hustle Institute and uh again you know um thank you for coming um to this event um I uh we're very uh blessed um by the uh the centrality of the China Topic in Washington DC because everybody's talking about uh uh the challenge we're facing um and uh we frequently have a good speakers with great credential and great insights and today is no exception and China Center let me just say if your China Center is a a center here affiliated with hustle Institute we have The Advisory Board a chair by former Secretary of State Mike Pompeo um and the board consists of a a few great individuals and Kyle our speaker just joined the board and the welcome Kyle thank you very much and our uh one of the another important board members um is here that's Paula uh dobranski who's a Ambassador uh Paula um and the the advisor board will consists of course um of uh Scott Morris and former prime minister of Australia as well as a Morgan Ortegas a former spokesperson at the state department he was a former colleague of mine uh so um today's speaker uh is a probably the smartest uh private Equity managers uh in the country not only because he's uh not only because he is a big Catalyst he's also a very responsible capitalist he's also environmental conser conservative what is it Environmental Conservation yeah that's correct so it's a bridge the gap between the left and right so both topics very good most importantly his tremendous insight into the financial world and how China factor in from the financial from the economic point of view which is something that we really really need Kyle is a member of the of the lifetime member of the console of formal relations and he um has taken great interest in international Affairs and he's truly the Intercontinental person not only Europe but also Asia um and so uh from that perspective so we're very pleased um uh to have him as a speaker today and you can see his full biography from our website uh at hudson.org so without further Ado and I'm going to oh before I say that um so today uh Kyle is going to speak um uh on the topic that that they were all very concerned about and then uh will be followed by a question and answer session um to be moderated by uh uh Ambassador dobransky and um and after that we have a reception so the drinks are all on us without further Ado Kyle please thank you thank you thank you we may need a drink after this WOW uh it's a it's a pleasure to be here thank you miles thank you Paula and uh and the Hudson center for having me um it's a it's a a life's passion of mine after studying financial markets Global macro flows and trying to understand the world Works financially how it of course without a doubt interfaces geopolitically so I'll get through what I want to say as quickly as I can I'd love to interface uh with the audience as soon as I get get finished but this topic I think is is essential and vital to the National Security of our nation and what we're facing today I'm going to just let you know how this came about you know we got out of whiteboard and I know we all live in this world where we read all of the press and the Press catches things and the Press particularly doesn't catch things that Xi Jinping says in his speeches uh and it is and it is written uh uh text so we spend a lot of time developing our own view of on exactly what she's saying and I'm going to cover very specific things that he said and not necessarily what what our press runs with and I think that's a there's a big gap there and hopefully I can help bridge that Gap so when I think about uh what's going on and and what she has said if you just look at the bottom of of this slide at the end of the 20th party Congress in the working papers he said we must strengthen our sense of worry adhere to the bottom line thinking which means party thinking of course prepare for danger in times of peace and prepare to undergo high winds and waves and even for the stormy seas of a major test I think that's a pretty ominous statement to be making at the end of the 20th party Congress today I'm just going to talk about this in three different buckets if you were thinking about Xi Jinping if he were preparing for war with Taiwan I like to separate into three thoughts the first thought is the force thought the the militaristic thought what's he doing with this military that might suggest that uh either building up moving it around what's happening and of course that's not my core area of expertise I interfaced uh with the top levels of U.S military I'm building the section now it'll go quick uh the second section is what is China doing on the mainland what are they doing inside of China on their mainland in their legal system what are they doing in building specific things if they were about to go to war what would they be building uh onshore uh and then what what are they doing uh from a policy perspective on on the mainland that's the second bucket the third bucket is where my primary expertise is but the the middle bucket is also vitally important and that's uh what would China be doing to insulate themselves from severe Financial sanctions uh in the event that they move on Taiwan you know when Putin moved on uh invaded Ukraine we supposedly went through with some really strong sanctions those sanctions were like swiss cheese we really didn't hurt him at all in this case I think we will be able to execute much more crippling sanctions in the event that that China invades Taiwan and I'm going to talk about what China is doing that actually doesn't make Financial sense if you and I were running a sovereign and we were running it to let's say operate in the highest regard of our our capital and Returns on Capital uh we would be making specific decisions what what I'm going to show you today is China is not making those decisions they're making decisions that are non-economic and preparing themselves for sanctions so I'm going to walk through those three buckets the first one is is The Liberation plas required Readiness simulations we believe there are three simulations that have to take place before Xi Jinping and and the central military commission will will authorize a a strike on Taiwan the first one happened in August of 20 22 operation joint fire strike the second operation joint sword just happened in April of 23 the final one that hasn't happened yet is an amphibious assault uh timing TBD and I'll get into when when we think we as a country think that timing uh can happen the first one was a 10-day exercise of course immediately after Pelosi's visit uh to Taiwan where uh the the Chinese launched 11 ballistic missiles to simulate the neutralization of taiwan's air defense systems uh multiple Ani submarine attacks and sea raids as part as China's Furious response to the provocation of the separatist elements of external forces those their words not mine and then subsequently to to that particular exercise the China Taiwan China's Taiwan Affairs office released its first white paper in Taiwan in over 20 years and there was something really important in there uh They said that the new policy document did away with the past promises not to send troops or quote administrators to Taiwan if China successfully conquers the island definitely another ominous sign the second operation was joint sword which of course began the day the day after signing wins a trip to America happened it happened April 8th through the 10th and this one was a much more uh let's just say integrated uh exercise where there were two phases one was an immediate deployment of forces the second one was rapid seizure of all domains for control air C and information uh to gain what one of their senior Colonels said was to gain an extremely advantageous position at the outset what we have learned China has learned from Putin's mistakes in Ukraine is number one he she knows that he can't Telegraph the move like Putin did Putin did a lot of things to Telegraph uh when his invasion was happening we don't believe XI will she will do that the second thing is Battlefield control and domains for controller vital to China's attack if and when they attack Taiwan and information control is key if you look through a lot of the Communist Party rhetoric and at the schools the Communists the Communist party schools the professors are all talking about the need for the cessation of data flows between Taiwan and the rest of the world and we're going to get into that and what's going on on the mainland uh today but they they stress this in this exercise it's stressed Speed and Agility but most importantly control of data which resonates throughout this presentation prior to just prior to Joint The Joint sword the pla severed the undersea Fiber Optic Cables between Taiwan and Matsu Island and you know where those are up on the uh just just North uh just Northwest of Taiwan closer to uh fujon um Lee professor at beijing's Communist party school said this in quotes uh we need to reunify with Taiwan as soon as possible with our overwhelming troops and Firepower simultaneously it demands cutting off water electricity and mobile phones throughout the island electricity