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China’s Rise as an Economic Power and Influencer—Supported by U.S. Investments

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In the world of investment and trading, Ray Dalio is a leading American pioneer: he is the founder of the world’s most prominent hedge fund firm, Bridgewater Associates, which manages $154 billion. The 72-year-old is also a philanthropist, husband, and father who has never shied away from vocalizing his concerns about civil unrest and the nation’s economic future.

Dalio is the author of the bestselling 2017 book, Principles: Life & Work and the recent, The Changing World Order, which connects the billionaire’s interpretation of empires in world history with present-day corporate management and investment philosophy.

In a recent podcast interview, Dalio was careful with his choice of words about China:

“China will be a ‘comparable power’ let’s call it, stronger in some ways, less strong in other ways, and that it is likely that it will pass the United States—but not certain. It’ll all depend on how strong the United States is by taking care of itself.”

The avid reader added that since 1984, China’s per capita income has increased by 26 times and that “we’re going to have that great power conflict.”

Indeed, China’s economic growth over the past four decades has arguably been aided by the Clinton administration awarding China permanent normal trade relations in 2000, effectively backing its bid to join the World Trade Organization; and American investments in Hollywood and cutting-edge technologies.

China has also steadily exerted power as an ‘influencer’ after acquiring top U.S. movie theater chains and film production companies. Consequently, many Hollywood screenplays have been flattering China in an attempt to be accepted for distribution by the nation’s ruling Communist Party.

To better understand China’s eagerness for a stake in the United States, let us explore the history books.

China’s history and relationship with the West. 

During the Age of Exploration, the major Western empires participated in trade, commerce, and the colonization of the Americas and Africa. In contrast, China was more focused on building economic power with oceangoing trade ships and a system of caravan routes linking China, Eurasia, and North Africa, carrying goods and ideas that lasted until the mid-15th century.

The Chinese empire under the era of the Qing dynasty surged as an economic power throughout the 18th century due to their widely sought exports of silk, precious stones, porcelain, tea, and spices. Early commerce with the United States shortly after the Revolutionary War included the maritime fur trade and the indirect sales of opium, which spanned between the late 18th and mid-19th centuries. China’s history does not reveal European-style colonization on non-Asian continents—but that doesn’t rule out a desire to exert economic control and influence perception over its biggest competitor.

China now has the most companies on the Fortune 500 list. 

Released in early August, the Fortune Global 500 list ranks the largest and most profitable corporations worldwide. While U.S.-based Walmart and Amazon secured the top 2, China’s State Grid (electric utility), China National Petroleum, and the Sinopec Group (the world’s largest for oil refining, gas, and petrochemicals) pivoted right behind in the top 5.

While much of America went into lockdown in 2020, China kept bustling ahead, further outdoing the U.S. for the highest number of Global 500 companies since the 2018 fiscal year. And for the fourth consecutive year, China (including Hong Kong and Taiwan) topped this year’s list with 145 enterprises. The U.S. and Japan followed with 124 and 47 businesses, respectively.

One noticeable feature is that 87 companies from mainland China are majority or entirely state-owned. The steel maker Ansteel Group is reportedly the fastest-growing business on this year’s list: the company saw a 92.5 percent increase in revenue and a 341.2 percent increase in profit compared to last year.

Conversely, only three U.S.-based companies match a similar description on the Global 500 list. The Postal Service is an independent agency of the federal government’s executive branch, and the Federal National Mortgage Association and the Federal Home Loan Mortgage are government-sponsored enterprises.

American companies aid China’s innovation in technology. 

In October 2021, Republican Rep. Mike Gallagher, a member of the House Armed Services Committee, released a statement:

“The People’s Liberation Army [of China] now has an increasingly credible capability to undermine our missile defenses and threaten the American homeland with both conventional and nuclear strikes. Even more disturbing is the fact that American technology has contributed to the [People’s Liberation Army] hypersonic missile program.”

(Though the Opium Wars in the mid-19th century against Great Britain and France resulted from China’s attempt to suppress the illegal opium trade and prevent additional commercial privileges in China, these military wars were fought in China.)

For at least a decade, U.S.-technology firms have been infatuated with their Chinese counterparts. According to an investigation published by the Wall Street Journal (WSJ), American venture capital firms and technology businesses made 58 investments between 2017 and 2020 in China’s semiconductor sector—an industry that provides vital electronic components called “chips” for smartphones, refrigerators, medical scanners, and weapons.

