Today I will review the report that was released on December 12th by the "House Select Committee on the Chinese Communist Party." The report recommends strategies America should use to win the economic battle they are in with China. The report is supported by both Republicans and Democrats, and according to the NYTimes, the Chairman of the Committee, Mike Gallagher, hopes to get the recommendations passed before the 2024 Presidential election.
I think investors should stay abreast of the US - China conflict because many companies receive a significant portion of their revenues from China, and CEO's of US companies are not disclosing the true level of risks they are facing in China because they don't want to anger the Chinese Communist Party, and lose access to the Chinese market. I know most people are used to reading summaries of industry reports and Congressional hearings, but I think in some circumstances, it is better to read the full reports and listen to the full hearings, so we can better understand the nuances of a topic. Nuances that might not get highlighted in the press.
By listening to the hearings, I learned a few things that I did not catch when I read articles about the US - China dispute. One of the things that I learned came from the testimony of Lindsay Gorman. She mentioned that as great as Steve Jobs and Steve Wozniak from Apple were, their success would not have happened without their use of breakthrough technologies that were developed by scientists and engineers in US and European public research programs. The breakthrough technologies included the internet, Siri, LCD touchscreen displays, and GPS. This was an important statement because it highlights America's true economic structure. America is not a pure capitalist society. It is a quasi-capitalist society where the public sector invests alongside, and sometimes prior to, the private sector. I mention this point because some lawmakers make it seem that all investments should come from the private sector because we are in a free market capitalist society, and if the government gets involved, the outcome will become disastrous. Unless I watched the hearings, I would not have appreciated the government's role in fostering groundbreaking innovation.
Below is the House Committee's report with my comments. Interesting Read.
The chart below shows the 10 sectors China is focused on dominating by 2025.
**Chart above is from Institute for Security & Development Policy.
Examples of the letters sent by the Committee to companies investing in China:
Letter sent to Qualcomm Ventures about their investments in China Letter sent to Blackrock about their funds investing in Chinese companies.
Videos of the Committee Hearings mentioned in the report:
Conclusion
Meetings have taken place. Reports have been written. The alarm has been sounded. It will be interesting to see how many of the recommendations get implemented over the next 1 - 2 years.
Stay strong, stay blessed, and God willing, I will see you next week.
No king is saved by the size of his army; no warrior escapes by his great strength. A horse is a vain hope for deliverance; despite all its great strength it cannot save. But the eyes of the Lord are on those who fear him, on those whose hope is in his unfailing love, to deliver them from death and keep them alive in famine. We wait in hope for the Lord; he is our help and our shield.
Psalm 33:16-20 NIV
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