water and mobile phones can all be reconnected once they're liberated but we must disconnect in areas the pla is not liberated particularly mobile phones if you remember China was really struggling with the protest in Hong Kong and the reason they couldn't roll in there with the tanks and handle things the way they wanted to handle things uh is there was so much connectivity there were so many phones and the world would see the disaster that they would be uh the the humanitarian disaster they would be affecting on the people of of Hong Kong uh so when we get to amphibious assault this will simulate an amphibious evasion Naval experts believe they're only three months in the calendar that allow for this assault uh and those are April May and August for those of you that have studied Normandy and the and the Allied invasion there there were very specific conditions that had to be present for that Invasion to be able to happen the tides had to be at a certain level the currents couldn't be as strong as they are in certain periods of the Year this is even this is even more challenging right this this is a 110 mile Gap it has 20-foot tidal surges uh and there are three miles of mud bogs that so this this this uh attack will have to be at very specific times again we think it will be uh it can only happen in April May or August roughly uh for them to basically bring all three of those simulations to life uh and especially with the amphibious side uh once once they give this particular once they execute an amphibious assault then then we believe our military believes they'll be ready to give a go order again this is the fourth side of the bucket uh let's move straight into the mainland preparations for War uh in a timeline this is this is vital again to getting out of whiteboard putting some things on the Whiteboard to understand the logical progression of what China has done uh to change their legal system to change things on the mainland to prepare for war in January of 2020 China updated its foreign investment law which gave Beijing the power and ability to nationalize foreign assets Investments under special circumstances which include War their words not mine it's very important to know that they updated a law that gave Beijing the authority to just nationalize things and take them we saw that happen in armed Holdings for those of you that followed what happened to arm uh June 2021 China issued or passed a new counter foreign sanctions law which enabled Beijing to seize corporate assets and detain expat employees simply if if they underlying condition was compliance with foreign sanctions I.E if the U.S or Europe sanctioned China and the corporations of the US or Europe were complying with their own sanctions uh China could nationalize the assets and detain uh the people April 2023 uh Chinese lawmakers passed a wide ranging update to their ni Espionage law which I'm sure we all saw Banning the transfer of any information related to National Security and broadening that that definition of what national security information can be and we're going to get into the raids of the various U.S companies since then just recently uh in fact uh last month China passed a sweeping foreign policy law that represented a much broader extension of that counter foreign sanctions law uh that created obligations and responsibilities for Chinese companies which essentially make all Chinese companies extension of the Chinese government it gives Beijing the legal authority to seize individuals assets and prevent them from leaving China the new law coupled with the ni Espionage law makes it virtually impossible for foreign companies to operate safely in the PRC uh the last thing is they plan to roll out a new law that will push patriotic education I should have put that in quotes for internet users school children and overseas Chinese that was just submitted um physical structures Power Systems and the new blood drive March of 2023 in fujon China is building 18 new air raid shelters which The Province announced and showcased on its website and two days later gone took it off the website never to be seen again so fujon was very proud of these 18 air raid shelters for those of you that know the geography of China that is across the street from Taiwan they geo-blocked it and we can't find it anymore but we have screen grabs of it March 2023 they're building the world's largest Combat Hospital also Geo blocked after one day of announced on a website so if you're building 18 air raid shelters along the fujon coast you're building a combat hospital this rhymes with what Putin was doing if you remember he moved entire groups uh brigades of troops in October he started building uh and and transferring blood banks to the Border uh December January he was telling you what was coming it's happening again and you need to you we need to pay attention um June 2023 China stays its first ever emergency drill to ensure it can handle large-scale power outages in its eastern region happens to be the region right across from the Taiwan Strait uh it's the first time the national energy Administration has held an emergency drill for large-scale power outages across provinces and region it's also the largest most extensive most targeted joint emergency power drill um June 2023 millions of people have been banned from traveling by Plano train and the Communist Party announced that the reason that was is their social credit scores were too low one way that they can increase their social credit scores go give some blood well that's super interesting uh go give blood to to bring that social credit score up I think it's a standalone comment it's not as interesting but putting it into a timeline like this it shows you the methodical thought process of the Communist party and what they're actually putting together ziz communicates to the pilot Bureau Central Committee and the Communist Party writ large in January of 2022 the Communist party's Journal Kishi uh published she's secret speech 60 days roughly after it was given and for the first time she himself was quoted as saying he called for the struggle against hostile forces we all know he never names the United States uh in these speeches but we are deemed to be the Hostile forces I don't think we're their strategic competitor that the Press writes about we are a hostile force uh May 2022 she ordered the Chinese banking system to risk assess and insulate against quote potential severe U.S sanctions well what would precipitate severe U.S sanctions we are sending our foreign policy staff half there with knee pads begging for meetings and our meetings are just begging for more meetings what would change the Biden administration's tax to want us to or Force us to ex to to install or instill uh crippling sanctions it would in my in my view it would only be a militaristic move on Taiwan uh May 2022 she also ordered Chinese Nationals overseas to divest their assets and repatriate foreign Capital back to China I'm going to get into why that's very important important too uh June of 22 in a page right out of Putin's Playbook she announced a trial plan outline to classify military operations against Taiwan to be classified as quote Armed Forces operations not a war if you remember it was just a joint military exercise um October 2022 the 20th party Congress she said to the Communist Party in working papers I just went over this the beginning prepared to undergo high winds waves and even for stormy seas of a major test and also at the 20th party Congress on Taiwan specifically he said we will never promise to give up the use of force and reserve the option of taking all necessary measures October of 2022 he also ratcheted his rhetoric regarding Taiwan by changing what he views as something that authorities sorry that authorizes China's use of force he declared that a simple refusal of China's uh overtures to reunify would then be grounds for an invasion prior to this it was someone in China in in taiwan's cabinet uh or presidency would have to formally declare they want to be independent now it's just if you just refuse our Overture uh we can come attack again the ratchet has only moved one way we remember how she humiliated hujin Tau and his loyalists removed him from the party and and installed a wartime cabinet what the Press missed in the hujin Tau humiliation was in one day imagine if we woke up here in America and one day you woke up and they said Janet Yellen is gone um uh the Central Bank president uh Jerome Powell is gone and uh Gary gensler's gone so we're gonna fire the head of the SEC the head of the FED um all in one day and we're going to replace them with the head of the missile unit we're going to replace them with the head of of nuclear Munitions and then the head of um all conventional munitions that is removing every Market technocrat that was responsible for China's supposed westernization and dealing with markets and replacing them with military people so the Press kind of missed that I thought that was really important all they caught was they were ripping hujin Tao out of his seat and it was it was a