Are China & The USA Working Together To Carve Up The Globe? | Peter Alexander

I believe at this very moment that the Chinese and the United States are negotiating what will be called the fourth communicate. The objective and goal is to have it agreed to when Xi Jinping theoretically travels to the United States at the end of the year is essentially for the United States and China to get together and say, "How are we going to divide up the world?"

Welcome to Felful Money. I'm Fal Money founder and your host, Adam Teard. Right now, the world's attention is on Iran, which is currently under siege by the US and Israel. But many in America think that the real challenge economically and geostrategically comes from a different country, one the war in Iran may be designed to weaken, and that's China. Many viewers of this channel have been asking for a deep dive on China, its capabilities, its motivations, and its likely future actions. Well, today we're delivering on that. I've got the good fortune to welcome to the program Peter Alexander, founder and CEO of ZBEN Adviserss, a leading provider of market intelligence and strategic advice on every facet of China's asset management industry. Peter, thanks so much for joining us today.

>> Thank you, Adam. How are you?

>> I am great. And Peter, um, it is it's an honor to meet you and have you here on the program, not just because this is a a very high interest target amongst this audience, uh, but you come, um, with the highest of, um, of referrals to me. I was at, as most of the viewers know, I was at Grant Williams and Stephanie Pomboy's conference a few weeks back, and the mystery guest there was Luke Groman. And uh coming out of the conference, Luke actually reached out to me proactively uh and said, "Hey, Adam, um one of the absolute smartest guys that I talked to is this guy, Peter Alexander, who, you know, has basically educated me tremendously about what's going on in China, and I rely on his insights heavily uh for all things related to China. You really should approach him about having you on your program." Well, look, I didn't need to be asked twice uh and you kindly accepted. And uh just as we were getting ready to go live here, you mentioned you really haven't done many of these podcasts before. So very much appreciate you uh selecting Thoughtful Money as one of the ones to make your debut on here.

>> No, I'm I'm super super appreciative of having the invitation and coming on with you. And you know, to start out, you know, I've watched some of your stuff over the years. Really, I think uh the approach that you have taken with your guests and your topics is um exactly kind of what the world needs these days. But if you don't mind, can I can I start by asking you a question?

>> Sure, absolutely.

>> Have you ever in interviewed anybody who's actually based in China where I'm I'm in Shanghai right now. Um I'm curious of I I know you've had people before who've come on and pontificated about China, but anybody who's actually been based here?

>> Nobody who's actually been based there. I have talked to people who travel to China relatively frequently. Um, uh, Yan Vanek, CEO of Vanek Funds comes to mind.

>> Um,

>> I think the only, well, Jim Rogers, you know, he lives close to China. I think he spends a fair amount of his time there, but again, I don't think he lives there full-time. I think he lives in Singapore. Um, Mark Fabre lives in Thailand. Um, so no, I think um I did attempt there's another fellow on YouTube um who has a lot of videos about sort of what it's like inside China and he talks a lot about um the implications for Western companies that that that you know want to have a presence there. Um and I did manage to get a hold of him. Um but he said you know what I'm getting a lot of pressure from my partners not to be as as transparent as I've been about China. And so he politely turned me down. So, you were the very first to to come at us who were who actually lives there and is and you've been based there for what 20 plus years?

>> I've um just passed my 30-year mark in Shanghai two weeks ago.

>> Wow. 30 plus years. Okay. Um All right. Well, yeah. So, again, uh even more reason why I think we should all listen very closely to what you have to say today, uh given your deep insider knowledge there. So, um, I I I'm going to ask you kind of a version of the kickoff question I like to ask people I haven't interviewed before, um, but I'm tweaking it obviously for China. And that is, what is your current assessment of China economically? Um, is it stronger or weaker than the average Westerner thinks?

>> Yeah, it's a great it's the reason why I wanted toh get a a better idea if you've interviewed anybody based here in China. You, I'm sure, will have noticed that there has been a an acceleration in the number of people who are weighing in on the subject of China, the competitive landscape geopolitically with the United States. And again, one of the reasons why I really have not participated in the the whole podcast environment is a long time ago, I recognized that China is an extremely emotive u conversation to have. People have very um strong strongly held opinions about what's happening and yet virtually nobody's really traveled here. So, you know, when you look at what's going on with the economy, I will always make which is when you're talking about anything related to China, the truth almost always lies somewhere in the middle. You know, we have these two very diametrically opposed outlooks that you will find across both traditional media and especially in social media. China is going to collapse imminently or China is going to accelerate and take over the world and become the next hegemonic superpower. Neither of those two outcomes are even remotely close to occurring at any point in the very near future. So if you look at the example that you're asking about the economy, what you have right now is what I refer to as a transition underway and a transition that's been going on since 2017, uh, but really has accelerated since 2021. The first point that I do want to stress to the audience is be extra specially careful when you're listening to those that are expecting some form of collapse. I mean, I I I have the saying where I tell people that the the road to calling China's collapse is littered with more dead bodies than I can count now. You know, I I remember back in 2010 um or thereabouts, maybe it was 2009 after the global financial crisis, you know, Jim Chenos infam infamously called China, you know, Dubai times a thousand. It was on a treadmill to hell. It was going to collapse imminently. Um you know, we had just a few years ago, everybody was obsessed with the so-called Everrand real estate debacle, calling it the Chinese Lehman moment. There there just needs to be a greater appreciation of not underestimating China's capabilities to either manage whatever implosion is underway or to recognize that there are other elements that the central government is able to not directly address specifically I should say but to manage. Um, and then it's it's somewhat of a decentralized process where it goes down to the provinces. But ultimately where we're at right now, and here's the here's the key takeaway, is when Xi Jinping came into power in 2012, um, within about 5 years, there was a clear recognition within his government that the then economic model was not sustainable. And then in 2017 he made a very famous speech at the then I think it was the 19th party congress where he stated very clearly that China needed to shift away from a growth at all cost economic model towards quality growth. And then over the preceding years there was a a very slow but very deliberate uh attempts I should say to move away for things like property infrastructure although infrastructure still is a a key driver but a move far more in favor of manufacturing but not just historic manufacturing manufacturing that is what's referred to here as nextgen or fourth industrial revolution types of uh processes. And that's where we are right now. We're we're watching the Chinese economy transition from an old economic model to a new economic model. And there has been an enormous amount of stress applied on the entire system. And what I will definitely stress to the audience as well is it is by no means a certainty that this will be a successful transition. Thus far we have seen um I believe decent degrees of success. And finally what I would also highlight is never bet against China. Now that's not saying you should bet on China but just don't bet against China. Uh I have found others that have done so in the past have well to put it politely um have found themselves on the wrong side of that trade.

>> All right. Um very helpful kickoff here. And I mean, Peter, I just imagine one of the reasons why those outside of China have such a imperfect uh view of it um or imperfect understanding of it um is just because China is a pretty insular country. It it protects its information flow. And so what we hear from China um we suspect as propaganda. Um and obviously here in the west we probably hear some propaganda from our own government to influence to think about China the way they want us to think about China here. Um and also you know just with imperfect information people start guessing and you know making up their own conclusions and then you get this sort of soup of of misinformation um or I hate to use that term but but um misunderstood uh outlooks. Um, okay. Um, so again, very excited to to kind of hear your best take as somebody who's been on the inside there for 30 years and who also understands the West. Um, gosh, I've already got a ton of questions here um from from what you've said um how to approach this. Why don't we why don't we start with this? So, okay. So you you say that um Xi is is leading the company sorry the country through this economic transformation which is uncertain um but but going okay at this time and one that you would say you know be very very careful betting against it or at least betting on its demise. Um I got a lot of questions that are popping to mind about things that could go wrong but why don't I start with things that could go right. Um, what are what are China's big advantages right now?

