George Soros follows up on his recent comments regarding a hot war with China in another piece titled “A Partnership with China to Avoid World War” See a short excerpt from Soros on China, SDR, IMF and war below.
President Xi Jinping has taken personal responsibility for the economy and national security. If his market-oriented reforms fail, he may foster some external conflicts to keep the country united and maintain himself in power. This could lead China to align itself with Russia not only financially but also politically and militarily. In that case, should the external conflict escalate into a military confrontation with an ally of the United States such as Japan, it is not an exaggeration to say that we would be on the threshold of a third world war.
Indeed, military budgets are rapidly increasing both in Russia and in China, and they remain at a very high level in the United States. For China, rearmament would be a surefire way to boost domestic demand. China is already flexing its military muscle in the South China Sea, operating in a unilateral and often quite belligerent manner, which is causing justifiable concern in Washington. Nevertheless, it may take a decade or more until a Russian–Chinese military alliance would be ready to confront the US directly. Until then, we may expect a continuation of hybrid warfare and the proliferation of proxy wars.
Michael Mauboussin: Challenges and Opportunities in Active Management And Using BAIT #MICUS
Michael Mauboussin's notes from his presentation at the 2020 Morningstar Investment Conference, held on September 16th and 17th. Q2 2020 hedge fund letters, conferences and more Michael Mauboussin: Challenges and Opportunities in Active Management Michael Mauboussin is Head of Consilient Research at Counterpoint Global in New York. Previously, he was Director of Research BlueMountain Capital, Read More
Both the US and China have a vital interest in reaching an understanding because the alternative is so unpalatable. The benefits of an eventual agreement between China and the US could be equally far-reaching. Recently there has been a real breakthrough on climate policy on a bilateral basis. By taking the nonbinding representations and promises made by the two countries at face value, the agreement has made more credible some recent efforts to bring climate change under control. If this approach could be extended to other aspects of energy policy and to the financial and economic spheres, the threat of a military alignment between China and Russia would be removed and the prospect of a global conflict would be greatly diminished. That is worth trying.
On his last state visit to the US in 2013, President Xi spoke of a “new type of great power relationship.” The subject has been widely discussed in China since then. President Obama should outline his own vision by drawing a distinction between Putin’s Russia, which has replaced the rule of law with the rule of force, and today’s China, which does not always abide by the rule of law but respects its treaty obligations. Russian aggression needs to be firmly resisted; by contrast China needs to be encouraged—by offering a more constructive alternative—to avoid the route of military aggression. This kind of offer may elicit a favorable response. Rivalry between the US and China is inevitable but it needs to be kept within bounds that would preclude the use of military force.
See the full article on China from George Soros here