To understand Trump´s China policy a good source is his former national adviser and mastermind Steve Bannon who designed the America First policy. Bannon thinks that all the former strategists had illusions in China. First, the decline oft the US and the rise of China was not natural law or law of history, but was man-made and can be changed. Secondly, China was a totalitarian system that had many economic weaknesses and ripped the USA of its economic power and deindustrialized it. Therefore the Asian pivot was necessary and an psychological and economic war against China. While Bannon claims that Trump wants only an economic and psychological and not a cybernetic military war against China, he in the end speaks of an ultimatum to the CCP to remove its military facilities on the reefs in the South Chinese Sea within 72 hours. Otherwise the US military would do it.
The devot interviewer of Steve Bannon is no no name in the USA. Kyle Bass is the founder of Haymann Capital which predicted the subprime mortgage real estate bubble 2008 and made a fortune by speculating against the market. Afterward Bass lost a lot of money in speculations in Argentine, Japan, Greece and bets on the Chinese yuan.
„Mr. Bass is the Founder and Chief Investment Officer of Hayman Capital Management, an investment manager of private funds focused on global event-driven opportunities.
Mr. Bass is a founding member of the Committee on the Present Danger: China. He is also Chairman of the Board of The Rule of Law Foundation (https://rolfoundation.org). Mr. Bass is the former Chair of the Risk Committee of the Board of Directors of the University of Texas Investment Management Company (UTIMCO), which manages approximately $45 billion. Mr. Bass has testified as an expert witness before the U.S. House of Representatives, U.S. Senate, and the Financial Crisis Inquiry Commission. In 2015, Bass was recognized as one of the Top 25 Most Influential People in the Global Patent Market as named by Intellectual Asset Management magazine. Mr. Bass has lectured on global economics at various universities, including Columbia, Harvard, Stanford, UC Berkeley, University of Chicago, University of Texas, and the University of Virginia. Mr. Bass was the recipient of the 2019 Foreign Policy Association Medal for his responsible internationalism.
Before forming Hayman, Mr. Bass was a Managing Director at Legg Mason and a Senior Managing Director at Bear Stearns. He graduated from Texas Christian University with a degree in finance. Mr. Bass serves on the board of the Texas Department of Public Safety Foundation (www.texasdpsfoundation.org) and is on the advisory board of Predata, a machine learning and predicative analytics platform.
Kyle Bass is together with Steve Bannon member of the Committee for the Present Danger: China, whose members and mission are described on the website of the organization:
“The Committee on the Present Danger: China” is a wholly-independent and non-partisan effort to educate and inform American citizens and policymakers about the existential threats presented from the Peoples Republic of China under the misrule of the Chinese Communist Party. Its purpose is to explain these threats that range from: the PRC’s accelerating military buildup; its active information and political warfare that targets the American people and our business, political and media elites; cyber warfare; and, economic warfare.
The Committee takes no ideological point of view, rather it relies on the facts as reasonable people can understand them. Armed with these facts, the Committee believes Americans’ abundant common sense will prompt them to demand of their elected officials that all reasonable measures be taken to defend the United States, its vital economic interests, and the security of its citizens.
The Mission of the Committee
The mission of the “Committee on the Present Danger: China” is to help defend America through public education and advocacy against the full array of conventional and non-conventional dangers posed by the People’s Republic of China. As with the Soviet Union in the past, Communist China represents an existential and ideological threat to the United States and to the idea of freedom—one that requires a new American consensus regarding the policies and priorities required to defeat this threat. And for this purpose, it is necessary to bring to bear the collective skills, expertise and energies of a diverse group of experts on China, national security practitioners, human rights and religious freedom activists and others who have joined forces under the umbrella of the “Committee on Present Danger: China.”