>> The biggest advantage as I have seen it, and it's something that I've seen in the entire time that I've been here, is a degree of dynamism that I really don't believe is appreciated in the with those that are looking at China for economic direction to see where things are going. It's the individual on the ground. And you know, I can give you so many different examples, but let me I'll go to CO. You know, when you know, of course, CO hit here first in early 2020 and we were not shut down, but it was a lot of different businesses were closed and most of those businesses here are individually owned. They're owned by families and and they're small. They're they're not of of any certain size. and there was no support from the government. Um, you know, what you had was individuals that were going to need to take care of themselves to be able to move forward. And about 30%, I would say, is a pretty good estimate of those small uh, family-owned businesses ended up failing. But then within a matter of months, what you found is that all of these small shops or these small businesses that had closed down, wherever their store shops were, they were taken up by somebody else. and then somebody else came in to do something. And you know, there really is a true appreciation that you're not going to get any support from the government. You want to be able to, you know, grow and benefit, grow wealth, whatever the case might be. You're going to have to do it based upon yourself and and the circle that you have around you. So, I think that fundamentally is one of the most interesting and and often overlooked aspects of China. You'll hear from a lot of economists globally that the reason why China has proven to be successful is because of government subsidies or um you know, bank lending or repressed wages or mercantilist trade. All of those are absolutely true. There's no doubt about it.

>> But what gets missed I believe is the degree in which those factors are representative of the success that China has had. And I don't believe that it is all that significant. And I think more of the significance comes into the Chinese being an extremely commercial-oriented people. They're looking for ways to be able to build businesses, to be able to build products, services that they can both sell locally and globally and do so at, you know, good pricing with good quality and you name it. And, you know, this has just continued to evolve over time. And you can see again in the 30 years that I've been here that China moved from a manufacturing base that was as people like to say textiles and toys but then continuously moved up the value chain as most people in the United States or in Europe looked at China and never appreciated that they were doing this. And then ultimately we get to where we are today. And China has built the most significant manufacturing moat in the world. It's not just the workshop of the world. It is the manufacturing base of essentially every end product that is built. But my favorite statistic of late has been 47% of Chinese exports are intermediate goods. which means anything you want to build in the United States, whatever parts you need are most likely being sourced from China. So there has just been this consistent evolution, this iterative process within the economy that's driven by this dynamism. And this is not stopping. In fact, I see it now accelerating once again after several years of a less than exciting period here locally with the economy.

>> All right. Um you know I have heard from many people who do business with China who say you know look in the west here we we we think of communist China um but really the people there are um are better capitalists than most of us in the west. It's this this dynamism of just kind of they're just laser focused on entrepreneurism and you know commerce and uh just being super innovative and trying to figure out you know how to make tomorrow better than today. Seems like you're nodding saying this but that that's kind of the core DNA that you're reacting to here. Correct.

>> That is absolutely correct. And and again what I would highlight in you know looking at recency bias is that between the lockdowns of 22 and then I would say 2024 there was a period where in in the time that I've been here was probably the most concerning in terms of sentiment and that has changed throughout 2025. I can I can state quite confident confidently that you know economically speaking you know China has you know is well past peak pessimism and is now moving forward. Um there's a lot of interesting cultural developments. I mean people love to talk about the deepseek moment from last year. What I find fascinating about that is how Deepseek moved and then you had not only DeepSEK but you had Quen, you had Chem Kimmy K2, now Kimmy K25, you had um a host of other open source LLMs in the space of a 12-month period which now has the United States a bit concerned over the direction that that whole ecosystem is heading. um you know kind of related to this and again I I mean I haven't been to China since the mid9s that was forever ago. Um uh and it was brief. Um but when I talk to um you know friends and and contacts who come back from China um they're amazed at at the infrastructure there. You know when they come back to America they're like it's kind of like coming back to a developing nation. when you land, you know, in these large uh American airports that haven't really been uh updated in in decades sometimes, and then you get on an Amtrak train and it breaks down. They're like, you know, it it feels a lot like living in the future. Uh when you go to I mean, this isn't unique to China, but but China uh has certainly done this at at scale. Um again, sounds like you're saying that that's that's not an anomaly. That really is kind of the way that is. And we also you know we see uh things on the internet and again you got to be careful what you say on the internet but it's like you know if if I I think right now u let's take nuclear energy right or let's take let's take electrical production um so I put up a chart here many times that shows the electric electrical production capacity of China versus the west it's map versus both the US and and Europe and US and Europe charts are almost flat for the past couple decades uh And they're a fraction of China's. China is almost like a vertical line and it's it's like over three times the capacity and and growing way faster, right? And part of that is going as is they look at, hey, look, you know, whoever is able to produce the most electrons the most cheaply, they're going to have a heavy advantage in the future. So they're investing heavily in uh you know, new nuclear plants. And I think if you look at the a chart of the global nuclear plants underway by country, China leads by far with 38 to the US is zero. Um I think I might have just seen some shovels being made on on some new plant here in the US. So maybe there's one about to start here in the US. But they're just crushing us on this stuff. And we see these videos on YouTube where, you know, China decides uh you know either a bridge fell down or they just we need a new bridge on this river. and the thing gets built in it almost looks like a matter of hours but it's a couple of days you know their engineers come and just make this thing happen and here in America we know that would take us like 12 years and be like five times over budget here so they have this nimleness and ability to deploy uh in in in a productive way that that appears from the cheap seats from where I'm sitting to just completely dwarf what the west is that the kind of increasingly sclerotic west is is capable of How much truth lies in that?

>> Oh, significant truth. I I I mean, let's let's get to I think one of the most important for me at least critical distinctions is for the past 30 years, China has spent a tremendous amount of money, has made an enormous amount of investments into infrastructure, period, however you want to define that. versus the United States, which has deployed probably a similar amount of money on war, you know, if we're being completely honest about it. And when you look at things like energy production for China, an electron is electron. And they're going to they're going to create as many of those electrons, as much capacity as possible, whether it's through coal or whether it's through solar, whether it's through nuclear or whether it's through natural gas.

>> Right? this don't care about emissions basically just get that electron made

>> Correct and because all life is based upon the ability to generate production but there's also and I think this plays into today's um you know ongoing geopolitical events you know let me give you an example here in Shanghai um so my wife and I we own a Chinese electric vehicle it's a Neo great car dirt cheap very efficient um on Sunday morning. She said, "Hey, we need to go get the car charged." Said, "Okay." So, we hop in the car, we drive over to a a parking garage nearby and, you know, park the car, put the charger in, go outside, have a nice lunch, you know, walk around. It was pretty nice day. Get back an hour later, the car is fully charged and it cost us 49 rem, which is about $6. So, you know, the it's not just that Shanghai. I would I would say based upon just eyeballs is at least 50% EV right now, but that the charging facilities are everywhere. They're faster than what I've seen in the US and they're cheaper. Now, why are they cheaper? Because there's so much electricity that's been built into the system. So you see these sorts of what I would call structural demand-oriented elements within the economy which is you know rather than this helicopter money that gets you know distributed to individuals you're seeing you know small shops being open or ease in which you can charge a car or whatever the case might be that allows the individual Chinese to go out and participate in society participate in the economy. Um, if I can step back for one second where you're talking about, you know, people that you've known that have come back and said, "Wow, China's living in the future." Uh, here's a couple of of interesting data points. Number one, very very few people have traveled back to China, Americans, I should sorry, Americans, very few Americans have traveled back to China since 2019. Now 2019 to today better part of a decade in China time that's like 30 years I mean the amount of change I've personally seen just in the last handful of years I find mindblowing and I live here so what you now have is when people okay when people will call me up and say look good I want to talk with you so I have all these institutional clients they want to get what's the real read on the ground I need to get sense I can't be listening to all of this this noise. I said, "Okay, before we have a conversation, when were you last in China?" And they will all say 2019 2018. I said, "Look, before you and I have a conversation, because I don't think that conversation's going to go very well because what I'm going to share with you is going to be so antithetical to what your mind set is, it's going to break you." I said, "This is what you should do. You fly to Hong Kong, go across the border to Shenzhen, spend some time in Shenzhen, take the overnight train to Chongqing, and then fly or take the train to Hjo, which is near uh Shanghai. Come into Shanghai for a day and fly out. Don't even go to Beijing. Like Beijing is a waste of time. And you know, if you had asked me a decade ago, if you were coming to China, what would you I would never have given you that itinerary. But because Shenzhen and Hong Joe and so many other cities have accelerated and this is where all of the actual um you know, growth is occurring is in these second I would I would call them now first tier cities um is mindblowing even for me to go to a place like Chongqing. I mean I remember going there in the late 90s and it was it was like old China. So all of this is transforming in real time and what's the what's one of the phrases we hear a lot of times nowadays is like the human mind cannot handle the exponential function. Right China is the exponential function.