humiliation um third also she states that China is now laser focused quote on the re-acquisition of the Taiwanese separatists again his rhetoric is becoming more bellicose every speech he's given since 2017 he tells you what he's going to do and it's just getting worse and worse and worse in his words uh in the two sessions three speeches uh the the markets expected those speeches at two sessions to be further stimulative about restarting the Chinese economic economy and moving things forward all three speeches she told the people of China to prepare for war the Press here focused on the very first 15 minutes uh where where Lee Kang attempted to calm investment markets uh and attract additional Western Capital but then once he sat down Xi Jinping took over and said we need to prepare for war and he said it in three separate speeches all right so uh we're going to get in now to the financial Market movements changes in their data policies Bond defaults corporate raids and wartime planning for natural resources these are these are things that that they're doing uh in the financial markets and as outshuts to those the commodity markets uh so she watched as the Western World moved immediately to try to seize Putin's 360 billion in FX reserves we're not sure how much uh the West was able to actually uh freeze uh with Putin but we immediately went to frieza's FX reserves what we should have done is immediately sanctioned all their Banks hold them off the Swift system and sanction their energy business which we were all too much afraid to do but that rhymes with what happened when Mussolini invaded if you remember UK and France got together and they had the same kind of uh peace through weakness ideology back then and they said uh we're going to sanction Mussolini and Mussolini said if you sanction my energy or my food that's an act of War so they said uh we can't do that so sanction a few other things but you can have all your and all your energy and all your food to continue your campaign that's what we did with Putin um if she were planning for war you'd expect him to take what assets The Sovereign has and the soes have in direct accounts with the U.S and they would start whittling them down or trying to sanction proof those and we're going to get into to what he's doing uh U.S capital markets are the deepest most liquid markets in the world and currently have the highest interest rates so again dollar balances should be buying short-term treasuries at four and five percent uh and not doing other things with them so we all know China's GDP in dollar terms uh this is these are uh Bloomberg and World Bank numbers uh have have increased 500 percent uh since 20 uh 20 2008 Alone um there are trade balance with China has basically come down to where it's it's about a 380 billion dollar trade deficit annually uh we have about 850 billion of trade that turns into a 380 billion dollar trade deficit now the difference between trade balance and current account balance this for those of you that aren't a particular economists or financial people the trade balance is one Contra one data series that contributes to the calculation of the current account the current account is all Financial Flows In and Out so you know there are 450 000 Chinese students in U.S universities in the US they are paying about 62 billion a year for that that's money leaving right this is money coming into China that was money leaving when the Chinese were were traveling uh prior to covid uh around the world and spending they can't spend r b anywhere they have to spend dollars eurosians or pounds that number was a huge number multiple hundreds of billions so the current account is is kind of the net assessment think about the net income of The Sovereign so the current account I'm gonna you guys are going to think on maybe conspiratorial but let me walk you through this the current account just prior to um uh just prior to the uh uh covid uh was as you see trending down towards zero that international travel number uh on China's uh macro level data Series in the wind database right before covid was 420 billion dollars so think about this for a second the current account was going to zero and the primary reason was they had a big balance of trade that was positive in their favor but allowing the Chinese population writ large to travel to spend abroad And maybe invest a little bit remember they had they had certain amounts that were allowable that number got to be 420 billion so at a time in which the Hong Kong protests were at their Zenith December 2019 and the time at which their current account was dangerously heading below zero for the first time covert arose that was that was really convenient for them that saved that that that really saved two major existential problems for the Communist Party Hong Kong and their current account so if you look at the current account boom it went straight back up to Magic 400 billion dollars so again maybe maybe it was just a pure coincidence but maybe it was a perfectly timed execution of something else so if you're running a positive current account if you have more dollars coming in than going out what you would be doing with that money is investing it in dollar-based debt at the highest yields with the deepest Capital markets in the world but what are you seeing here China's taken their treasury balance from a trillion to 850 billion we don't know what the new number is yet but I would imagine that Janet yellen's uh uh Tour de appeasement recently uh was begging them to just stop selling their treasuries we have to issue another eight nine hundred billion just for the announced fiscal deficit for the year and the fed's not buying them China's not buying them there are a few other sovereigns that are buying them someone's someone's got to buy these things I think our banking system will lose more deposits they'll go into treasuries but point being is this is a non-financial move if you were running China you'd be buying treasuries not selling them unless you're trying to sanction proof your reserves they're getting them out here now you guys those of you there in the economics profession probably follow Brad Setzer and a couple of people that really understand Financial flows well Brad's comment here is that they're selling treasuries but they're buying agency Securities in Belgium if that's the case and by the way that's it's supposition it's you there are no there's no data series that will show you that that's that's the case uh but if he's right that's also China betting that they can divide Europe and not have severe European sanctions when the U.S if and when the U.S sanctions them and as we've seen out of macron lately and what you're seeing out of Germany there's not a lot of solidarity in in uh in in Europe as far as it relates to to China but this is this is something really interesting one of the other things that happened in the last few months is how many of you in here use any of the China data series like wind or any of these any like like the bloombergs of China at our firm you know we use wind at all the research universities in the US they use wind it isn't a data aggregator of both uh macro level data and corporate level data about three four months ago severed it's gone no more data series you're not allowed to have it the data that we're getting out of China now is from the mainland approved by Xi Jinping to be released in a press release there's no more databases Stanford doesn't have it anymore Harvard doesn't have any more all of the universities that are actually partners with China in many ways and receive a lot of Chinese donations have been said would be different if it was just meath severed uh but it was everybody so uh I think access to all data was just severed and if you think about the strategy on the battlefield about controlling the data domain you know we all know that China has 20 plus youth unemployment we all know their economy is really struggling right now the last thing Xi Jinping wants is the Western press to keep writing about how much trouble their economy is in so you know what they just cut the data feed now we're going to run with whatever they say and and case in point last year last year they were welding their citizens into their buildings during the extreme covet lockdowns they were the LNG demand for China was down 22 percent and WeChat payments were down 30 percent if I gave you those three data points on them on a chalkboard would you say GDP was up or down right it was a train wreck last year and you see that in the Commodities markets but China reported a very positive GDP for the year so it's it's interesting what they do so now we're not going to get those data series anymore um if you were Xi Jinping and you were you have two worlds you have your domestic World which is your r b or you want based World which you control they control everything internally but then you have the world they're interfaced with the outside and this is key to understanding they all cross-border settlements about 85 percent of all cross-border settlements when China trades with the rest