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  1. #1
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    Default Geo Political Risk

    There is a significant risk to the economy, apart from COVID which could occur in October or November. China may take a calculated risk and finally resolve its long standing claim on Taiwan and annex it . Should this occur, they may believe that, with the current inept leadership of Donald Trump that no meaningful response from the USA would be forthcoming. If this occurs trade with China, would come to a standstill. New Zealand exports would be severely impacted, the NZ dollar would plummet. The risk of this happening is, I believe, much higher than we may think

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    All that needs to be done is send President Xi a biography of General Galtieri a former fellow despot who used foreign quarrels to busy giddy minds.

    He needs to read the Wikipedia page on the "Highway of Death" battle of the Gulf War to understand what happens to dictators who gravitate from being beastly to his fellow citizens to being beastly to other countries and makes the Americans cross.

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    It may happen, I wont rule it out completely (that China annexes Taiwan soon) but I personally don't think its at that stage just yet. China has a lot of geopolitical tensions these days and I think they will stagger their way through them successively.
    It is probable that tensions will rise in the lead up to the US elections, but I would think that China will wait to see if Trump is re-elected , or who else they have to deal with before taking any seriously confrontational military action.

    But I also think that if they push him Trump might retaliate whereas your view was that he wouldn't do so, so we clearly have different ways of seeing things.
    Last edited by peat; 07-07-2020 at 01:04 PM.
    For clarity, nothing I say is advice....

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    I also believe that an even bigger risk may come from a miscalculation to do with China's actions on the South China Sea. There is talk that China may shortly declare an Air Defence Identification Zone, a further step to them after setting up 2 Administrative Zones recently, cementing their illegal claim under previous UNCLOS determinations, to the South China Sea via their nine-dash border line. These actions have frightened Australia this month into upping their 10 year defence budgets by 40% ! - and they have announced they are buying long range Air, Sea and Ground launched missiles off the US Navy initially to extend their offensive capability. NZ could be drawn into a war against China at almost any time with the tensions between China and the US rapidly escalating. Of course NZ is basically defenceless with no Air Strike Wing and only 2 frigates, poorly armed and basically cannon fodder in a naval contest. Of course we would be in a US or Australian led squadron but that is small comfort.

    https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12344494

    https://asiatimes.com/2020/07/us-china-inch-closer-towards-a-conflict-at-sea/

    https://www.aspistrategist.org.au/au...nce%20paradigm
    Last edited by Davexl; 07-07-2020 at 07:22 PM.
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    Relax- NZ will not be wanted in any squadron - our Navy would be a liability. Previously we had just been asked to do patrolling in unrelated areas to allow US/UK etc to send better equipped ships to action
    Quote Originally Posted by Davexl View Post
    I also believe that an even bigger risk may come from a miscalculation to do with China's actions on the South China Sea. There is talk that China may shortly declare an Air Defence Identification Zone, a further step to them after setting up 2 Administrative Zones recently, cementing their illegal claim under previous UNCLOS determinations, to the South China Sea via their nine-dash border line. These actions have frightened Australia this month into upping their 10 year defence budgets by 40% ! - and they have announced they are buying long range Air, Sea and Ground launched missiles off the US Navy initially to extend their offensive capability. NZ could be drawn into a war against China at almost any time with the tensions between China and the US rapidly escalating. Of course NZ is basically defenceless with no Air Strike Wing and only 2 frigates, poorly armed and basically cannon fodder in a naval contest. Of course we would be in a US or Australian led squadron but that is small comfort.

    https://www.nzherald.co.nz/world/new...ectid=12344494

  6. #6
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    Extremely unlikely that China would try to force the Taiwan issue by armed force anytime soon. The communist party values internal peace and harmony above all else and for good reason. A humiliating loss would as Marilyn alludes to bring the downfall of the regime. As could a major economic recession. China like much of the world has got used to endless growth.

    The time for appeasement of the CCP is however over. The CCP under Xi is a very different beast to the party under previous leaders, authoritarian, rule-breaking, aggressive and anti-foreigner. The 10 year transition of power since removed by now dictator Xi used to work relatively well in diffusing and regularly transferring power. Now all look to Xi with all the problems that entails, COVID-19 just one devastating example.

    Another bad mistake Xi has made is breaking the Hong Kong agreement and imposing their internal security apparatus upon it. No one will trust them now and the HKers will not go quietly into the night. Unlike Tibetans that were victims of an earlier CCP takeover, HKers are highly educated and integrated into the global community and China itself.