>> All right. So we've got you know probably half the audience now Peter saying okay so Peter's a page stew of the the Chinese communist here Um, and I do want to ask a few more questions here on on its advantages and then we'll then we'll get to the the meat of the situation. Um I would think and you correct me if I'm wrong but something else that you would add to China's advantages um is its um sort of superpower relative superpower on long-term planning um how it is able to I mean we here in the west we say yeah we we think in years and China thinks in dec centuries and I don't know if that's really true or not you'll tell me no but but they definitely keep coming up with these long-term plans and they have a continuity of governance that allows them to I I I would believe, you know, stay on that plan more consistently for longer than a lot of Western nations where we have elections more frequently. You know, you get a country like the US where we're just kind of flip-flopping back and forth between two very kind of increasingly polar uh parties. So, you know, the first year or two is is all about dismantling what the party was doing, the previous party was doing. Um, where China, I think, is much more like, nope, we're we're we're locked and loaded and we're, you know, 27 years into the hundred-year plan right now, and we're going to keep going. Um, so h how how much of an advantage would you say that that truly is?

>> Well, it's it's an advantage, but not particularly for why you had laid out. The advantage resides in China does have longerterm planning, but it's none of this nonsense centuries or what have you. There is typically, you know, right now we're going into the next fiveyear plan or, you know, there was project 2020, 2015, China 2025. You know, these things do exist, but they're very malleable. They're never really written in stone as you would view it. um you know, okay, this is how the communists work. They come up with these plans and they it's more of a guideline that comes out of Beijing that is then passed down to the regional governments to try and find a way to execute. Where China, I think one of their superpowers exists is they understand how the American political system works and they use that's their advantage. They understand. And I'll give you the classic example. When I was talking to clients last year, I said, "Look," I said, "China's going to slow roll the Trump administration. They're going to figure out ways to put some pressure on and have these meetings. But China was positioning itself with the expectation that based upon history, come midterms 2026, there would be a a change in in government, at least at the legislative branch in Congress, and that Trump would become a lame duck, and there would be nothing that could really be agreed to. So, China's been able to deploy that knowledge and it's one of the one of the areas that I I try to stress when I'm speaking with groups in the US is you need to learn how the Chinese system works. You don't understand how it works. And if you do, you can find ways to be able to better position yourself or not position yourself in a way where you're going to get humiliated, aka the trade war of 2025. You know, I I even was on CNBC early last year making the point that look, the the the approach that the Trump administration is taking is not aligned with where they're going to be able to find success. Uh and again, they moved forward. So, China is not some omniresent doesn't make mistakes. They make mistakes all the time, but there is a ability to self-correct pretty quickly. Um, there's an ability, I think, to sort of allow for certain experiments, even if they're not expected, to be able to play out. Um, and to then change as need be as you go down the path. But I promise you, ch you make the comment that there's going to be a lot of people in the comment section saying I'm a, you know, a paid stoogge or what have you. That's fine. I'm used to that. But here's I I think a critical point that I do want to make to you. Number one, I am a red-blooded American and I believe that the American system, the American system I grew up in, is a far superior system than any other system that's ever been created in the world, I simply believe that the United States has lost its way over the course of the last 25 years. Mhm.

>> If there was if there was a possibility for the United States to recognize that it needs to be able to shift recognize and this is the critical thing recognize what is the geopolitical competitive threat that China does represent and then position itself domestically to be able to address it. Those issues are not being uh they're not even being raised let alone tackled. So the easiest and I would say the path of least resistance is we're simply just going to blame China. That doesn't help anybody. Um so I'm just trying to continue to demonstrate what the world is as opposed to what the world is what you want it to be.

>> All right. So this is getting into the meat of it then. And uh I I I do want to make sure at some point um because Luke Groman connected us um we get to some of Luke's um uh you know uh his his I don't want to call them beliefs but his calculations that that China you know may be doing some some pretty big things to try to either weaken America's position economically or strengthen its own by you know these things might be based in gold and using America's debt burden against So, we we'll get to all that. U I'm uh I'm not surprised by your comment there about um you know, America kind of ignored China, sort of had this this um anacronistic uh opinion of it as this country that just makes you know, toys and whatever it was you said. Uh and then China all of a sudden became this this you know incredible manufacturing power and again not just of of of low-level goods but but as you said um uh what interim components uh that are critical to virtually almost everything we need.

>> Right?

>> Uh but I am a little surprised that you're saying uh it's still not even like you know uh having having the discussion about what it should do about it. So, and I say that only because the the Trump administration, I think, on a relative basis to previous ones, super vocal about the Chinese threat and and is has done and is doing a lot on again on a relative basis from previous administrations to quote unquote tackle, you know, the China threat. Now, maybe it's doing all the wrong moves and and you can, you know, let me know what you think about it. But like you mentioned the 2025 trade war. I mean from from my view in the cheap seats that was largely Trump saying look I got to start containing China here. And so I am going to put pressure on everybody all at once to basically get on team America versus China. I'm going to put crazy numbers out there, freak you all out, and then we're going to we're going to agree to something that you'll accept. But part of that agreement is is you're going to agree to be on team America versus China. Um So to me that looks like okay it's starting to do something to address the threat. Now again maybe it's the in your opinion it's it's it's the wrong thing we should be doing. But it it does seem to me that the current administration is both trying to say look America did take its eye off the ball on its own and we're trying to make America great again and kind of go back to some of the you know things that that were nostalgic for in America. Um but also saying and we took our eyes off China and we got to start putting that that threat in a box somewhere. Um what would you say to that?

>> Um I agree that the Trump administration and absolutely I in 2017 when he first came into power he was the first president to ever recognize that China was the competitive threat and he he should get credit for that. My I think the where I differ is in the remedy. So the remedy right now is to contain China uh to try to get the rest of the world which I don't think is going to happen uh to try to get the rest of the world to be able to come together in some form of a loosely knit alliance to be able to to counter China and its economic increasingly uh dominance across all facets of the economy globally speaking. this as I see it again red-blooded American as I see it it needs to start at home what needs to happen is you you to consider rare earths for a moment rare earths is the symptom of a much larger problem rare earths is an input just like I was saying before intermediate goods 47% of total trade it is an input that the United States requires for various aspects of its manufacturing process. That is just one of dozens if not hundreds of other areas that the United States is at a disadvantage when it comes to China. They need China. The Europeans need China because the US manufactures absolutely nothing for the most part right now. So the remedy I believe starts at home which is you mentioned power. There needs to be power production. Then you need, as I see it, a Washington DC consensus that goes and assesses critically speaking all of the various areas in which China is a critical path for manufacturing, rare being one. Then you have things like APIs for the pharmaceutical industry. It go the list goes on and on and on. And my strongly held belief is that being able to then identify those areas and be able to increase power production, be able to start building manufacturing. And again, I mean, if you look at the manufacturing issue in the United States, one of the examples that I give to people all the time is, and I'm sure you would have seen some of this, you know, over the course of the last, I think this was under the Biden administration, the whole chips act, they brought in TSMC to build a fab plant in Arizona. Great. That's what needs to be done. This is something that I that I believe is the right approach as a remedy. As they were building that plant, they had to bring in Taiwanese to be able to run parts of that because there wasn't any skill in the United States to run those plants. And then a host of Americans who had applied for certain jobs that were denied those jobs felt that it was discriminatory and launched a class action suit against TMSC in Arizona for discrimination, which is still ongoing. And my response to that is like look if you don't have the skills this is not discriminatory. This should just be tossed out by the courts. You know, what's the other famous example which is in California may be an anomaly. So maybe not the best example but what about the highspeed rail between LA and San Diego? I think I I read somewhere that the the most recent price tag that's like $133 billion.

