Get Ready for China
- Jul 01, 2005
- admin
- Investing
ow will the likely rise of China affect me both as an American
and as an investor during the next 5, 10 and 25 years?
That’s a question I’ve been asking myself seriously ever since it
was reported that the Premier of China, Hu Jintao, was in
Latin America three months ago.
Normally a trip like this would barely make page nine of a serious
American business paper. But this time was much different.
This time news that the Chinese were here hunting for natural
resources was featured prominently across the front pages of
almost every daily in the country.
“Un-named” government sources sounded suprised that the Chinese
had the moxie to be “cutting deals in our own backyard.”
I remember being taken aback at the subtle vitriol.
Much has happened since then. For starters, the U.S. and China
have been engaged in a very public tug-of-war over the value of
the Yuan.
I emphasise “public” because the Chinese need to keep their
Yuan low in order to keep growing, and the U.S. needs China to keep growing
to finance our deficits.
In other words, most of what you hear is just noise to play
for domestic audiences. For change to really happen, China will
have to decide to stop growing, or the U.S. will have to get its
fiscal house in order and stop borrowing.
Neither scenario is likely.
And then last week, the “big” news came. The Chinese state-owned oil
company, Cnook (pronounced: “C-Nuk”), shocked Washington by trying
to leapfrog an agreement between Chevron (SYM: CVX) and
Unocal (SYM: UCL) to merge.
Looking back, it shouldn’t have been suprising. China wants
an American oil company whose main reserves are in Asia, and they
were smart enough to hire Washington lobby firms and Wall Street
advisors to get it.
As suprising as it initially was to hear, most people are OK with
the Chinese playing the game by the rules we’ve invented.
But it’s not the Chinese playing the game by our rules that has
many concerned. It’s the possibility that China’s sheer size can
one day CHANGE the rules of the game that concerns people.
And for a country that leads a world that is “American-centric,”
the thought of China becoming an equal – or superior – economic
or military power may require a major paradigm shift in our
thinking.
IF IT HAPPENS AT ALL.
I say “if” because it is NOT a foregone conclusion that
it will indeed happen.
Far from it.
In fact, most of the people who project China’s future project
it using a growth line that goes straight up.
But the road of history is littered with examples of countries
who came out of the gate strong only to fizzle when the
government couldn’t adapt.
We just don’t read about them in most history books because
history, as we all know, is written by the winners.
So, over the next several weeks, we promise to take you further
inside China than you’ve ever been.
We want to know:
How does China really see America? What makes her tick? How does she
view her place in the world? How hungry is she to take her
place on the world stage? What is important to her?
To answer these questions properly, we’re going to take
you deep inside the country and show you what the Chinese
phenomenon looks like from the perspective of a young American
businessman currently visiting China, Wayne Mulligan.
Wayne is a dear friend of mine. After spending several years
working on Wall Street with me, he decided to further pursue his
education at Columbia University. In addition to economics, he
studied Chinese culture and speaks the language.
As with many young enterprising businesspeople, Wayne sees the
long-term potential for business with China. That’s why he
jumped at the chance to study there. He arrived in China
approximately two weeks ago.
When I proposed the idea of his contributing a weekly diary
for you, our readers, he was thrilled.
He believes, as do I, that information is the difference
between the “haves” and the “have-nots.”
With that in mind we will do our very best to inform and
educate you in the coming weeks.
Have a great 4th of July…
–By Dylan Jovine & Wayne Mulligan