A San Francisco-based venture capital firm made 25 investments, and Chinese affiliates of multiple U.S. firms reportedly made at least 67 investments in Chinese chip-sector companies. Meanwhile, Intel—the world’s largest semiconductor manufacturer—is backing China’s Primarius Technologies, which specializes in chip-designing software tools that U.S. companies currently lead in development. Indeed, the semiconductor industry in China has been thriving, with at least 24,000 new companies reportedly registered in 2020 and the first two months of 2021.

According to the WSJ, U.S. companies have become attracted to significant tax reliefs created by China’s State Council in August 2020, thereby boosting financial incentives to develop software tools for designing and testing chips.

U.S. companies are also backing China’s growth in artificial intelligence (AI)—a technology currently revolutionizing different business sectors worldwide, including (but not limited to) banking and finance, such as fraud prevention projects; transportation such as self-driving cars; healthcare such as telediagnosis; and cybersecurity and warfare systems in the military.

For example, the U.S.-based Synopsys set up a $100 million strategic fund in 2017 for the Chinese market “to collaborate with local companies and venture capital”, particularly in the areas of chip design and AI.

Meanwhile, according to a 2019 report published by the U.S.-China Economic and Security Review Commission, Chinese firms invested in at least 51 AI startups in America between 2010 and 2016. Yet, the report states that “analysis of Chinese investment in the United States generally underestimates the real level of Chinese economic activity in the United States.”

China’s hand in Hollywood. 

In 2012, the Chinese conglomerate Dalian Wanda Group agreed to purchase U.S.-based AMC Entertainment Holdings, the largest theatrical exhibition company in the world, for $2.6 billion. However, Wanda reportedly sold off a significant stake in AMC in May 2021, partly due to Reddit-inspired traders who bought shares of the theater chain and inflated the stock’s price.

Interestingly enough, Wanda’s founder, business magnate, and investor, Wang Jianlin, served in the “People’s Liberation Army” between 1970 and 1986 and as a deputy to the 17th National Congress of the Chinese Communist Party. There has never been a shortage of eagerness at Wanda. In 2016, the conglomerate agreed to acquire Legendary Pictures, the U.S. film production and mass media company behind the Dark Knight trilogy, for $3.5 billion. Despite a minority stake in Legendary being sold to Apollo in January 2022, Wanda remains the majority owner.

Well, it’s not surprising to learn that Metro-Goldwyn-Mayer Studios’ 2012 Red Dawn remake replaced Chinese soldiers invading an American town with North Koreans. As film producer Peter Shiao explained, “[Chinese diplomats] were not interested in their country being perceived as a violent military threat to the lives of the average American.”

There’s an emerging pattern. 

The 2014 Transformers: Age of Extinction, which premiered in Hong Kong, reportedly portrayed the U.S. government as “either ridiculous or diabolical, but China’s is assured and effective.”

Consider the 2015 movie The Martian, which begins with an American exploratory mission gone wrong, where astronaut Mark Watney is left for dead on Mars. NASA works overtime to rescue Watney, yet their efforts fail miserably. Then, lo and behold, the Chinese National Space Administration decide to support NASA in the interests of international scientific cooperation and offer their booster rocket—ultimately saving the Americans from themselves. The Martian was a success; it grossed a total of $630.6 million, of which $228.4 million came from the U.S. & Canada and $95 million from China alone.

China only allows 34 foreign films into its lucrative market of moviegoers every year. The China Film Administration is a state-owned body that oversees film approvals and enforces media censorship in compliance with its government.

Marvel Studios’ 2019 Avengers: Endgame made over $2.8 billion at the global box office, with over $600 million coming from China alone. Yet, the company’s Shang-Chi and the Legend of the Ten Rings and Doctor Strange in the Multiverse of Madness have been banned over the past few years. The movie Spider-Man: No Way Home was also rejected because Sony Pictures declined to remove scenes that included New York’s Statue of Liberty.

This year, Universal Pictures’ Minions: The Rise of Gru was given the thumbs-up: it takes the audience on Felonius Gru’s childhood journey to becoming a supervillain. Yet, when Gru’s plans are thrown off course, the minions save him through the guidance of Master Chow’s kung fu teachings during the Chinese New Year celebrations in San Francisco’s Chinatown.

All in all, China must be portrayed as the sole supreme and a bearer of benevolence in the world. 

In 2020 and 2021, China became the world’s biggest box office, with a revenue of $7.3 billion last year. However, as of late June this year, the country’s COVID-related lockdowns plunged China’s box office revenue to $2.45 billion.

According to Stanley Rosen, a professor of Chinese politics and film at the University of Southern California, any dependency of Hollywood on China for direct film investments and access to the nation’s audience means that “Hollywood has a lot more to lose than China.”