>> Oh, it's financial. I I I lived in California up until end of last year. Um Oh, it's the worst political boondoggle ever. Yeah.

>> And if I think about what China has spent, like there's a famous port which is going to become, I think, a bone of contention for the Americans in Peru called the port of Chiang Kai, which the Chinese went in and they built and they actually own the majority stake in it. I want to say that port, deep water port, massive, I think it was 65 billion and they built it over the span of three years.

>> Yeah, it's it's let me put it this way. Hats off to China for um you know, really getting that laser focused productivity that they're bringing to their country and to assets elsewhere, all that stuff. But but let me Adam I just I wanna I want to ask you do you not agree though that the American like America is an idea American people have like I would I said don't bet against China. I would never bet against the United States either. I think the the DNA that is the United States is still very much present and could easily reverse course. I I don't want to say there there needs to be political will or or what have you, but I do believe that the clearly best way to be able to challenge and effectively compete at China has to begin at home. Just, you know, going defensive and saying we're going to just try to contain the Chinese. I'll be honest with you, my biggest concern right now is if you read history, what you're seeing playing out is not cold war 2.0. You know, you hear this bantered around all the time. That what for me is an ide ideological uh competition that took place. What is occurring right now is far more similar to the years heading up to World War I where you had the UK and Germany sort of one was the established power the UK and one was the rising power Germany. And it all came down to what? Manufacturing. The Germans were manufacturing at such a rate and a quality that it it frightened the British. Now, I'm not saying that that one variable led to World War I, but there is a degree of when you are the hedgeimon and you see that there is a credible threat rising and rising quickly that one of the options that you can take is to find ways to instill conflict.

>> Sure. And I would say there are similarities that we can point to today, but I do want to stress anybody who continues to say that this is Cold War 2.0 does not understand their history.

>> Okay. Um I I think there's a lot of truth in everything that you've said there. And I I do want to make sure I get the question here some way, shape, or form of, you know, what what what odds do you put at at something potentially kinetic ever happening between these two powers? But but we'll work our way up to that. Um

>> Okay.

>> you know, I I I share Winston Churchill's uh view of Americans where he said, you know, I love them because you can always count on them to do the right thing after they've exhausted every other possible option beforehand, right? And I think we're in that process right now as a country.

>> Yeah. sad to say. Um I I I I can't speak for them and this is not um this is not uh you know an endorsement of of the current administration, but um one of the things that that I do appreciate about the current administration is they are very vocal. Like if you want to know what they're thinking, they've got cabinet members are on they're getting interviewed every day. So they're they're pretty um communicative about what they're trying to do here. And it from what I can tell and again I'm I'm no political strategist. From what I can tell, Peter, there is a sense of wow, we really took our eye off the ball here. China's doing a lot of things um right in a lot of critical areas that we're far behind on there. The the trade wars aren't just to try to box out China, but they are trying to reshore uh critical production, critical manufacturing here. A lot of the trade deals are trying to, you know, not only make American goods potentially more competitive uh abroad, um but also to bring in foreign capital to build, uh, the industry here to to start making this stuff again. So, I I I guess I'm going to hope that, um, at least, you know, part of the country is starting to get the memo that that that we need to be more productive in this way. And it's not just about trying to thwart China, you know, it's about trying to enabling, you know, American innovation, American production, all that type of stuff. Will that happen? Who knows? You know, we've got lots of issues with the courts going on right now. And your TS TMSC example is is a great one. Um, and and that goes back to where I was sort of saying about continuity of of government long-term planning and also kind of just command and control, right? In China, they can kind of get everybody to line up, right? you tell me because you're you're you're there. But my sense is is you know Beijing can kind of set the plan from the top and you know make sure that everybody knows what they've got to do and you can't you don't have rogue provinces, you don't have rogue justices, you don't have lawfare, you don't have anything like that. Just the top is saying look this is the way it's going to be and if you go rogue it's not going to work out well for you.

>> There's I would say there's yes. Short answer is yes. it it tends to be a very hierarchial approach, a conversation perhaps for another day because it it it it's it's a it's a rabbit hole uh to say the very least. But one of the primary themes that I've been sharing with clients over the last handful of years is that there's been an underappreciation that the a civil war of sorts has been ongoing in the Chinese Communist Party for the last 10 years or so. Because when Xi Jinping made the decision to shift the economic model, as I was mentioning before, what that ultimately meant was a significant proportion of the party daspora here locally. They had, let's call it, alternative sources of revenue. Those alternative sources of revenue got cut off and that led to a significant amount of push back. Now, it's all been going on underneath the surface, but you know, look, Xi Jinping is no emperor for life. He is no um you know, strong man that controls everything. There is a degree of checks and balances that go on here. uh but for the most part and I think I mentioned this a little bit earlier how it operates is you will have broadbased plans um guidelines direction that is provided from Beijing to the provinces and then through that somewhat decentralized approach those provinces are responsible for trying to execute as best as possible. Um so without question though compared to the United States today um China is far more focused if you will on how they go about the process of economic growth.

>> All right. Um I'm going to ask you an unfair question just because we could talk about this for a whole hour and I just want to real quick answer here. Um

>> Sure.

>> So um you know we read here I think just last week you know um President Xi uh has done some shuffling of those close to him and that seems to happen every so often and and the sense here is that's because you know that maybe he hears the sharpening of the daggers and therefore he's got to just kind of you know keep shuffling guys there to make sure that he can continue to do what he wants to do. Um

>> Yeah.

>> I if if he were to get either taken out by a rival or let's just say just keel over tomorrow from a heart attack. Um how consistent would China's governments continue on from him? In other words, you said he's not a strong man. He's not an emperor for life. We hear those terms here in the West. So again, maybe that's just part of our misunderstanding. Um but is there a deep bench of folks that would pretty much pick up the torch and continue doing exactly what he's doing? or would China veer in a different direction?

>> It's a great question actually. Uh the best way I would say I would answer it is first and foremost and I think this is the most critical element the party here is built to sustain the party meaning whatever the fallout from that situation might be um it would be party first individual second.

>> Okay.

>> So the only other thing that I would add is there are two broad-based camps that are operating right now within the communist party I would suspect that there would be jockeying for position over who would have the most support overall for the role of new leader of China. And then once that was decided, everybody would then rally around that individual. So it would be it would be consistency.

>> Okay. All right. That was what I suspected, but glad to hear your your validation of that. Okay. So let's let's get to the the real big question here. Um and I'm going to do a little bit of speculating here, so everybody forgive me. Um, but my best interpretation of of at least what America is trying to do right now, this is given the current administration, right? So, let's assume for a minute that this continues for the next couple of presidential administrations. America's view is to um uh return itself uh to to its its its former state of glory, you know, as the preeminent economic super economic and military superpower in the world. Um and it's going to do so uh part of it strategy of doing so is is um you know reducing its vulnerability to some of the more existential threats it faces today. And um listening to the current administration it's sort of you know heavy on the Monroe doctrine 2.0 like we are

going to totally focus on our our western hemisphere. We're going to get rid of the regimes that you know have been thorns in our side for a long time. So, Maduro's gone. Cuba hopefully tilts our way. Eventually, there'll be a friendly guy in Brazil and uh and we'll make nice with Canada while we get what we need from uh Greenland. Um we'll put it under a a golden dome. Um uh and so, you know, anybody wants to come after us, we're going to be super well protected. We're going to be relatively self-sufficient. We're going to have two massive oceans on either side. We're hopefully still going to have the world's biggest military. Um, and we're going to trade with everybody else, right? We're not going to be insular. We're going to trade with them, but it's going to be more kind of on our terms than it is right now. And China will be an important trading partner. Um, but we will have made uh hopefully uh the rest of the world a little bit less dependent on China. China's not going to have a presence, any substantial presence in our hemisphere. And you know we'll continue to work with with other you know big regions around the world uh to make sure that you know again you know maybe we're a little less dependent on them than we are right now uh but that they don't get too overdependent on China right so I think I think that's kind of generally the west's vision here right we're not we're not looking to impoverish China we're not looking to attack them by any stretch we're just trying to kind of keep them kind of you know doing what they're doing but not doing an awful lot more than that and again kind right?