of the world are in dollars everything they do internally is in RMB or you want the dollar is really important to them and so if you or she and you thought about the way the Chinese Capital markets work you have domestic Capital markets that issue bonds and stocks and RMB then you have domestic or Chinese companies that issue Bonds in dollars so case in point they're about 170 billion dollars worth of dollar bonds that the Chinese property develop developers issued to the West so a bunch of Western investors bought dollar bonds they have R based bonds too but if you were China and you were about to prepare for war you would just say you know what I'm just not going to pay those dollars back I'm going to default on my dollar stuff and I'm going to pay my r b stuff so that my people are okay it's that's the basic way to think about what they're doing here so they're offshore defaults of their dollar-based bonds if you look at the two current categories or 35 percent so 65 of the dollar-based bonds of all the property developers in China are in default offshore onshore it's a little bit different right now there are 79 percent of those bonds of the same companies not default only 21 are in default so if you're a Westerner holding a dollar Bond you're going to get something that rhymes with hero soe Banks this is another thing that just started happening so the way that airplane leasing Works in China is the big soe banks are the orderers for Boeing and Airbus they're the biggest orders in Asia they own the order books those order books have grown since China ascended the WTO they want to control they want to control the aircraft leasing markets they want to do it for their own Market domestically and then they want to be the big lessor for the rest of Southeast Asia which they are they have never missed a year to grow their order books in the last 20 years well just a few months just two months ago some ndas went out to the marketplace two of the big soe Banks want to sell their entire order book they've gone from building building building building with a very specific strategy in mind as controlling the air the order books of all the big airliners in China to we want to sell it all and we want dollars and we want the highest bidder it's just a change in their strategic positioning in the financial markets they would never do that if they thought they wanted to keep growing and having a positive relationship with financial markets in the West these things are in the market these are 10 Billion Dollar Plus transactions so the other things the other thing that happened even before they uh put together their new laws about uh National Security of data uh is the Chinese authorities arbitrarily and capriciously raided the Minsk group Bain cap Vision they detain multiple employees they have they are doing things that are scaring the lights out of U.S corporate due diligence companies all three of these companies just due diligence they look at Chinese competition if you're a private Equity Firm in the U.S you hire one of these firms and say hey this group of Chinese uh investors or entrepreneurs came to us to get us to give them money and raise for the new company we need to understand if they're criminals we need to understand what their history is you know you do basic due diligence the Chinese rated all three of these firms took all of the computers and detained employees if you were trying to develop or continue A system that attracts dollars and attracts corporate interests this is something you would never do okay uh wartime planning for natural resources uh if if again if we were running China China is the world's largest importer of crude oil and LNG they import almost 12 million barrels a day of crude eight BCF a day of LNG they use about 15 and a half billion or a million barrels of oil a day so uh you would try to secure that kind of natural resource commitment from let's just say countries around the world that might not adhere to U.S sanctions and if you were going to do that what would you do well maybe you'd get on an airplane and for the first time in the history of the world the Chinese Premiere landed in Saudi Arabia and maybe you'd put try to get the sunnis and the shias to love each other and uh start talking with Iran and Iraq what do you think he just did he just did that he's trying to put together 12 million barrels a day on the gas he'd be trying to do the same thing gas is harder so I'm going to walk you through here's where here's where China gets its crude from about halfs from the Middle East um 13 Africa about 16 from Russia so really they only have to worry about a handful of percent you know the Russians are going to go along with them you know the Saudis play Both Sides you know the rest of the Middle East will play Both Sides so they're pretty safe I think in their in their uh let's say countering sanctions moment uh in the event of an invasion what they're gonna have to worry about is the majority of this is Seabourn uh and we have a great Navy so those Straits of Malacca are be going to become trouble for them on the energy side but let's just say in securing commitments they're on the natural gas side uh LNG the the brown area there is mostly the stands and that's that's pipeline so um uh you go to focus on the rest of the world the really only problem for them on the LNG side is is Australia so if you knew you couldn't get Australia which they won't get Australia to agree uh what would you do would you build a lot more coal because you have a lot of coal back here uh in May of 2023 China's coal Imports hit 360 to 380 million tons uh that compares with 290 million tons the year before and an all-time record in 2013 of 327 million tons John this is John Kerry's worst nightmare right they are going back to the dirtiest cheapest potential fuel in the event that they're not going to be able to get that that LNG again I'm giving you one one idea here but it sure looks to me that that they are securing all of trying to secure all of their energy commitments uh Chinese local governments permitted a staggering 106 gigawatts of new power new coal in 2022 that's a hundred large coal-fired power plants the most since 2015 and it quadrupled over 2021. just think about these think about where the world's headed on an ESG front and on a climate front and Greta I can't figure out why Greta never ends up in Beijing but we can talk about that later um uh other Coal Power project activity accelerated as well 50 percent more starts China the combined capacity of coal power plants that started construction that just began last year was six times as large as all the rest of the world combined just to put things into perspective so what else would they be doing to diversify themselves away from sanctions uh gold they added eight tons of gold in April they've got about 150 billion dollars worth of gold it doesn't really move the needle per se but on three trillion of reserves 150 billion is nothing to sneeze at if they're going to really need access to something they can sell somewhere that doesn't adhere to U.S sanctions the last thing there are two things I'm almost finished here we're going to have plenty of time for questions um China has 20 percent of the world's population and they're hoarding almost 70 percent of the world's green today now different grains are in different uh different amounts uh but the head of grain Reserves at the national food and uh food and strategic reserves Administration just told reporters this last November our wheat stockpiles can sustain China for a year and a half that's super interesting why would you need to do that why would you need to have a wheat stockpile that lasts a year and a half in China um the China Enterprise green Reserve company was formed in August of 22 to manage their National grain reserves the new companies a joint venture between their two state-owned grain companies uh cyanograin and kafko if you had a grain Reserve you're running a country and your people in one of your largest cities are hanging out their Windows banging pots and pans because they're welded into their buildings and you have a food Reserve in that City wouldn't you release the food Reserve to the people that needed food it didn't happen the grain reserves weren't touched in Shanghai when the coveted extreme coveted lockdowns were going on if you're not going to release them then then why are you holding them I don't know maybe you're holding them for something even larger that's an even larger problem again I'm trying to show you in a series of different ways that they're doing things that don't actually make sense unless there's a greater plan for a worse situation the last one here uh this is a fascinating stat the number of Chinese ICBM launchers reported by the Pentagon went from a hundred missile silos and launchers in 2020 to 450 by October of last year just think about that for a second they had a hundred in their entire country in 2020. they have taken that number and increased it by 350 percent in 18 months now why would they do that again this has a strategic militaristic