Category Archives: foreign policy

Leverage

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Since so many American businesses—Apple, Alphabet, the NBA, to name a few—put their individual fiscal game ahead of American values, especially regarding Hong Kong and its citizens ongoing struggle for their own liberties (which just happen to lie at the core of our values), here are some thoughts on the fiscal value of Hong Kong to the People’s Republic of China.

Since 1997, mainland Chinese companies have raised $335 billion by floating in Hong Kong, tapping a broader range of shareholders than they could onshore.
…since the Hong Kong dollar is pegged to its US equivalent, and the city has no capital controls, a listing there can generate hard currency for foreign takeovers and investments. It would be harder to use a Shanghai stock sale for the same goal.

And [emphasis added]

For global investors, Shanghai and Shenzhen have become more accessible. But investors typically prefer Hong Kong’s legal protections, and they have other concerns about mainland markets, including the difficulties of moving money out.

And

Hong Kong is by far the largest offshore center for bond sales by Chinese firms. Companies can borrow for longer than they can onshore and, crucially, can raise funds in hard currency….

And

Hong Kong serves as the main offshore hub for yuan loans, bonds, and trading.

Interestingly [emphasis added],

When it comes to dollar bonds, big state-backed banks and industrial companies even prefer to sell these in Hong Kong…. US deals would be overseen by American regulators and would require greater disclosure.

And

Hong Kong is a preferred location for Chinese and international financiers or business people to conduct transactions because it has a Western-style legal and regulatory system that is seen as fair and nonpolitical.

In sum,

…Hong Kong stands out from its mainland rivals for its rule of law, competent regulators, low taxes, free movement of capital, and use of English.
Neither Shanghai nor [the People’s Republic of] China’s free-trade zones “can really compete with what Hong Kong is and does….”
…
Hong Kong is still [the People’s Republic of] China’s financial window on the world, and the rest of the world’s financial window on [the PRC].

RTWT; there’s more.

Sadly, too many of our major corporations don’t have the moral underpinnings to exercise that leverage.  Apple’s Tim Cook would rather the prestige of sitting as Chairman of a major university in Beijing.  Alphabet would rather work on censorable search engines for the PRC and help develop AI tools for the PRC’s government and People’s Liberation Army than it would work with our own defense establishment on such tools or refuse to support PRC censorship.  And we’ve seen, just in last couple of weeks, how the NBA as a whole, and its individual team staffs and players think their pocket books are more important than the rights of others.

Warren’s Assault on Hydrocarbons

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Progressive-Democratic Party Presidential candidate and Senator Elizabeth Warren (D, MA) want so ban new leases for oil and gas drilling offshore and on Federal lands, and she wants to ban fracking altogether. This assault on our national energy underpinnings would have far-reaching negative outcomes.

  • domestic natural-gas prices would jump to somewhere between $9 and $15 per million BTUs from last Friday’s $2.32
  • oil would rise to the $80-to-$85 range and could run to $150 during market shocks from last Friday’s $53.78
  • entire oil-field service companies would become obsolete
  • pipeline owners would suffer without replenishment, as existing wells peter out

Think how such price increases for basic transportation and such job losses would hammer “the little guy” that Warren pretends to so want to protect from Evil Big Business.

And some far-reaching positive outcomes: for Canada, Russia, and OPEC.

  • Canadian shale drillers
  • big global operators for which higher energy prices would offset losses on US assets.
  • Russia: our ability to free our friends and allies from dependence on Russian oil and gas
  • Russia and OPEC: the potential for political and economic dominance by these two from their enhanced ability to commit energy blackmail (both of which have demonstrated histories of engaging in such blackmail)—sources of market shocks

Here is a core part of Warren’s foreign policy.

Threat

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Turkey’s President Recep Erdoğan is telling us and Europe to sit down and shut up about his invasion of Kurdish Syria, or he’ll loose millions of Syrian refugees on Europe. He especially objects to the way the EU is characterization his invasion:

Hey EU, get your act together. If you try to describe our current operation as an occupation, our task will be simple. We will open the gates and send 3.6 million refugees your way.

The irony here is simple. If Europe actually respected Union and national borders, this would be a toothless threat.

Of course, the irony will be lost on our Progressive-Democrats.

Courage Under Fire

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Republic of China’s President Tsai Ing-wen, against the background of the People’s Republic of China President Xi Jinping’s abuse of Hong Kong citizens through his Hong Kong police, his functional abrogation of the solemnly agreed treaty with Great Britain governing the handover of Hong Kong to the PRC, and his parallel functional reneging on his government’s “one country, two systems” pretense vis-à-vis that city, has spoken against the PRC’s pretense of that toward her nation.

That framework, she noted, has brought Hong Kong to the brink of disorder.

Speaking from the presidential office building in the center of Taipei, Tsai accused China of using that same program to threaten Taiwan’s “regional peace and stability.”

Tsai went on:

We must stand up in defense. Rejection of “one country, two systems” is the biggest consensus among Taiwan’s 23 million people across parties and positions.
Over 70 years, we’ve endured all sorts of severe challenges, and not only do none of these challenges knock us down, they make us stronger and more resolute. One offensive after another, they’ve not made Taiwanese people yield.

This comes in the face of increasing international isolation inflicted on the RoC by the PRC.

Would that some American athletes and athletic associations had the same courage, especially given their far greater relative power and their complete safety from PRC actions.

Hong Kong Police out of Control?

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Or is it President Xi Jinping’s staff member, Hong Kong Chief Executive Carrie Lam, who’s out of control? Or has she simply lost control?

First, the police shot, at point blank range, an 18-yr-old student (and arrested him for his role in the shooting), during the then-latest round of violence that Lam’s police have been provoking with their approved-thug attacks, water cannon, pepper spray, cudgels, brandished firearms, and then shooting those firearms into the air.

Then, Lam made a classic despotic move: banning facemasks during public gatherings of three or more folks (imagine getting fewer than that at a pedestrian crosswalk).  She even invoked a British colonial law to rationalize that ban.  In response to that latest attack on freedom, Hong Kong citizens protested in their tens of thousands again.

And one of Lam’s policemen—who wasn’t even in uniform—shot a 14-yr-old child.  Then arrested him for rioting and assaulting police. Apparently, it really is illegal in Xi’s/Lam’s Hong Kong to interfere with a police bullet making its lawful rounds.