>> Somewhat diminished from where they are right now.

>> What do you think China's view is?

>> Um, I think China would ascribe to that view. Um,

>> and sorry, I don't mean China's view of America, but like what what's China's aspiration? What future are they trying to create for themselves? Oh. Um, that that is one of the more easier questions to answer, which is you in the in the United States, the way that they would call it would be regional hegemony, meaning that China would be looking to be able to say, um, you know, the East China Sea, the South China Sea, this whole area, this is our backyard. you know, you America, we're fine with you taking the Western Hemisphere, but in return, we would like what the Americans call the Western Pacific or the East China Sea and the South China Sea. And what I think is interesting, and I I really appreciate the way in which you brought up this this question or this topic, Adam, is I believe at this very moment that the Chinese and the United States are negotiating what will be called the fourth communicate And if you notice in the course of the last year or so, there's not been a lot of um saber rattling, if you will, out of the administration with regard to China. It's been the exact opposite, in fact, where

>> you're you're seeing um the Trump administration trying to be a little bit more consiliatory, trying to downplay China to a certain extent.

>> Trump's traveling there next month, right?

>> Yes, he is. Yes, he is. He'll be here in end of the month.

>> And what a what a communique is, there have been three so far and almost or I should say all of them have centered on the issue of Taiwan. What I believe this fourth communique which will not be agreed to and entered into during this trip. But I do believe the objective and goal is to have it agreed to when Xi Jinping theoretically travels to the United States at the end of the year is essentially for the United States and China to get together and say, "How are we going to divide up the world?" I don't want to make it too blunt, but you know, the the the Portuguese and the Spanish did it some 400 years ago under papal decree.

So the fascinating thing is what does that mean for China? Well, are bases going to be moved out of South Korea and Japan? Maybe. The issue of Taiwan, you know, we let's, you know, let's get to the elephant in the room. China has no intention, in my my estimation, of taking any military action on Taiwan, no matter what anybody says. China wants the status quo. China wants to simply say, "Let Taiwan be Taiwan for the next 50 years, and then we'll deal with the issue." Right? Don't claim independence. We won't deal with it militarily. Let's just continue to do business because what China wants is to be able to compete against the United States and all other nations economically and grow their country, try to improve the livelihoods of their people and not be dealing with all of this uncertainty and all of the elements of containment that the United States have attempted over the course of the last, I don't know, 10 years or so. So, it really is just about economic dominance in the region and then allowing China to operate and and build its bilateral agreements for trade with whomever they want to trade with. And then again, this has been my issue. Let the American system and the Chinese system work it out and compete. And if the United States can make the right moves right now at home, I believe the United States can ultimately win. But we need to see those changes made.

>> All right.

>> Did that answer your Did that answer your question?

>> It it it does answer my question, though I do have some follow-up follow-up ones here. Um Okay.

>> And and let me let me talk about China. Sorry, Taiwan just for a sec. Um

>> Sure.

>> I'm going to ask forgiveness of of any Taiwanese viewers we have here. Um what is America's This is a naive American question. outside of the semiconductor industry like what is America's interest in Taiwan?

>> Oh, containment. I mean, if if you look at a map, you have Japan, Korea, Taiwan, the Philippines, Australia. It's called the so-called first island chain. The United States has had a containment strategy, broadly speaking, ever since the end of well, call it the Korean conflict. uh they do not want China to be able to get beyond the first island chain and have a blue water navy. Very 20th century thinking in my estimation, but it carries forward. I mean, this is the hegemonic concept, if you will. I've never believed that Taiwan's issue was about semiconductors. I think that has been a useful cudgel for Washington to be able to say this is why we need to we need to protect democracy. We need to protect chips. If Taiwan were to reunify with the mainland again, which I do not believe is going to happen anytime soon, then the United States would know that all of a sudden there would be a very easy opening for the Chinese to be able to go into the Pacific uninhibited. It It's as simple as that based upon what I've been able to see over the the course of the last 30 years.

>> Okay. Again, another naive question. Do we have US naval bases on Taiwan or are we relying on the Taiwanese to be doing the containment in that region of the ocean?

>> Um, there are no formal bases on Taiwan. Um, I think there are like 500 US troops that are training or whatnot, but the goal right now has been Taiwan needs to buy armaments to be able to become a so-called porcupine that will be able to stave off any military action by China. Meanwhile, Beijing, and again, I cannot stress this enough. Beijing has no intention. Let me let me explain why because I think this is important. And I'll make this quick.

>> That's fine. And also, just in your answer, I think it's hard for Westerners to kind of have faith that China has the sort of non-expansionary mindset just because the Western mindset is very expansionary.

>> Correct. Yeah. There there is a degree of projection without question. Like I hear people all the time say, "Well, Taiwan will," and I can't believe I'm hearing this, but Taiwan will be a domino because the appetite is in the eating. Meaning that once they take Taiwan, then they're going to go after Japan because they have all of this animosity from World War II and so on and so forth. The degree or lack, I should say, of introspection that is present within the United States on these subjects is mindboggling. But to the issue of why can I state with such a high degree of confidence that China would not move on Taiwan is and it's going to sound it's it's very SunSu art of war but it's still so very pertinent. If you cannot win the peace, you should not start the war. And China has a history, and I mean thousands of years history of what I refer to as peace or winning through assimilation. Meaning, you know, look, the Mongolians took China over back in the 1200s. Uh became what was called the Yuan dynasty. The Mongolians were then ultimately assimilated into the ethnically Hanchinese to become Chinese. And then it happened again with the Manurians in the 1600s. Manurians came in, they took over China, they were then assimilated and became essentially Haden Chinese. So if China were to move on Taiwan, and again you can use the example as I I do with groups with with Hong Kong. I mean, China moved on Hong Kong and essentially took it over formally, if you will, back in 2019. We saw all the videos and all of the uh the I don't know conversations of people and tear gas and what have you. Why why did China move when it did? Because in 1997, Hong Kong was essentially a British city. I mean, very British. They all spoke Cantonese. They didn't speak Mandarin. And then China opened up the borders and then over the course of 20 25 years you had more and more mainland Chinese move work what have you into Hong Kong. So by 2019 the entire city of Hong Kong was essentially nothing more than just another Chinese city. It was predominantly Hanchinese. When they moved in it was very easy because all of the Chinese were already there. They assimilated Hong Kong over 25 years. That does not exist with Taiwan. If Beijing were to move in, there would be no way that they would be able to maintain the peace or to be able to digest, if you will, that piece of land. And Beijing knows this. They're they are here very much focused, in my estimation, on a longer term outlook. 50 years of status quo and in 50 years the lead the the two leaders of the Taiwan and Beijing will get together and say, "How do we move forward next?" If status quo can be achieved and the fourth communicate I think will basically have the United States supporting this that's where directionally I am expecting things to go.

>> Okay. Um, well, this will be super fascinating and and this has already been I want to say even maybe I not not that I'm any great thinker, but I think I might have brought this up a couple weeks ago in kind of a a spitballing discussion of, you know, could there be some some discussions going on behind the scenes with the US and China? And also um also thought maybe there's some going on with with the US and Russia too where it's a little bit of like all right look, you know, we're not going to announce this publicly anytime soon, but if if this is what you want in Taiwan and this is what we want over here in the Western Hemisphere where you've got some presence,

>> why don't you agree to get out of here? We'll eventually let you take that over here. Russia, you know, okay, stop the war. or maybe you can hold on to what you have right now in the Ukraine if we get other concessions out of you. And it is a little bit of a modern um redistricting, redrawing of of of the global map. Um I know you're not a Russian expert, so I'm not going to ask you to comment on that in any way, shape, or form. Um but again, I was sort of spitballing and it's interesting to hear that you think you as somebody who's really in the know thinks this may actually be going on here.