What did the President of the People’s Republic of China tell President Biden about “owning” America? 

It’s not exactly like U.S. lawmakers haven’t hinted at or vocalized concern over the U.S. and China investing in one another’s companies, particularly in the technology sector.

When President Biden addressed service members at a Virginia military base last year, he said to have spent more time with President Xi Jinping of China “than any world leader has—for 24 hours of private meetings with him with just an interpreter; 17,000 miles traveling with him.” Biden added that President Xi Jinping “firmly believes that China, before the year [20]30, ’35, is going to own America because autocracies can make quick decisions.”

Furthermore, National security advisor Jake Sullivan remarked last year that the Biden administration was “looking at the impact of outbound U.S. investment flows” that could otherwise “enhance the technological capacity of our competitors in ways that harm our national security.”

Biden did not explain what was meant by “own America,” but in June of this year, Politico.com reported that a bipartisan set of House and Senate lawmakers is proposing a new “compromise for government screening” of American investments in China. The bill would provide the authority to review new investments in specific Chinese sectors, such as the semiconductor field.

Seven lawmakers, Sens. Bob Casey (D-Pa.), John Cornyn (R-Texas), and Reps. Rosa DeLauro (D-Conn.), Bill Pascrell, Jr. (D-N.J.), Michael McCaul (R-Texas), Brian Fitzpatrick (R-Pa.), and Victoria Spartz (R-Ind.) released a statement:

“Creating an outbound investment review mechanism is a critical tool as Congress works to provide guardrails on taxpayer funds and safeguards our supply chains from countries of concern, including the People’s Republic of China.”

China’s stake in American companies.

At this stage, it might not be hard to believe that China has already invested in or purchased a multitude of U.S. companies across diverse industries besides Hollywood. To name just a few:

General Electric Company (GE)
Smithfield Foods
International Business Machines Corporation (IBM) personal computer (PC) division
Hilton Hotels

We’re not talking chump change here.

GE is a conglomerate founded in the late 19th century, incorporated in New York state, and headquartered in Boston. In 2016, Haier Group, a Chinese multinational home appliances, and consumer electronics company, acquired GE’s appliance division for $5.4 billion. Therefore, while GE products might be manufactured in the United States, several key decisions are made in China.

Smithfield Foods, the largest pork-producing company in the world, was founded in the 1930s and based in Virginia. In 2013, WH Group, the largest meat producer in China, announced the purchase of Smithfield for $4.72 billion. Once the U.S. government approved the purchase, the deal was valued at around $7.1 billion with debt, which included 146,000 acres of land, making WH Group one of the largest foreign owners of U.S. farmland.

Besides being famous for selling PCs and other computer hardware, IBM is known for inventing the ATM for cash withdrawal. Founded in the early 19th century, IBM is headquartered in New York. In 2005, the Chinese computer manufacturer Lenovo Group completed its $1.75 billion purchase of IBM’s PC division, creating the third-largest PC maker in the world at the time. Then, in 2014, IBM sold two server brands to Lenovo for $2.3 billion.

The luxury Hilton Hotels, founded in the mid-19th century, is a U.S. hospitality magnate. In 2016, China’s aviation and shipping conglomerate HNA Group acquired a 25 percent stake in Hilton Worldwide Holdings for $6.5 billion. In fact, earlier that year, HNA bought the hotel division of the U.S. travel management company Carlson (now known as Radisson Hotel Group) for an undisclosed sum.

A drive toward investing in America.

Alongside Dalio, fellow billionaire investor Warren Buffett has also expressed his opinion on China’s economic growth, albeit to a lesser extent. Moreover, Buffett has stuck with living and usually investing in America, with rare investments in China.

For instance, Buffet’s Berkshire Hathaway agreed to buy a 10 percent stake in BYD Company Limited, a China-based manufacturer focused on electric cars and rechargeable batteries, for around $230 million in 2008. Amid plummeting BYD shares in mid-July, financial media outlets started speculating on Buffet’s decision-making, but thus far, the value of the stake sits at $8.3 billion. Not bad.

Yet Buffet has continued to firmly believe in America’s economic progress, despite lockdown-related setbacks over the last two years. In a released 2021 letter to shareholders, the investor gently boasted that Berkshire Hathaway owns the most considerable amount of U.S. assets than any other company in the United States. And in doing so, he praised the emergence of America’s railroad industry after “150 years or so of frenzied construction, skullduggery, overbuilding, bankruptcies, reorganizations, and mergers.”