buildup food buildup they're trying to sanction proof their money and she's telling you in every speech he's given to prepare for war in fact he just recently did it the day that Janet Yellen landed in China that day he visited China's Eastern military command and he told the people in the Eastern military command to oversee Taiwan to prepare for war it was gaslighting yelling right before she landed so if you listen to She and you read what he says and forget about the Western press like I've tried to do here he's telling you where he's going he's telling you what he's doing and he's making every preparation that I would make if I were running China and I knew I was going to invade Taiwan so I think it's important to have this conversation do I know that he's going to do it I don't but I actually take him at his word I think it's likely I think it's highly likely that he invades Taiwan um and I'm not a military strategist or analyst I'm a financial analyst but looking at all of the writing on what I call the Great Wall it sure looks like it's headed All in One Direction so I'll stop there and love to take questions and Paula I think you're going to come up and join me thank you [Applause] yes thank you I was indeed going to say that because this is our game plan first outstanding presentation uh very compelling uh well-researched uh really the the the the kind of detail and the argumentation uh as I said is very compelling and we have to have a vibrant discussion so I'm only going to ask you one question so all of you please be thinking about your questions because we're going to really go to you and hear your exchange with Kyle my core question is this I did just as Dr you just mentioned I just returned from Taiwan and needless to say front and center at least during my visit in the delegation I was on we did focus on this very question what's the timeline here I don't think anyone is focusing on if but they are focusing on when and this is what I want to push you a bit further the elections on Taiwan the three candidates will be held in January 2024 some are arguing that this election the Chinese of course are already wielding and waging their influence on are hoping to will their influence on the results of the election some will argue well that's The quote-unquote Invasion that they have the political some argue this uh well we'll you know get the right candidate it's low cost we got it we don't have to expend our military or our economic reserves on the other hand then to a different point of view it was said well let's look at 2027. uh XI ji ping you know that's a point where he goes on to another term and looking at really the Legacy and maybe it should be that point in time give us now your view since you made such an extremely compelling case what do you think in terms of the timing and let me add one more Wrinkle In the Mix you know the question was is it going to be military you even yourself in articulating and mentioning the you know operation joint five strike uh the ambitious assault uh uh excuse me amphibious assault um uh in this case the other question is well could it just take this form of a blockade dive a little deeper on that and then we're going to go to all of you so I'll start by saying there I recently returned from and so did uh miles uh from the beaches of Normandy and um it when when you walk around and you understand the the destruction and the disaster that one madman or let's say back then to Hitler and Mussolini could bring to an entire world it it it really sunk in understanding that we know Putin's a Madman we also know he's not acting Paula when I hear people rationalize when someone might move for this reason or that or there's an election coming uh or it's much easier and not and it'd be much easier on the economy to do X Y or Z what I when you really think about who these guys are they are not rational and they're not economic actors mind you Putin didn't invade because he thought it was a great economic move um and he didn't he didn't choose a time that was suitable to the rest of the world it was a time suitable to him and so when I think about whether or not Xi Jinping is rational and economic and you if even you remember uh when the blood banks moved to the border the New York Times are saying he's just saber rattling I mean for God's sake everyone thinks these people are rational and they're not so you think this could be imminent imminent in the sense that there's immobilization I mean it could be around the corner it could certainly be in 2024. yeah so my the the the sum total of my analysis especially on the financial side which is where I find myself to have the most expertise um it's now down to a period of months in which they're ready and not years the Cadence of what they're doing in financial markets can take us down to 12 to 18 months so I would say my guess is before the end of next year and again you know who am I to guess but based on my analysis it sure looks obvious that that's the case and then if I were Xi Jinping if you read very carefully the militaristic doctrine that is in open source there they are focused on targeting destruction way before detection happens so I think he'll move much sooner than any of us think he'll move and I think it will be military I hope I'm wrong about all this because the world will be so much better place for us and our kids and our families and our relationships if I'm right this is awful and it's something I don't want well I have to say again your your your analysis here is very compelling it's well articulated and well researched and so um all right let's go to questions and by the way we're going to try to get everybody in the mix here let's go to you first and please introduce yourself I'm Peter Humphrey I'm an intelligence analyst and a former Diplomat I'm troubled by a real fantasy that seemed to dominate this problem and that is um that Taiwan has to wherewithal to stop an invasion Fleet and clearly it does not if we're looking at Convoy is coming from Poland they they ain't coming everything that Taiwan needs has to be on the island on day one and it needs more stuff than Ukraine ever needed and we ain't supplying it so I want to ask why we're living with this fantasy uh that we that we cannot conceivably arm Taiwan in time and failing that does Taiwan have the financial wherewithal to make the anti-ship missiles the drones and the Torpedoes that might might have a chance at Sinking The Invasion Fleet thank you for your two questions thank you also no speeches please one thing I haven't I didn't really elucidate well there is I am a huge proponent of crippling China through the economic sphere there are four Wars that we can be fighting with them won the kinetic war that that you're that we're all referring to today where the U.S has the best war department in the world the second one is a cyberware department uh cyber War where we have the best department in the world the two other Wars the economic War and the data slash propaganda War we don't have War departments okay what what I'm advocating for is if 86 of cross-border settlement for all of China's daily transactions are in dollars we can hobble their economy if we press one button if we take them off the Swift system writ large and say your soe Banks your joint stock Banks if you invade Taiwan that's what we're going to do uh their economy comes to a grinding Hall in one month and we need to we need to socialize the concept of that button here's the problem you look at the administration and again I'm not being partisan it's just the people in place today and even the people that were in place in the Trump administration because we talked about this the treasury is owned by Wall Street right mnuchin was owned by Wall Street Yellen is owned by Wall Street they want one thing they want more dollars more Euros more shekels they want to chase economic deals and so getting Treasury and ofac to socialize the concept of pressing this economic nuclear button they won't talk about it it's too incendiary it but but it is it is incredibly effective we don't need all the Harpoon missiles uh sitting around Taiwan if we don't want to engage militarily I believe some of it will be military but if we really want to be effective we press that button put me in charge of ofac I can work the button right and I know what kind of Devastation it will do to to China uh and so we as a country it's an amazing effective deterrent we need to start talking about it by the way if I could just add it's Russia based do you know what Medvedev when he was president of Russia he said you take us off Swift you cut us on Swift it's a declaration of war so it is a severe measure let's go to this gentleman here if we get a mic over here and if you'll introduce yourself and please no speeches just questions thank you everyone so um I'm Daniel I'm the co-founder of freeware investment so basically my job is to um basically just contact you with an investigation on SMP companies into assess their exposure to China we're looking about like last time I come to Houston Institute was like you