>> Um,

>> yep.

>> I I have heard from some other folks that I talk to that um there may be some other players in the in the Pacific that really might not be fans of that of that agreement. Uh, Japan is one that immediately comes to mind. Um, but I'll save that for a different day. Um, I'm looking at the time here. U, we've gone an hour. If you don't mind, I'd love to go just a little bit longer because we've got some big media questions to tackle and obviously we're not going to get through everything here because this is a massive topic.

>> Um, but Peter, it's been so great to meet you and I hope that we can have you back on the program again in the future to dig into some of these other topics we're not going to get a chance to get into today, but okay. So, um, again, let's let's go back to Luke Goman.

>> Um so uh you know in his mind uh there's a there's a grand game going on and um a lot of it revolves around um uh global debt sovereign global debt and um you know America has had a a um an exorbitant privilege with being the world's reserve currency and it's been able to um use that privilege to print up an awful lot of paper uh and get a lot of real things in return for it. And um you know, other countries are beginning to say, okay, maybe that doesn't work out so great for me.

Um and you know, part of this game requires foreign company countries to own US debt. And a number of them are beginning to say, well, okay, wait a minute. Um A, that makes me more dependent on you. and B, if you're continuing to to print away, the value of this debt, the purchasing power actually goes down over time. So, I don't necessarily want to be super dependent upon that system. And of course, the US sort of freaked out a lot of uh the rest of the world by um freezing Russia's assets when Russia invaded Ukraine and countries have said, "Hey, look, I don't want to be holding your assets if I turn out to be on your on your your bad your naughty list."

>> So, I need to find ways to try to start insulating myself from that. So, we've seen things like, you know, the coalition of the bricks be put together and that coalition has said, "Hey, you know, we want to try to create a competitor to the Swift network so we're not as dependent upon um Western platforms for doing commerce and sending money around the world."

>> Um

>> Luke seems to to think that um an important component of whatever comes out of this future uh is is going to be some sort of return in some way, shape or form to currencies or trade being tied to hard assets, probably most notably gold going forward. Um he's got the phrase, which I'm sure you've heard him say, you know, these

>> these big sovereign indebted nations uh need to get busy inflating or get busy dying.

And um China has been a real leader um in accumulating gold for whatever reasons, right? And I think Luke, you know, is saying, "Hey, I I think they're doing it because at some point um it's it's

>> something that's either going to back the REN in some way, shape or form, you know, or it's just going to be a superior uh asset to hold instead of US debt."

>> Um

>> right.

>> What What is your perspective on all of this? I would agree. Uh this is the first distinction that I want to make. China is not in my estimation looking to undermine the US dollar system. They're not in they're not sitting in some dark smoke fil room crafting these plans to try and undermine the dollar. It's not in China's best interest. China right now benefits greatly. And and just to clarify, it sounds like you're saying they don't have aspirations to have the remnant be the one be the the next reserve currency of the world. Is is that part of what you're saying?

>> Absolutely. I I totally agree with that concept because to be the if you're going to be the actual reserve currency uh or reserve asset really then you need to open up your capital accounts. China doesn't want to do that. And I think this has been the biggest missing point and that is China wants to be able to have all parties and this goes back to my point about bilateral trade relationships. We want you to be able to use whatever currency you want. Doesn't matter if it's a remn or the the Brazilian realale or you name it, use the US dollar. How is it settled? Now, what China does want to be able to do is create a risk mitigation facility. Meaning, the United States has been weaponizing the US dollar going all the way back to 2012. I mean, the Iran issue goes back to sanctions placed in 2012. It was beginning in 2012, 13 and 14 in that time period when China began taking very serious action to be able to remove itself as best as possible from the US dollar and the swift system and has made tremendous strides in that regard. The Shanghai International Gold Exchange was created in 2014. The Belt and Road Initiative was established in 2013. The belt and road initiative was a conduit to diversify foreign currency reserves held in US treasuries. China had so much money parked in US treasuries that they had no other alternative. And back then everybody said they had no alternative. And what was very interesting was between 1996 and 2013, China had been working with Russia already and with Central Asia to build rail lines and to build pipelines and to basically go with the whole Mckinder heartland strategy. 2013 it all of a sudden dawned we can do this globally. We can have a lot more impact with soft power globally. And we can use all of the money we have to be able to divest our US dollars and transfer not only away from those US treasuries but into hard assets like ports and rails and commodities and you name it. So you had that as the first push and then you had the issue of gold come in. What China is looking to do is to go to a gold settled standard. The bricks are not looking to create some sort of gold back currency. China is, let's be honest, China is trying to run the show in a way with the bricks group and a goldbacked I mean my personal belief is any overt even less than overt attempt to create a goldbacked currency would be viewed as an an act of war by Washington. M

>> so we don't want to go in that direction but let's go with gold settlement and gold settlement however is only possible through remmbb invoiced and settled trade and what you're what you've been seeing over the course of the last decade really over the last five years is more and more counterparties with China that are trading in invoiced and settled R&B And then China is saying you can now take that R&B and you can settle it in physical gold and transport it wherever you wish. Now most people will then say to me, "Yeah, but that means all the gold is sitting in the Shanghai vault." Okay, that is definitely an issue that counterparties would be concerned with. So what's China doing right now is they're creating something called the Golden Road. I always find fascinating how China comes up with these names. And the golden road is

>> funny how how their America's naming is now very similar. We have golden everything under Trump. Yeah.

>> Right. But they're creating a um an integrated series of vaults across the globe. They've got one they just opened up in Hong Kong. They're going to move to Singapore. Uh originally they were going to set one up in Dubai. I'm not sure about that right now. But the whole concept is you settle and trade or you trade in remn. You final settle in gold. But this is not about undermining the United States. This is about making sure that other counterparties are not at risk of being cut off from a weaponized US dollar system. And then finally, China has already created again back in 2012 created an alternative to the Swift network called SIPs. Now, it's not really that prevalent right now. In fact, I believe SIPs even piggybacks on the Swift system to a certain extent. But where the where the I think importance of the SIP system comes in is between the Chinese banks. So ICBC Belgium versus ICBC Hong Kong or ICBC. So this is Industrial and Commercial Bank of China. They're all connected via SIPs. And let me make it very real for you, Adam. Uh I think this just came out yesterday. In 2025, the Azian nations, so this is Malaysia, Thailand, Indonesia, six or seven nations here regionally. In 2025, they settled 8.9 trillion remmbb trade in RMBB, not dollars. And that was a 50% increase over 2024. So you're seeing this already happen across various geographies globally. So when you hear all these stories about, oh, the United States is cutting China at the kneecaps in Iran and the Panama Canal and here and there, yeah, they're they're targeting China, but the sheer scope and depth that China has been able to build over the last 13 years now, um, is significant.

>> Okay. Um gosh, I you know I'm like wishing we had another hour or two to really dig into all this.

>> We can we can we can always circle back at another time. I'm not going

>> Okay, good. No, I I'm planning on doing so. Um just to be super clear, um I just want to make sure folks understand what a settlement currency is.

>> So essentially what you're saying is is I'm China. I do a bunch of trade with South Korea and um you know, you're buying billions of my stuff and I'm buying billions of your stuff and instead of sending payments for everything that's going on, we just kind of account for it all and then we say, "Okay, at the end of whatever period, let's just net it out. Oh, okay. looks like uh you know I bought a little bit more from you than you bought from me and so I'm I'm just going to pay you what I owe the difference right of what I owe you and that's going to be in this what they're hoping to do is that settlement is going to be in this new goldbacked R&B and you as the receiving party of this can either take it and hold it or you could say yeah you know what I just want to convert that into gold and have the gold in my name and you might be able to work with one of the golden rolled vaults or whatever if you don't want it stored in China. Is that pretty much how it works?