The 91-year-old business magnate, in his writing, is looking at America as a young nation buzzing with grit and optimism—a view that many continue to hold and a view that many want to regain:

“Since our country’s birth, individuals with an idea, ambition and often just a pittance of capital have succeeded beyond their dreams by creating something new or by improving the customer’s experience with something old…In its brief 232 years of existence…there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking.”

“Our unwavering conclusion,” he added, “Never bet against America.”

By: Cameron Keegan

Cameron Keegan is a researcher and writer on U.S. politics, education, faith, and culture affecting young people through a conservative disposition. To learn more about Cameron’s work, visit https://ckeeganan.substack.com, and for comments or questions, send an email to ckeeganan@substack.com

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Chart of the Day: See Polling as Americans Increasingly Caught in a Rat Race – Watch Mesmerizing Video

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Increasingly many Americans find themselves falling behind. Rising inflation but not their wages. Storm clouds of war building in faraway countries. A woke culture that is difficult to navigate without getting canceled – a political environment of politicians catering to themselves and not the electorate.

Are Americans caught in a rat race going nowhere?

The percentage of Americans who evaluate their lives poorly enough to be considered “suffering” on Gallup’s Life Evaluation Index was 5.6% in July, the highest since the index’s inception in 2008. This exceeds the previous high of 4.8% measured in April and is statistically higher than all prior estimates in the COVID-19 era. Across extensive measurements since January 2008, the suffering percentage has reached 4.5% or higher on a handful of occasions. See this in the chart below and learn more here.

For its Life Evaluation Index, Gallup classifies Americans as “thriving,” “struggling,” or “suffering,” according to how they rate their current and future lives on a ladder scale with steps numbered from 0 to 10, based on the Cantril Self-Anchoring Striving Scale. Those who rate both their current and future lives a four or lower are classified as suffering. Those who rate their current life a seven or higher and their anticipated life in five years an eight or higher are classified as thriving.

It is interesting to note from this poll that both Democrats and Republicans alike are not doing well. Independents are even worse. See this in the chart below.

The Biden administration has tried to gaslight Americans into believing that all is well. Even telling us, we are not in a recession. However, 68% believe we are in a recession – the belief cuts across party lines. See this in the chart below and learn more here.

Nearly three-quarters of Americans think the United States is heading in the wrong direction under President Joe Biden, according to yet another bad poll for the president ahead of the midterm elections.

Despite grappling with low favorability ratings for much of his first term already, Biden’s popularity experienced a deep downturn in recent months amid growing pessimism over the economy.

Now, a whopping 74 percent of Americans say the country is on the wrong track, while just 21 percent feel the nation is headed in the right direction, according to a new survey from NBC News. See this in the chart below and learn more here.

Watch below this fascinating yet mesmerizing video that is a metaphor for what many American lives have come down to.

This is amazing pic.twitter.com/dAU8uFrpUv

— Council Estate Socialism (@RickyDHale) August 21, 2022

Do these polls paint too negative of a picture? Or is America increasingly becoming a place of despair, a rat race going nowhere, brought on by our supposed intelligent elites and political leaders?

See more Chart of the Day posts.

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Today’s Must Watch: Ruby Ridge -Looking Back 30 Yrs Only Supports the FBI’s Gestapo Image

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New York Post:

The feds attempted to make Randy Weaver an FBI informant.

In the wake of the massive raid at Donald Trump’s Mar-a-Lago home, politicians and pundits are hectoring Americans to blindly trust the FBI.

“The men and women of the FBI,” Attorney General Merrick Garland proclaimed, “are dedicated, patriotic public servants.” But the FBI would be more credible if it didn’t claim a right to secretly wield almost unlimited power.

Most Americans (53%) view the FBI as “Joe Biden‘s personal Gestapo,” a recent Rasmussen poll found. FBI actions 30 years ago at Ruby Ridge help explain the G-men’s fall from grace.

Randy Weaver and his family lived in an isolated cabin in the northern Idaho mountains. Undercover federal agents targeted him and entrapped him into selling a sawed-off shotgun. The feds sought to pressure Weaver to become an informant, but he refused.

After Weaver was sent the wrong court date and (understandably) failed to show up, the feds used any and all means to take him down. On Aug. 21, 1992, six US Marshals outfitted in full camouflage and toting automatic weapons trespassed onto Weaver’s property. Marshals circled close to the Weaver cabin and threw rocks to provoke the Weavers’ dogs.

Weaver’s son, Sammy, 14, and Kevin Harris, a 25-year-old family friend living in the cabin, ran to see what the dogs were barking at. Marshals killed one of the dogs, and Sammy fired in their direction. As Sammy was leaving the scene, a marshal shot him in the back and killed him. Harris responded by fatally shooting a marshal who had fired seven shots.