sequent their legislative Union came here their chairman came here we're talking about elections so thank you for bringing it up so but the thing is like My worry is that like is how do we redeem western China from China of all those Wall Street and SNP companies considering their exposure from China we're talking about more than 15 of almost like every SMB companies being exposed to China and my job is to basically just to build up a portfolio that's free from of internal countries to offer to investors and one of the things that like I think right now American investors we have trust of ESG environment but we don't have a trust on human rights it was saying that I want a portfolio that's free from China for over 10 countries I want human rights sorry you don't have a choice so my job is facing some difficulties right now to promote that awareness is there something that we can do here in the private sector yes thank you thank you yeah it's it's a great question it's something I've been pushing for behind the scenes and and in the in the public domain for for a long time and um unfortunately again even if you think about Biden Biden uh and uh uh especially blinken and they're on the campaign Trail he specifically said many times uh in the public domain that we will We meaning the United States will never trade human rights for a trade deal with China but what did we just do you know we just we just went over there hat in hand begging for meetings in the various disciplines and we didn't mention human rights we don't care we care about economics and it's Wall Street driving this this uh uh this movement so you know I always say in our firm um if our national security and our values were left up to Wall Street uh and in the private sector will all be speaking Chinese tomorrow right we need leadership at the top we need leadership to set the guard rails and you know it's interesting the Director of National Intelligence in the United States every year uh declassifies a bunch of work and he writes a report to Congress it happens every March and it's the dni threat assessment report to Congress how many of you in here have read that report before okay five percent that report details the largest threats to U.S national security and every year it's China Russia Iran North Korea in that order and it's really it's really interesting it's well written and there's this Chasm between Wall Street and s p and the Director of National Intelligence giving you the data saying they are the largest threat to our way of life to our values and to our system and to the security of our country and yet we can't wait to raise more money for an IPO that will help them uh uh genetically modify their food so that they can have a bigger Reserve to attack us with it's in it's actually insane so there's no answer other than if and when this happens the people that lose the money that lose what you know what they have invested in China whether it's PP e on the corporate level or whether it's money uh invested from U.S institutions in their Equity markets in their private Equity world they're going to lose it all in my opinion that that day is coming and those people deserve to lose it all and they deserve to lose their jobs those people have never lost their jobs right they're going to say but but everybody did it and I'm going to tell you that that's not going to fly because so I think there's just uh there's no way to to prevent it although Corporate America is doing all they can now to diversify Supply chains and they're not going to tell you about it beforehand they're going to do it very quietly and they are they are doing it I'm going to catch uh Dr you did you have uh you said you have a question or comment all right all right because thank you because there are quite a few I'm going to go to you right there and then we'll pass it to you next and I'll come back I saw over on this side and back there we'll catch you we'll get you all please if you introduce yourself hi uh thank you for speaking my name is Zoe and I'm an intern at the Vandenberg Coalition this summer I just wanted to go back to what you said in your comments at the start of this discussion where you said that you don't think that she is necessarily a rational actor I'm wondering how you reconcile that with kind of the methodical approach you think he's taking in terms of the grain reserves you know selling bonds and all the things you mentioned your PowerPoint why would he go that far and then act in some kind of irrational way not taking to account other factors like elections and such in his actual invasion of Taiwan and if you'll pass the mic to him and we'll hold you'll hold your question so I I think that they've had this plan for a very long time I think you know she is uh has been in 10 years he's Consolidated power like any dictator would he's removed all of his opposition uh with hujin Tao being that the final straw there is everyone in the standing committee owes their life to Xi Jinping and somewhere or fashion so he's got Yes Men all the way through and he's finally got to this point where he has total power now he's still very worried about you know he's he sacks generals like it's the national Pastime over there when they even look look uh the wrong way so he's worried internally about any kind of conflict something that Miles and I talk about but he's been very rational in the build to take Taiwan but what I'm saying is rational thought from our perspective our perspective is well if he was rational he would never do that he would never move on Taiwan if he wants the GDP of China to move and he wants them to continue to grow and internationalize and make the world a larger Kumbaya place he would never do this right so what I'm saying is from our perspective he's not going to act rationally from his perspective what's rational is he's going to take Taiwan and it doesn't matter what anyone else and anyone else in the world says they believe they're strong enough now uh to withstand U.S sanctions they're going to build a coalition of the axis of Evil if you just see who she's been visiting you've got you've got him visit in Saudi you've got a visiting Venezuela he told you know he's a limitless partnership with the world's number one war criminal but how do like how does our treasury secretary go over there and ask for more meetings like there's there's a big gap between kind of I think perception and reality it I I wake up every day thinking I'm taking crazy pills so I think he's rational in his own mind but he's not rational as we think Kyle we like your directness on everything here all right you're up next hi I'm Kai and I'm also an intern at the Vandenberg also I'm Kai okay sorry okay very close Okay um but I'm also an intern at the Vandenberg Coalition uh my question is uh regarding southeast Asia um so a lot of Chinese soft power and economic power is in Southeast Asia and as someone whose family in Singapore grew up in Singapore 20 years that's very concerning to me um do you think that the U.S has any sway in Southeast Asia if China were to do anything to Taiwan uh in terms of holding China economically accountable um as you said in your um speech yeah if we could get the mic over to the gentleman right here with the yellow tie thank you sir are your point your point is is well taken Taiwan isn't the prize Taiwan is a stepping stone to Southeast Asia and and also to Oceana you know we fought some really big battles in World War II on the Marshall Islands right and the Solomons and uh so when you think about southeast Asia and then Oceana writ large China has been methodically changing the organizational structure of Oceana bribing them putting I mean I'm sure you saw they just announced they're putting an embassy in the Solomon Islands yesterday we are fighting as as much as we can but again they don't operate in the rules-based order they bribe coerce they influence they do things that we can't do now we can help build things and enter economic Partnerships but we can't pay off leadership like they do so they have really set an influence campaign in the in Oceana and in Southeast Asia we have our allies right Singapore I don't know Singapore might split down the middle sorry uh but when you think about uh the Philippines and you think about Japan some of our greatest allies uh over there care very much about this I'll tell you one of our senior military leaders who I'm close to maybe the senior most one over there uh went met with the Japanese defense minister and the Japanese defense minister said something really in interesting he said this is the largest existential crisis Japan has ever faced and we said respectfully you know ever I mean this is up there right he said no ever and so to me that told me Japan knows how vital this potential conflict is to them uh and we of course have very uh a strong uh militaristic ties to Japan and and uh we have a article five protections with them so the long way of saying this is Taiwan is a stepping stone to Southeast Asia and if we allow this to happen uh then the people the countries of Southeast Asia will have