>> Uh yes, with one with one small distinction. It's not a gold back R&B. I want to make that distinction very clear. It's gold settled. Meaning if historically to give you the example, if China and Korea, South Korea as an example are trading historically within the last, you know, for the last 30 years or so, that trade would have been done in US dollars. And you're right, at the end of a given period, one of the two markets, let's say China, would have had excess US dollars from that trade. They would have taken that dollars and they would have put it into US treasuries.

>> So settlement would have been in dollars, but final settlement would be in US treasuries. Does that make sense?

>> Yep. Yeah. I end up with those dollars. I got to do something with them. Let me put them in treasuries. Got a little bit of yield. Yep.

>> Right. So now, as an example, uh let me use Indonesia because it's a better example. Indonesia and China trade. China's gonna say to Indonesia, "Look, we're going to go back and forth. We're gonna buy your oil." Right now, it's like 600, 700 barrels of oil that China buys from Indonesia. And then, let's say Indonesia has an agreement that we'll trade in R&B. And at the end, Indonesia has all this R&B left over. They then go to China and say, "Okay, we have all this R&B. We don't want to buy your bonds." And China says, "We don't want you to buy our bonds." But what you can do is you can buy physical gold in the Shanghai International Gold Market. So they go in and they buy the gold. Now the gold then sits in the Shanghai vault and can be transported if needed. Um and I think what is another wrinkle in all of this has been that this is just happening increasingly at the margins. I don't know if this has been formally concluded, but you're looking at even Australia, the Chinese are putting immense pressure on BHP to invoice R&B for iron or um trans shship shipments. So again, the whole idea is like you can do this, but then you don't need to buy our bonds. You just take your excess R&B and buy gold and we'll ship it down to you in Perth. So that's the approach that China's taking. And again, I need to stress this. It's about risk mitigation. The United States has weaponized and began in 2010, 2012, sorry, weaponized the dollar. And China recognized we can't put ourselves at risk. And let's not forget, Adam, in the global financial crisis of 2008, what did the United States do? They didn't do what every other market or economy had to do, which was restructure, austerity, everything else. They debaseed the currency. Right. Yeah.

>> In 2008, who had the largest holdings of US debt outside of the United States was China. Between their Treasury and their GSSE positions, that was when the decision was made by China that if America is going to debase once, they're going to do it again. And they began that process.

>> So, this has been ongoing for quite some time. And I I I'm desperately getting trying to get people to look more holistically over time at what has transpired rather than to be reactionary to the daytoday tribulations of what's happening on Twitter.

>> Yeah. Um what I'm taking from this is a lot of America's perceived threat from China in its I'll say ascendancy here or its strengthening here in many ways um are outputs of of own goals that America has made along the way. You're nodding as I'm saying this.

>> Yes.

>> Yeah. No, I I think you can I mean not to belittle the fact, but here's another good example is in uh 1998 1999 after the Asian financial crisis, China put a um a proposal through to the IMF to change the voting structure. Uh the voting structure was heavily skewed towards Europeans in the United States and the IMF board kind of kicked it around. didn't really do anything. And you know, China China was trying to work within the system to change the system. And it didn't work until around 2006 where the IMF finally said, "Look, we're going to do a two-year review." And in 2006, they did a two-year review. They came back and it was still like I think China went from like 3.4% to 3.6% voting rights, what have you. Long story short was finally they did a massive review in '08 that came out in 2010. um they made this major change in the voting structure of the IMF, China went from three to 6%. And then because the American regulations stipulate, any change to the voting structure needs to get voted on by Congress for approval. Congress didn't take that up until 2015 and then finally they changed the IMF voting structures. So, you know, you can see that there has been this ongoing process to try and I wouldn't say keep China down. It's the wrong way. But look, a hegeimon is going to hedge them. And that's what the United States has done.

>> China, however, has just taken it upon their own to try and build what they can to mitigate the risks of that hegemonic tendency.

>> Yeah. And in many ways is what I've sort of heard you say at the beginning of this conversation is they've kind of out capitalized us on a lot of this.

>> Um

>> yeah.

>> Um okay. So look, there's a bunch of topics I didn't get a chance to get to. Um one of which was, you know, we talked a lot about China's strengths. You know, what are its liabilities? What are its weaknesses? Um things like demographics. Uh things like debt. uh China had a had a

>> a pretty low debt balance sheet in 2008. It's much more indebted now. You very briefly mentioned the collapse of the real estate industry there. That one I don't know if it still is, but it was the I understood the world's biggest asset at that point in time.

>> Um so that's very deflationary. It's been trying to claw out of that for the past couple years.

>> Um

>> correct.

>> Okay. So there's there's lots of things there that uh as you said at the very beginning um you know China is trying to affect this this transition to a sustainable growth future but it might not get there for a whole bunch of reasons. So anyways maybe next time you're on we can dig more into that.

>> Um I didn't get a chance to ask you too much about um you know, the the US's latest moves in Venezuela, Iran and whatnot. You know, some see that as 4D chess to to really try to, you know, put China back on its heels a little bit more. And certainly China China takes 90% of Iran's oil, although I think I've seen that Iran's oil, China's total oil inputs, that the oil from Iran is a relatively small percentage, although I'm sure at the margin it it's meaningful.

>> Um I don't want to short change this topic, so let's not even really get into it this time around. We'll we'll save it for next time. But but there's that element to to get into as well. Let me ask you this last big question before we wrap it up, which is um you know, your firm is there providing strategic advisory services to firms that want to do business in China, etc.

>> What investment themes are you seeing right now around China that are worth putting on people's radars?

>> Look, I think indirectly gold is probably what most people will feel comfortable with. Uh, I'm again, and here I'm not going to I'm not I'm I'm clearly being subjective, not objective whatsoever. When the economist says that China is uninvestable, that's normally a pretty good time to sort of take the other side of that that right. And they said that a few years ago and and essentially bottom tick pretty well.

>> Our outlook when we've talked to clients is we do believe that China is going to outperform developed markets over the course of the next year or so.

>> Um but the the short answer to make it very clear is I think all investors should have some exposure to China.

>> Now maybe that's Hong Kong. Maybe it's a bit easier for people to but Hong Kong is not China from an asset class perspective. But I think you know a couple of percent maybe you don't have to go crazy. I think it's the world's second largest economy that's going through a period of transition. You're right, it has a ton of systematic issues like leverage and population and demographics and whatever the case might be.

>> Uh but for again the past 30 years, I have heard economists and their outlook for China and it was going to collapse. I think the vast majority of economists that are looking at China right now, something is missing from their calculus. I don't know what it is, but I think it would behoove investors, smart money. These are the people we deal with. Like my job today is talking to people who are saying, "What am I missing?" Peter, you're there on the ground. All of our clients are institutional.

>> um they're not necessarily going to be making investment decisions off of the advice that I give them, but they want to know what is happening. I had one client say, "Peter, you're just my China insurance. I get a sense of what's going on, and I'll take that. I'll be your insurance policy, but the overall goal is to say, have some exposure. You don't have to go crazy.

>> Um and then just revisit."

>> So, you know, an ETF maybe, it's up to say, but gold, look, I think gold clearly is is the right play when it comes to China at least,

>> because you see them continuing to lean into, look, we're going to build this gold link settlement currency and therefore we're going to need a crap ton of more gold in the future.

>> Um

>> yes. And then I could also suggest that perhaps part of the fourth communicate that I was mentioning before and this is highly speculative but you know it is in the best interest of both the United States and China right now to have a higher price of gold. It would help domestically for the Chinese and for the United States they could then you know as Luke likes to say revalue their gold up to god knows what and then have the uh the Federal Reserve print the difference. So, you know, you could see it move in that direction, but especially given events that have transpired over the course of the last what 10 days in the Middle East, people are going to be I think investors institutional and otherwise are going to be more inclined to have a a bearer asset that has no third party risk, and that's gold.