The FBI sent in its Hostage Rescue Team snipers with orders to shoot-to-kill any adult male outside the Weaver cabin. A federal appeals court ruling later noted that “a group of FBI agents formulated rules of engagement that permitted their colleagues to hide in the bushes and gun down men who posed no immediate threat. Such wartime rules are patently unconstitutional for a police action.”

On Aug. 22, 1992, FBI sniper Lon Horiuchi shot Randy Weaver in the back after he stepped out of his cabin. Moments later, Horiuchi shot and killed Vicki Weaver as she stood in the cabin door holding their 10-month-old baby. The FBI initially insisted Mrs. Weaver’s killing was justified, but later claimed it was an accident.

Weaver and Harris, who never fired any shots at FBI agents, surrendered after an 11-day siege. After an Idaho jury largely exonerated the defendants, federal judge Edward Lodge slammed Department of Justice and FBI misconduct and fabrication of evidence in the case.

Disregarding the judge’s condemnation, FBI chief Louis Freeh in 1995 exonerated the FBI and portrayed Ruby Ridge as one of the bureau’s finest hours. After I slammed Freeh’s whitewash in The Wall Street Journal and elsewhere, Freeh denounced my “inflammatory and unfounded allegations.”

Five months later, I snared a confidential 542-page Justice Department report on Ruby Ridge, excerpting its damning findings in a Wall Street Journal piece. The cover up unraveled, and the feds paid the Weaver family $3.1 million to settle their wrongful-death lawsuit. A top FBI official was sent to prison for destroying key evidence.

Some things never change! Its time to clean out the FBI.

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Chart of the Day: Lower Crop Yields Due to Drought, Threaten More Food Inflation

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The size of North America’s upcoming crop harvest will have a meaningful impact on global supplies next year. Early signs from the US crop tour revealed that menacing heatwaves and drought this summer had damaged corn and soybean yields.

Both corn and soybeans were below average at the initial stops in South Dakota on the western leg of the four-day Pro Farmer Midwest Crop Tour. Corn yield potential was estimated at 118.6 bushels per acre, well below the three-year average of 161.8 bushels. Soybean pod counts stood at 792.5, below the 1,073 average. Some corn fields had been cut for silage, a sign of a poor-quality crop as reported by Bloomberg.

See a video below that shows how drought in some areas can cause corn not to produce ears.

A first for me and my counterparts. Herman, NE. No ears. #pftour22 pic.twitter.com/86TVY2yO6p

— Jarod Creed (@JrodCreed) August 22, 2022

Global agricultural traders are closely watching the US growing season to understand future harvest to see if it can produce enough corn and soybean to replenish dwindling supplies due to the Ukrainian war and drought across Europe and China. Due to the Ukrainian war, wheat production in the Ukraine is seen down more than forty percent. Crop scouts are forecasting yields lower than what the USDA is predicting. See current expectations of crop yields in the US and learn more here.

Current subdued crop production is on the back of low ending stocks (on average) from the previous year. This also will have an inflationary impact on food prices. See this in the chart below.

As of August 16, droughts of different levels of severity affect more than 66 percent of the area of the continental United States. The number has been above the 60-percent mark since October of 2020, with just two short breaks (82 out of 98 weeks). While it has risen this high before, it rarely stayed there for so long. See this in the chart below and learn more here.

For rainfed corn, the scenario is diverse across US regions, with a higher probability of near-average yields in the eastern fringe of the region and below-average yields in the western area due to a combination of below-average rainfall and high daytime temperature during the past two months. Temperature and rainfall during the rest of July and early August will likely define the trend for all sites across the region. See this in the graphic below and learn more here.

Meanwhile, the European Union (EU) (MY) 2022/23 corn production is forecast at 60.0 million metric tons (mmt), down 12 percent from last month, 15 percent below last year’s crop, and 10 percent below the 5-year average. See the drought areas below in Europe and learn more here.

Corn and Soybean prices early on this year had poked higher on the back of inflationary and crop yield concerns. Summer rains had calmed the prices down, but the rains were not enough in many areas, leading to a new surge in prices, as shown in the charts below. The fear is that the drought conditions seen in the US have yet to be fully priced into the markets.

With the ongoing Ukrainian war, European crops damaged by heatwaves, as well as other parts of the world, an underwhelming size of North America’s crops could result in shortfalls globally next year. Add on supply chain issues, and it may make an interesting fall for food prices.

Of course, you know what this means – higher food prices.

See more Chart of the Day posts.

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