to arm and fight or submit to China's uh Rule and this is China's plan and for those of you that have read unrestricted Warfare right they have to secure the first island chain uh by a certain date and then the second island chain and then they move on they actually have a plan and they've had this plan for a long time and so we have to stop it sir we're going to you and then we have two questions here and back there yes Eric rosenman from the Jewish policy Center uh you we have seen repeatedly in the press that uh American analysts have quotations telling his military to be ready to take Taiwan by 2027. you're saying 12 to 18 months perhaps and your expertise is fiscal you said not necessarily the military but you're in touch with uh military experts are we in a position espec if it comes sooner rather than later and even four years is is maybe not that much of a warning or Preparation time is it your sense that the U.S military uh can do anything other than suffer perhaps a very serious defeat if pushed earlier yeah let me dis a value of that thought we have a plan we have a very strong plan we know we can win we just need to go uh and it's going to be ugly if if we have to execute that way with our allies and strategic Partners in the region they're going to be tens of thousands of lives lost no one wants that to happen but uh please don't uh don't believe in the sense of fatalism that we're so far behind that we don't know what to do you know China has uh you think about this uh I I think in in 2010 China had 35 ships in their Navy and now they've got 350 ships in their Navy and they're they're building a Navy they have 11 shipyards running 24 7. we have two that have like Union problems so you know our our country's gone somewhere where we need to fix a few things but in their Navy being that uh uh large as far as a ship counts concerned they have two aircraft carriers one was a junker from the Ukraine that a Chinese businessman bought to turn it into a casino and in the end it was an MSS guy wanting to flip it into a aircraft carrier that the Leaning they built one they're building another one both of their aircraft carriers run on diesel wave 11 carrier strike groups that all run on nuclear we're still ahead on the naval side and advanced Weaponry side and they haven't fought a war we you know at least have some people uh that can that can really move this needle forward you probably saw the U.S just took Admiral San paparo who's commander of the Pacific Fleet nominated him to be the chief of the Navy his Senate confirmation hearing should be in the next couple weeks and we have people in the right places we have the right people in the right places we have the right equipment this isn't something that we want and we never want to execute this but I can tell you without beyond a shadow of a doubt we have a plan and our plan is a devastating plan to China you have a next question um hi my name is Kevin from Georgetown University um so in examining all instruments of you know National Power what is military diplomatic or economic you know has American diplomacy like failed us so that you know we have to resort to using potentially military power and to that extent you know how you know should we integrate you know that all these instruments to to you know effectively deter China yeah so this question about American foreign policy or diplomacy um you know we have obviously adopted what I call we've energized the appeasement caucus name a time in which uh appeasement against autocratic despots has ever worked it never works right what you learn is deterrence through strength is the only path forward so the current path of our country is embarrassing to me and and by the way I need to tell you from a political perspective I don't sit on either side I am pro-choice I own 200 guns and I'm the biggest gun control Advocate there is out there I I don't fit in a box but I think you're at Texan yeah I'm a Texan uh but again a Texan who is number one in gun control okay so I'm I don't fit with our governor either uh the point I'm trying to make is it's a non-partisan thing to say that our foreign policy is gone so far in the wrong direction that I actually lose sleep about it at night it drives me berserk to see the weakness that we're pushing and the this begging and pleading when what we need to do is is show strength and be strong we're the strongest country in the world and we should start acting that way and so if if it goes to war it's not a failure per se of foreign policy although we're going in the wrong direction I don't believe we could have stopped Hitler if you read Hitler's own notes and you read all of the notes of of Churchill I don't know if you've read Churchill's books and Hitler's notes you know Hitler was going to invade there was nothing that was going to dissuade him now if we had attacked him when he moved on the Rhineland that war would have been much smaller but that's such a tough decision to make amongst a bunch of pacifists and appeasers you can't attack early and God I mean I can't imagine us being the first mover we would never do that now given the way the world is set so I'm resigned to believe that if and when it happened she is going to do this he's told you since 2017 and every single public speech he's given that he's going to do this so I'm believing that that's going to happen and what we've got to do is have everything ready for if and when that happens back to your question we we are the economic Powerhouse of the world and Europe is in theory our Ally there are a few that you know might go the other way but if we just act in unison we can shut them down they have a closed capital account we can stop this or we can hobble them and and then we'll have a new regime and they can start over um so I I think the foreign policy failure question is something where I'm very disappointed where we are but we let's hope we can change that quickly but I actually don't think foreign policy can fix this all right uh you have a question at the back and then we have one up front and then we're going to move to Dr you okay but at the back please hi thanks for a great speech uh this is Kathy issue with uh Voice of America um after the weights draw of Alan I've treated the U.S uh is still lagging behind in developing this intermediate range misos raging between 3000 to 5500 while China has already fielded over 1200 uh ballistic and cruise missiles what does this miso Gap mean to the US in a potential conflict over Taiwan and what is your recommendation to help offset China's miso advantage in the Pacific recently there are some policy maker proposed this a ring of fire miso strategy they want like the U.S the Philippines or Japan to host some shorter range missiles and deploy the long range to Australia Pacific or Guam but do you think it's feasible or necessary to build this network of conventional miso ground base me so in circle in China or should the U.S invest more on nuclear weapons or drones some other weapon systems thanks again not not my strong point although I've have my opinions um I think that uh when you look at our submarine Fleet and our our Navy um I don't think we need any more missiles we have plenty uh and we have the best submarine Fleet in the world and that's we are at least a generation if not two ahead of China on the submarine Fleet um so I don't think I don't think that that's encircling China with our missiles is necessarily even a good idea uh on the land-based uh but I do think that we have all the Firepower we need at the moment and I don't think basic missile counts matter and if you if you read what the Pentagon says um you know while China might have more missile silos than than we do um we don't know if they're active missiles in there they're still building but the point being is if you think back to what Churchill was saying in World War II from the late 1920s on he's saying hey hey are you guys looking over look at what he's building he's building the biggest Air Force he's committed to building the Navy's committed to building more airplanes more Munitions than anyone else is anyone paying attention and we also know there's not going to be another War let's just uh let Neville Chamberlain to learn how effects work this out um the point being is they China has been hell-bent really in the last five years uh going exponential on everything military and we're just starting to wake up to this to this fact and it really it bothers me too but again it's all par for the course if you think he's really going uh to do what he's going to do um it's I think unfortunately I believe that's likely to happen so we have your question we'll hear from Dr you and with his permission I'm going to ask one last wrap-up oh we just saw you in the back okay we'll take yours in right there and we're going to close with that yes hi I'm Kathy and I'm now interned project 2049 and I'm from Taiwan and I used to work in legislative un for two years I agree what to say because we've put too much focus on Western there is China but China is also directs for the world so my question is how