Wealth Warrior Sneak Peek: Sanctions Don't Bite; Dragons Might

Wealth Warrior Sneak Peek: Sanctions Don't Bite; Dragons Might

Written by Jason Simpkins
Posted September 19, 2020

Today we're bringing you a sneak peek at The Wealth Warrior from Jason Simpkins.

China has used any chance it can to advance itself as a regional and global superpower, all while rapidly expanding its military capacity.

With the U.S. focused inwards due to the pandemic and some of the worst political fighting in generations, it is pushing towards its goals as fast as it ever has.

Read on for an in-depth analysis from Jason.

Take care,

Adam English
Editor, Outsider Club



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Earlier this summer, China said it would impose sanctions on Lockheed Martin after the U.S. State Department approved a deal to sell $620 million worth of arms to the quasi-independent island of Taiwan.

Now, Lockheed has finalized another deal, this time for fighter jets, that will total tens of billions of dollars.

Policymakers in Beijing are furious. And as the recent move on Hong Kong suggests, they're dead set on regaining control of the renegade province. 

The only real question is: Will the U.S. back its decades-old pledge and go to war to combat China's aggression?

Locked and Loaded

Last week, Lockheed Martin announced a massive $62 billion contract to produce 90 new F-16 fighter jets for foreign allies. 

No doubt, the company's freshly-minted (and massively expensive) F-35 gets all the headlines and is the driving force behind the company's growth strategy. 

But the F-16 Falcon quietly remains the world's most popular fighter jet. 

F-16

Some 2,280 F-16 Falcons are in use by air forces around the globe. That's more than twice as many as the world's next-most-popular fighter, the Sukhoi 27.

And now that figure is poised to increase by 66.

Taiwan will be acquiring more than two-thirds of the total (Morocco is getting the other 24), so it's safe to say Taipei will be paying more than $40 billion.

Taiwan already has 142 F-16s in service so this will take them up to 208 by the end of 2026.

For Lockheed's part, it'll see something in the neighborhood of $7.1 billion in profit from this deal over the next 10 years just for the sale, and then more for maintenance and upgrades. 

In fact, a Taiwanese planemaker this week is opening a maintenance center for F-16 fighter jets in collaboration with Lockheed Martin. That facility will upgrade Taiwan’s 142 F-16A/B Block 20 fighter jets to the more advanced Vipers.

It's set to be inaugurated by President Tsai Ing-wen on Saturday.

Now, let's talk about her for a second...

Trump and Tsai 

In April 2019, I did a full write-up on Tsai.

She was initially elected in 2016, making her Taiwan's first female president. She was then re-elected in a January landslide.

Tsai 2

In short, she, in contrast to her predecessor, is seeking to reduce China's influence and pave the way for independence — something China simply won't abide. 

Immediately, she began courting U.S. assistance, and she's clearly been successful. 

In addition to landing several monster arms deals for her nation, Tsai also received Health and Human Services Secretary Alex Azar — the most senior official to visit Taiwan in 40 years — earlier this month.

Ostensibly, Azar was there to praise Taiwan's pandemic response, as the country with a population of 24 million managed to keep case numbers below 500 with just 7 deaths.

But it's also no coincidence that the visit coincided with this massive arms deal crossing the finish line. It was a clear signal to China about where the United States stands. 

It wasn't the first, either. 

In 2016, President Trump took a congratulatory phone call from Tsai, making him the first president to speak to a Taiwanese leader since 1979. 

That, too, infuriated Beijing, as did the subsequent trade war, and repeated freedom of navigation missions conducted by the U.S. Navy in the South China Sea. 

Now, China has its ways of making its displeasure known. And it's certainly done that.

However, China's aggression over the past few years goes far beyond simple tit-for-tat provocations.

China is pushing forward with an aggressive campaign to displace the United States as the world's unquestioned superpower.

And in service of that objective, in just the past few years, China has...

  • Launched large-scale cyberattacks against rival governments and private companies, stealing vital information. 
  • Attempted to seize control of the South China Sea — a body of water it shares with half a dozen neighboring countries.
  • Sent its navy and air force to harass those same neighbors, instigating conflicts with Taiwan, Japan, Vietnam, Malaysia, and others.
  • Gotten in a number of scrapes with India on their contested border.
  • Ramped up global propaganda campaigns. 
  • Brutally cracked down on its own citizens — jailing dissidents and forcing Muslims into concentration camps.
  • Repeatedly attempted to intimidate U.S. forces in the region — going so far as to attack some with laser weapons.
  • And most recently (and tellingly) reabsorbed Hong Kong, eradicating the liberal bastion's autonomy.

Retaking Taiwan

There has never been any mystery about what China wants. They've been saying it explicitly for decades...

They want to make the Chinese nation whole again — to subdue local opposition in Xinjiang and Tibet, to control the South China Sea, to regain Hong Kong, and to “reunite” Taiwan with the mainland under the Chinese Communist Party’s rule.

These are fixed goals, and most of the boxes have already been checked.

As we've talked about before, China has built a series of artificial islands in the South China Sea that now host airfields, naval bases, and missile batteries. In defiance of all international law, it's simply militarizing the entire area to the point that no one (including the United States) will be able to drive it out.

China has overwhelmed Hong Kong, eradicating its independence with ruthless authority.

And Beijing has cracked down on its minority populations, driving them into concentration camps in an effort to dehumanize, disenfranchise, and ultimately eliminate any who don't conform to the government's central authority.

So that really only leaves one thing: Taiwan.

And that's next on the list.

That's why President Xi Jinping was named "president for life." It's so he can finish the job he's started.

Again, this isn't conjecture on my part. He's explicitly said China is preparing for war.

“We must explore ways to train and to prepare for war when epidemic control efforts are getting normalized,” Xi declared. “We must hasten to step up preparations for armed warfare, carry out real-combat military training with flexibility, and to comprehensively enhance our army’s abilities to perform military missions.”

And that rhetoric has been backed up by increased military spending and technological development.

Indeed, China’s latest defense budget increased by 6.6% from $167 billion to $178 billion — the fifth-largest annual increase in China’s modern history.

The fact that China, the epicenter of the Coronavirus pandemic, is spending more money on defense and choosing to cut costs elsewhere should tell you something about its intentions.

And if actions speak louder than words, consider that China's air force and navy have come to menace Taiwan on at least 10 separate occasions since mid-January.

The Chinese People's Liberation Army (PLA) has been holding consecutive, concentrated military drills in all four major Chinese sea regions since mid-August.

Retired Admiral James Winnefeld Jr., who served as vice-chairman of the Joint Chiefs of Staff from 2011 to 2015, and Michael Morell, who twice served as acting

CIA director in the Obama administration, have said that China could retake Taiwan in just three days and the United States would be too disorganized and unprepared to stop it — especially if we were mired in a political/legal dispute over who actually won the 2020 presidential election.

Other officials have voiced concern, as well.

“We are concerned by increasing, opportunistic activity by the People’s Republic of China to coerce its neighbors and press its unlawful maritime claims in the South China Sea, while the region and the world is focused on addressing the Covid-19 pandemic,” Defense Secretary Mark Esper recently warned.

And U.S. Navy Capt. Michael Kafka told CNN: “The People’s Republic of China is attempting to use the regional focus on COVID to assertively advance its own interests.”

Again, this isn't just rhetoric.

Having reabsorbed Hong Kong, China has completely abandoned the "One Nation, Two Systems" charade.

Tsai knows what's coming. You should too.

Fight on,

Editor, The Wealth Warrior


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