How China is Influencing Your Spending
Chinese influence on the world stage is growing. That isn’t a secret.
Yes, there’s all the talk of trade wars, rapid growth, expansion into other countries, and advances in military technology. But there’s one aspect of the country’s growing influence that has largely been overlooked until recently.
You most likely heard about the story related to Daryl Morey, the general manager of the NBA’s Houston Rockets. He tweeted support for the Hong Kong protests and earned the ire of Beijing in the process. The story quickly dominated headlines, resulted in sponsorship cancellations, fractured business relationships between the league and China, and drew scrutiny from American politicians.
Before that story even cooled off, something similar happened in eSports. A popular player in the online collectible card game Hearthstone expressed support for protestors in his native Hong Kong during a post-game interview. The stream for the event was abruptly cut short, the player was banned from competition for one year, and his prize money was taken back by Blizzard, the game’s developer.
This caused an uproar in the gaming community. Some believed that the punishment was too heavy-handed. Others accused Blizzard of kowtowing to Beijing in order to appease the government and save any future business relationships with the country.
This, too, dominated news headlines, led to protests, and drew scrutiny from American lawmakers.
Florida Senator Marco Rubio had this to say about the incident:
“Recognize what’s happening here. People who don’t live in #China must either self censor or face dismissal & suspensions. China using access to market as leverage to crush free speech globally. Implications of this will be felt long after everyone in U.S. politics today is gone.”
The backlash caused Blizzard to reduce the penalties against the player, but the damage was done to the company’s reputation in the eyes of many American consumers. The same could be said about the NBA incident. If nothing else, it caused many people to open their eyes to China’s growing influence on consumer markets in addition to all the other areas where it had been making gains in the past few decades.
The thing is, this isn’t the first time this has happened. It’s only the first time it became headline news. Other companies that have run afoul of Beijing’s government include Marriott hotels, Delta Airlines, and clothing retailer Zara. These incidents happened after the government saw wording on these companies' websites and in their emails that suggested Chinese territories were independent.
In short, the government is hanging its population of nearly 1.5 billion potential consumers over the heads of these companies. It’s doing that to influence how they talk to their audiences. It’s using potential future revenue to get companies to fall in line with how the country wants to be perceived throughout the world.
It clashes with the tenets of free speech valued by many countries, putting companies that come from those countries in tight spots.
But as we’ve seen with the companies named above, they’ll readily choose the bottom line over any perceived political loyalty to their home countries.
That speaks volumes to China’s growing economic power in addition to the other areas where it’s making inroads. This is something every investor should be paying attention to.
What It All Comes Down To
Whether you agree with what China does or not, the reality is that it’s happening. It will only continue from here as the country grows its economy in its bid to become a world superpower.
We’ve talked in the past about how it’s developing new military technology. We’ve mentioned in these pages the steps Beijing is taking to have its currency replace the dollar.
But now, on top of shaping its image through pressuring western companies, there’s another way that China is seeking to put itself at the top of the world pecking order.
It’s stocking up on gold.
The yellow metal has been climbing in price in the face of an emerging bull market. The stockpiling of gold is something central banks all over the world have been doing, but China has been among the leaders. In the ongoing trade war, the country wants to try and get away from the dollar as much as possible. But this is part of a larger trend of countries and smart investors seeking a haven that will hold value during times of economic instability.
And it’s through that gold buying that China will be able to further fashion itself as a main player on the world stage. Its influence will be felt for decades to come.
But you can benefit from the gold frenzy, too.
The bull market is still in the early stages, so there’s plenty of time to take advantage. You just have to know what companies to look out for.
Gold is accelerating as everything else slows down. Make sure you catch it before it’s gone.
Keep your eyes open,
Contributing Editor, Outsider Club
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