Taiwan and the world can prepare for China that is the risking from the world and how this say do Gap and like we wear awareness about like China is going to the rest of the world but how can we overcome this they do Gap in this demo Democratic countries especially us and the Western countries thank you okay thank you and let's take that mic all the way to the gentleman in the back if you Ray Jesus's hand and no no uh keep yours keep yours we have two please so again it goes back to the to the kind of dogmatic operations of the the people sitting in the office today that we all want peace I think everyone in this room wants peace but if you know that war is coming you better start changing your your method of operation and unfortunately we we continue to go down the appeasement pacifist route more and more instead of turning the other way and I think I really think we should have turned the other way a long time ago because I know from talking with our senior military leadership they know this is coming and our intelligence agencies know this is coming and and think it's a high probability event they don't think it's a super low probability event so why isn't our leadership in our country acting differently and they're just in a position where we've had too much peace for too long and they really really really want peace and they want to they really want to project their moral values and I get it I understand that but unfortunately that's not where the world is today and I think that's where the Gap is Right leadership has to change has to change quickly but I would say from having just been there I think people are really mobilizing and they're aware of what is at stake here Dr you we're going to go take him and then come to you and then me please hey Kyle uh Tom Lyons with 24 30 group you got to speak up I'm sorry I'm sorry it's hard to hear 24 30 group uh a question for you what do you make of the new appointment to the pboc uh over the weekend and then what advice do you have for multinationals that have operations based there yeah first of all glad to meet you in person thanks for coming um uh thanks for your service to our country uh anyway I think that okay so a lot of people didn't follow this back to the 20th party Congress where they fired the head of their Central Bank the head of their Treasury and the head of their security Exchange Commission all in one day in one failed swoop imagine if we did that can imagine what world markets would do um so Yi gang they took out of the pboc and just a few weeks later quietly reinstalled him now we were just kidding I mean the rest of the world hated the fact that he got ripped out of the pboc um on the Saturday of Fourth of July weekend about a week ago they quietly fired him again so they fired him rehired him fired him and it's in a period of time when the Yuan uh both anchor and offshore was was massively devaluing did five percent in a week and that was really worrying China so they were in the middle of a currency crisis and they fired their Central Banker that's like not that's not the crisis operation you should engage in at that moment in time so I think it was a a a move of panic I think it was a move of uh it was a sophomoric move in capital markets but you have to remember the Chinese have only been at this Capital markets game for 20 plus years we've been at it for you know over 100 years so I think they they are still really green really new at Capital markets the problem is the size of their Market in nominal terms is so much larger than their GDP and so they've got like 20 plates spinning all the time and if one plane Drop one plate drops the others are are shortly behind so I I think it's a big deal that you gang uh kind of did the on-again off again off again uh uh moves and it's fascinating to me to see truthfully I was with my son in the Bahamas spearfishing I had a friend ask me uh five days later you know and I follow this stuff as closely as I can especially the financial side I missed it I'll be the first one to admit I missed it and that was intentional by China Saturday on Fourth of July weekend that's a perfect day to tell us to just remove him and put someone else in and pretend nothing ever happened it was fascinating miles this gets yours then mine we're gonna wrap then and you'll get to be one-on-one with uh our guest speaker thank you very much and I think it due to a constraint of time I'm going to yield my time to you okay well thank you all right well thank you you're very gracious I have the mic right here um my wrap-up question for you is I can't help myself because I do follow Ukraine very closely and something you said reminded me Lessons Learned were in the midst of what's happening right now with Ukraine and it said over and over what happens in Ukraine and if there's a successful outfit outcome that will send a signal to XI ji ping okay potentially potentially not but something you said earlier very fast Putin in 2007 at the Munich security conference he actually openly said Western values are not our values we have every right to go and invade in any country where you have Russian speakers and ethnic Russians and then we saw 2008 Georgia well chechnya before that 2008 Georgia 2014 Ukraine and then uh just last year what is the Core lesson learned and that you the core message you want to impart to this audience here you actually just stated it for me it was perfect and you know you and I met over Ukraine at the bush Center um and I I think exactly you just put it together perfectly I think that Putin told you where he was going what he was going to do now he didn't tell he was going to blow up his own apartment building to start chechnya but he did go take uh Georgia very quickly he took uh uh um Crimea and Sebastopol next in 2014. here's also a fun fact if you just think about this um I've I've been on the boards of some of the largest financial institutions in America as far as endowments are concerned um and so when you think about institutional asset allocation and investing in in various markets institutions had Fairly large sums of money invested in Russia I helped craft an Institutional uh compliance program or sanctions compliance program in 2017 and I stood up on the stage and I was beating drums saying why do we have money in Russia I'm trying to understand you know he took Georgia no way he took uh Crimea and Sebastopol in 2014 and why do we have 350 million dollars invested in Russia they said well because it's cheap super cheap they gave me a 60-page PowerPoint which I still have uh and I said I think it's insane we're insane to have money in Russia half of these companies we're investing in Russia the Russian government owns more than half the company like cheap it's cheap for a reason they can just take it away and he's not a good guy and it's a terrible place for our money and by the way so is China it's an awful place for our money and here's why and I was saying that in 2017 and I was overruled um and the day that Putin invaded um 350 million lit on fire and these institutions can sweep small amounts of money under the table if you have 100 billion dollars what's 350 million bucks it actually doesn't even make the news by the way just goes away and the your constituents probably don't even know it but in China you can't sweep 5 billion under the rug if you've got 100 billion you're gonna have to talk about it and so these I think that the lesson learned is Putin's invasion of Ukraine was really important all across the board from the force perspective from The Diplomatic perspective from understanding the psyche of Mad Men and then the financial markets and financial markets think about back to World War II after World War one it was the U.S and Britain lending Hitler the money to build his Force back up to come at us with we lent him the billions of dollars to build his Force back we are building China's entire uh pla uh Navy Army and and with U.S money we've got three trillion dollars worth of pp e and and FDI invested in China I think it's insane that we keep investing their money and I know many of us have worked together to try to keep the Thrift Savings Plan of the US military from investing in Chinese companies I mean you can't even make that up one day there's going to be a book written about this miles you and the China Center here at Hudson thank you for inviting uh Kyle bass uh if I may uh to please join us in thanking what an outstanding presentation we are delighted you were here today thank you thank you very much I think it should be called the financial interpretation of China as the logic of aggression right so um thank you very much and uh with all this uh Grim assessment I'm very convincing I'm going to present you with a token of uh appreciation which is a symbol of a honey piece and Harmony which is the Winnie the Pooh I love it thank you miles thank you I love it I will this will be on my table every morning excellent thank you thank you

Channel: Hudson Institute

Views: 9,541

Keywords: Hudson, Institute

Id: 98kMSEkPiLo

Length: 76min 30sec (4590 seconds)

Published: Wed Jul 12 2023