>> China included.

>> Um, you just echoed something that I talked about with Luke.

>> Um for decades here in the west um precious metals investors have have felt very strongly that the government had an incentive to suppress the gold price that it was sort of mirror of truth that that would show people how the purchasing power of the dollar was being devalued by monetary policy.

>> But now it seems, you know, from from Luke's perspective, as you just said, it's now in the US government's interest to have a higher gold price. So, this has flipped and you're saying clearly it sounds like it's in China's interest to have a higher gold price as well. So, now we're kind of taking, you know, what used to be a liability and we've jiu-jitsued it now into an asset for those that own gold.

>> I am in complete agreement with that and and again I think that there are conversations underway between Washington and Beijing and whether this is a line item in a communique or just a gentleman's agreement, I think that there is an understanding by the two parties.

>> All right. Um, Peter, I I can't thank you enough. Uh, and I'm really going to have to thank Luke for making this introduction.

>> A super fascinating discussion.

>> Um, and like I said, I feel like we we really just scratched at the surface of it. So, lots more to talk about in the future. I'll thank you in advance uh for coming back on the program here. Okay.

>> Um for folks that would like to follow you and your work though in between now and your next appearance on this channel, where should they go?

>> Um I don't really do a lot.

>> Um I I dabble on Substack, so maybe I'll I'll throw you can throw the Substack up there, but again, I I probably will ru the day for saying this. For me, it's about having conversations with people who are genuinely interested in discussing China without the emotion. So, I mean, I'm more than happy to give you my email address, and if people want to have a conversation, they can reach out to me directly.

>> Okay. Um, and so I'll put up your Substack URL on the screen when I edit this. Should I also put up the URL for your company's website, Zben Advisors, if you know, there are a lot of professionals that watch this this show. if if they want to get strategic strategic consulting services in China, is that the kind of person who should reach out to you?

>> Oh yeah. I mean, I would say over the course of the last year since the trade war, uh the clientele that we operate with has expanded in terms of scope. It's not just sort of in the financial field. It's it's manufacturers, you name it. People just truly trying to get a genuine sense of what's going on here locally.

>> Okay. Um All right. Well, look, um, like I said, Peter, I'll put up those links when I edit this, folks. The links will be in the description below this video as well.

>> Um Peter, this this has been just absolutely great. Folks, please do two things

>> to thank Peter for me. One, let him know how much you appreciated him by hitting the like button and then clicking on the subscribe button below if you haven't already, as well as that little bell icon right next to him.

>> um definitely let them know in the comments section below um if there is as much uh feedback um to have you come back on soon, Peter, as I as I'm sure there's going to be.

>> Um folks, I'll I'll definitely swiftly react to that.

>> Um Peter, if you can just hold on with me for one second here. So, Peter gave us a couple things to think of, you know, owning gold, uh buying some exposure to Chinese equities, maybe through an ETF.

>> But if you'd like to get some additional guidance in your portfolio about how to, you know, potentially add um exposure to either of those asset classes or anything else that that Peter's talked about here,

>> um first and foremost, I I recommend you get that guidance from a good professional financial adviser. Importantly, one that takes into account the things that Peter has talked about here. If you've got a good one who's already doing that for you, great. Stick with them. But if you don't or you'd like a second opinion from when it meets that criteria, consider scheduling a free consultation with one of the financial advisory firms that thoughtful money endorses. These are the firms you see with me on this channel week in and week out. To schedule one of those consultations, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out.

>> Uh again, these are totally free. There's no commitments involved. It's just a service these firms offer to help as many investors as they can. Lastly, if you're watching this video when it goes live, and I'm trying to remember exactly when it's going to go live, but um you have uh at most a week left to buy your ticket before Thoughtful Money's spring online conference, which amongst its amazing faculty is featuring Luke Groman, the gentleman that put Peter on our radar here.

>> Um so, if you haven't signed up for that uh yet, um run don't walk to thoughtfulmoney.com/conference. Buy your ticket right now.

>> Um, if you are a premium subscriber to our Substack, uh, look at the, uh, at your email inbox. You'll see the code that I sent you you can use to get an additional $50 off of whatever the current ticket price is. If you act fast, you might be able to get our last chance to save price before it goes to full price on the last week before the conference.

>> Um, and uh, the conference itself is going to be on Saturday, March 21st.

>> Uh, don't worry if you can't watch live because everybody who buys a ticket is going to get a replay video of the entire event, all the presentations, all the live Q&A.

>> Uh, I will spare you all going through the amazing faculty we have here, but it's the best we've ever had.

>> Over 11 hours of content. It's a massive amount of content here.

>> Uh, but you can get all that at the thoughtful.com/conference URL that I mentioned.

>> Um, Peter, thank you again so much. This has been so wonderful to meet you. I look forward to continuing this relationship hopefully far into the future. Do you have any just parting bits of advice for the viewers here? Most of them are Americans, most of them are Westerners, but not all.

>> Um, most of them are just looking to make uh, you know, to build um, financial security and hopefully prosperity for themselves and their families. and they just, you know, they they don't want to um lose it all either because of the ill effects of terrible, you know, uh if the trade wars go south between the US and China or um some, you know, horrible geopolitical things happen because these nations can't see eye to eye or whatnot.

>> At least that's their fears.

>> Um what sort of parting council would you have to them?

>> Two things. First, China is not the enemy, but China is the apex competitive threat.

>> Uh, and the United States needs to to do what it can to be able to to step up to that to that threat.

>> The second one, and maybe maybe you can, you know, the audience can do me a favor. Anytime you come across somebody who's out there pontificating about China, ask a very simple question of that person if you can and ask them when was the last time you were in China? Because I do strongly believe that the primary disconnect that exists exists because there has been zero travel between the United States and China over the course of the last five years. It'll give you a real insight because you gota you got to be here to really understand what's going on. You don't know everything, but you know a lot more.

>> Okay. Uh very wise words.

>> Um I'm going to ask you this last question just because it's popped to my mind as you were talking here.

>> Um, and I'm not trying to sell sunshine, so tell me if if this is too polyianaish, but is is one of the potential, you know, maybe positive outcomes from all this um that that both nations compete in a way that that forces each to to become its best self and and and maximize its own prosperity? And the analogy in my mind because I grew up in in New England um is the competition between Larry Bird and Magic Johnson, right? I mean, two greats in the game and they were they were each other's apex competitor.

>> But that competition brought out the best in each other and and kind of everybody if you were a fan of basketball, you loved that rivalry because you got, you know, just some fantastic years between the the Celtics and the Lakers as they vied for transcendency. And it was, you know, bird versus magic every year trying to say, "How do I get better than that bastard, right?"

>> Um, and so it was an aggressive competition, but it kind of made everybody better in the end. Is is there a potential for that type of outcome here?

>> I believe so. In in fact, that's sort of and I I think that's a great way to have that question phrased, Adam. That's what I'm striving for. Again, as I said, China's not the enemy. And if you look at the two countries, they're still very symbiotically aligned. There's there's ways to be able to work together. It, however, requires the United States to be comfortable being uncomfortable. You can't have this relationship where the United States is still going to say, "Yes, but we're, as we call in Chinese, the DACA, the big brother, and you have to do what we say." I believe this is what China wants. I think China views the relationship, again, I don't believe China's ultimate aim is for hegemony and to replace the United States. There is a big world and I think it's far big enough to allow for both the United States and China to operate. So I do believe China's interest is there contrary to what most so-called China experts would have you believe.

>> Um and I think the United States and I think the Trump administration recognizes that and are trying to move in that direction.

>> All right. Well, look, I'm going to cross my fingers and hope uh that that type of future is the one that plays out here. U Peter, again, can't thank you enough.

>> Um,

>> thank you.

>> Just uh really look forward to talking with you more often here.

>> Okay, I'm around.

>> All right, and everybody else, thanks so much for watching.