    Previous CCP leaders would simply have waited the remaining 26 years for the HK agreement to lapse. Strategic patience used to be a great Chinese asset. Xi's impatience sadly will bring more mistakes. A much wiser Chinese leader said it best:

    China is not a superpower, nor will she ever seek to be one... If one day China should change her color and turn into a superpower, if she too should play the tyrant in the world, and everywhere subject others to her bullying, aggression and exploitation, the people of the world should identify her as social-imperialist, expose it, oppose it and work together with the Chinese people to overthrow it.

    - Deng Xiaoping

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    Deng Xiaoping also introduced the limited term to ensure the focus was on the party and country rather than the leader. Or words to that effect. And look what's Xi has done.
    Its unlikely they have invested all that money in South China Sea to not reap a reward. That said they are (probably) too smart to provoke war. They may just pick their time to deepen their interests there....perhaps now while US and UK are weak and Aus still relies on China to buy its rather limited range of exports. Taiwan is indeed an interesting beast though, they have serious weaponry (unlike HK).

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    Interesting posts dibble and Jaa.

    China has historically played a very long game. The last 20 years has seen China incrementally adopt Western Capitalism to suit its own purposes, but at some point (perhaps already reached) it will be difficult to control the cultural changes that flow from it.

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    An interesting thread but shouldn't it be in the Off Market Discussions forum, rather than the NZX forum which is for instruments listed on the NZX.

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    Quote Originally Posted by dibble View Post
    Deng Xiaoping also introduced the limited term to ensure the focus was on the party and country rather than the leader. Or words to that effect. And look what's Xi has done.
    Its unlikely they have invested all that money in South China Sea to not reap a reward. That said they are (probably) too smart to provoke war. They may just pick their time to deepen their interests there....perhaps now while US and UK are weak and Aus still relies on China to buy its rather limited range of exports. Taiwan is indeed an interesting beast though, they have serious weaponry (unlike HK).
    While playing these games, China is also heavily involved in building enduring relationships with other nation-states via trade and the supply of aid. They are also investing heavily in military campaigns in the cyber realm, however they may be spreading themselves too thin.

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    Quote Originally Posted by Zaphod View Post
    While playing these games, China is also heavily involved in building enduring relationships with other nation-states via trade and the supply of aid.
    True. They are also quietly "buying" votes on various international forums/fora (UN etc), usually linked to trade and aid, and doing a pretty good job of getting their way without too much bother.

    Agree with Macduffy though, not really the right place for the thread. Is it possible to move a thread??

  12. #12
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    Quote Originally Posted by dibble View Post
    True. They are also quietly "buying" votes on various international forums/fora (UN etc), usually linked to trade and aid, and doing a pretty good job of getting their way without too much bother.

    Agree with Macduffy though, not really the right place for the thread. Is it possible to move a thread??
    It may not be the right forum, however a sudden conflict involving China and Taiwan would definitely impact the NZX do you not think??

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    I'm hearing things though the grapevine that the australian economy is going to be in difficulty soon. They started a trade war with china a few months ago and the second covid lockdown in Victoria is an added challenge for them.

    Our main risk is to do with trade and hopefully we can do more of the digital services exports in the US/Europe. food is something everyone needs and our competition is mainly in south america this time of year which is doing poorly. Premium prices for our food exports maybe?
    Last edited by Panda-NZ-; 08-07-2020 at 10:13 AM.

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    Quote Originally Posted by Panda-NZ- View Post
    I'm hearing things though the grapevine that the australian economy is going to be in difficulty soon. They started a trade war with china a few months ago and the second covid lockdown in victoria is an added challenge for them.

    Our main risk is to do with trade and hopefully we can do more of the digital services exports in the US/Europe. food is something everyone needs and our competition is mainly in south america this time of year which is doing poorly. Premium prices for our food exports maybe?
    Sure are... some pretty strong retoric coming out against the Ozzies.

    China were going to impose additional 'inspections' on every ship of iron ore, likely a move to covertly play the trade war game. They pulled back when COVID starting to hit Brazil, at the momment they need ozzy for the ore (but expect that to change). At the moment they dont have an alternative trade partner to coking coal (neither India nor the US would be interested in selling to them). Find some big reserves in Africa and they're in real trouble...

  15. #15
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    Quote Originally Posted by Panda-NZ- View Post
    I'm hearing things though the grapevine that the australian economy is going to be in difficulty soon. They started a trade war with china a few months ago and the second covid lockdown in Victoria is an added challenge for them.
    Australia didn't start a trade war, they called for an international investigation into the origins of COVID-19. Something that could save 100,000s of lives. This is standard practice anywhere else in the world but such an investigation would show up at the very least the incompetency of CCP rule.

    China responded with its now typical "glass heart" petulance with a cyber-attack and the kind of non-tariff trade barriers they specialise in. e.g. increased inspections, delayed permits, delayed/cancelled orders, pressure on Australian citizens in China etc. They have done this with NZ too in the past with our milk exports, turning boats around in mid ocean and other nonsense. Time for the world to require free trade reciprocity with China.

    Such petulance and tone-deafness was also on display in their harassment of and forced quarantine of African citizens in Guangdong and criticism of the French public health response to COVID-19 and is losing China any support and friends it once had.

    I have even heard calls for a "Made in the Free World" campaign.
    Last edited by Jaa; 08-07-2020 at 03:42 PM.

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    Something that arrived in my inbox that people might be interested in:

    The CSIS Southeast Asia Program and Asia Maritime Transparency Initiative are pleased to present the Tenth Annual South China Sea Conference: Keynote and Session One on Tuesday, July 14, 2020. This monthly webinar series will provide opportunities for in-depth discussion and analysis of developments in the South China Sea over the past year and potential paths forward. This session will feature a keynote address by Assistant Secretary of State David R. Stilwell, followed by a panel discussion on the state of play in the South China Sea in 2020.



    https://mailchi.mp/csis.org/webinar-...2?e=11d5ef38a9

    Also something potentially major from the US on the South China Sea situation to take notice of this week:

    https://www.bloomberg.com/news/artic...ons-escalating

    or if you can't access it try this: https://www.japantimes.co.jp/news/20.../#.XwuoVeexVPY

    Cheers people...
    Last edited by Davexl; 13-07-2020 at 01:07 PM.
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  17. #17
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    Fortifying the South China Sea allows China to cut oil supplies to South Korea, Taiwan, and Japan at will. It also denies the US effective use of the Philippines as a military base for aerial operations against China.

    Effectively, China is militarily securing it's eastern borders thus facilitating its westward orientation.

  18. #18
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    https://www.theguardian.com/world/2020/jul/14/south-china-sea-us-says-beijings-claims-to-disputed-area-completely-unlawful

    https://www.reuters.com/article/us-usa-china-maritime/u-s-rejects-chinas-claims-in-south-china-sea-adding-to-tensions-idUSKCN24E2OU


    South China Sea-US says Beijings claims to disputed area Completely-Unlawful

    Now that the US has formally taken sides with ASEANs recent statements on the South China Sea, watch the tensions ratchet up even further

    Also this day: https://asiatimes.com/2020/07/philip...uth-china-sea/ the Philippines reiterates its 2016 arbitral tribunal ruling at The Hague against its (China's) expansive claims to the South China Sea

    And Japan confirms the same issue: https://www.reuters.com/article/us-j...-idUSKCN24F040

    while the US confirms it is "in business" still despite Coronavirus and not intimidated by Chinas threats against its carriers:
    https://asiatimes.com/2020/07/us-nav...killer-threat/
    Last edited by Davexl; 14-07-2020 at 09:34 PM.
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  19. #19
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    Quote Originally Posted by Davexl View Post
    https://www.theguardian.com/world/2020/jul/14/south-china-sea-us-says-beijings-claims-to-disputed-area-completely-unlawful

    https://www.reuters.com/article/us-usa-china-maritime/u-s-rejects-chinas-claims-in-south-china-sea-adding-to-tensions-idUSKCN24E2OU


    South China Sea-US says Beijings claims to disputed area Completely-Unlawful

    Now that the US has formally taken sides with ASEANs recent statements on the South China Sea, watch the tensions ratchet up even further
    I’m not a fan of sabre rattling, but I think the world has been sitting on its hands while China has been thrusting its influence in to many parts of the globe. If China wants to be a world player then it should be held to account.

    An interesting podcast that discusses America’s “too trusting” stance is available here: https://freakonomics.com/podcast/covid-19-china/

  20. #20
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    I have always seen the CCP's ridiculous and entirely fictional nine dash line as something similar to Imperial Japan's Greater East Asia Co-Prosperity Sphere in the 1930s. There's an oily reason why it dips so close to the Bruneian and Malaysian coasts.

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