Members of the Committee
|Brian Kennedy||Chairman; Former President, Claremont Institute; President of American Strategy Group|
|Frank Gaffney||Vice Chairman; Executive Chairman, Center for Security Policy; President and CEO, Save the Persecuted Christians|
|Hon. Steve Bannon||Former Chief Strategist to President Trump; former Chairman, Breitbart News|
|Hon. William Bennett||Former Secretary of Education; former Drug Czar|
|J. Kyle Bass||Co-Founder and Chief Executive Officer, Hayman Capital Management|
|Paul Berkowitz||Former Professional Staff Member Asia and the Pacific House Foreign Affairs Committee|
|Joseph Bosco, Esq.||Fellow at the Institute for Corea-American Studies (ICAS) and Institute for Taiwan-American Studies (ITAS); Former China Country Desk Officer in the Office of the Secretary of Defense|
|Lt. Gen. William “Jerry” Boykin, USA (Ret.)||Former Deputy Under Secretary of Defense for Intelligence; former Commander, Delta Force|
|José Cardenas||Former Acting Assistant Administrator of US AID; former NSC, State Department official|
|Hon. Robert Charles||Former Assistant Secretary of State; former White House official; naval intelligence officer|
|Amb. Henry Cooper||Former Director, Strategic Defense Initiative; former Ambassador, Defense and Space Talks|
|Dr. Anders Corr||Former civilian staff member for U.S. military intelligence on China; published editor|
|Hon. Kenneth DeGraffenreid||Former Special Assistant to the President for Intelligence|
|Hon. Paula DeSutter||Former Assistant Secretary of State for Verification, Compliance, and Implementation; Professional Staff Member, House Permanent Select Committee on Intelligence|
|Gunnery Sergeant Jessie Jane Duff, USMC (Ret.)||Military Advisor to the Committee on the Present Danger:China|
|Sam Faddis||Former CIA operations officer, published author, and national security commentator|
|Capt. James Fanell, USN (Ret.)||Former Director of Intelligence and Information Operations, U.S. Pacific Fleet|
|Richard Fisher||Senior Fellow, International Assessment and Strategy Center; Author, China’s Military Modernization: Building for Regional and Global Reach|
|Kevin Freeman, CFA||Author; host of Economic War Room with Kevin Freeman|
|Pastor/Dr. Bob Fu||Former Chinese dissident; President, China Aid|
|Rosemary Gibson||Senior Advisor, The Hastings Center; author, China Rx|
|Dr. Sasha Gong||Former Director, VOA Mandarin Desk, author film-maker|
|Chadwick R. Gore||Former Staff Director, European Subcommittee, House Foreign Affairs Committee; Fellow, Defense Forum Foundation|
|Lianchao Han||Visiting Fellow at the Hudson Institute; one of the founders and vice-president of the Independent Federation of Chinese Students and Scholars|
|Mark Helprin||Author and essayist; Senior Fellow, Claremont Institute|
|Rich Higgins||Senior Fellow, Unconstrained Analytics; former Program Manager, Irregular Warfare, Department of Defense|
|Peter Huessy||President of Geostrategic Analysis|
|Bradley Johnson||Former Senior Operations Officer and Chief of Station, Central Intelligence Agency; Founder and President, Americans for Intelligence Reform|
|Dr. Phillip Karber||President of the Potomac Foundation; former Director, Defense Department’s Strategic Concepts Development Center|
|Ratko Knezevic||Board Member and Chief Strategic Officer, Aiteo Group|
|Dr. Xiaoxu Sean Lin, PhD||Executive Director, Global Alliance Against Communist Disinformation and Propaganda, Microbiologist, Former US Army officer, GM of WQER-LP Radio, Survivor of Tiananmen Massacre|
|Reggie Littlejohn||Founder and President Women’s Rights Without Frontiers|
|Clare Lopez||Former Clandestine Service Officer, CIA|
|Jay Lucas||Founder and Chairman of The Lucas Group|
|Col. Robert Maness, USAF (Ret.)||Founder and owner of Iron Liberty Group LLC, host of The Rob Maness Show at LifeZette.com’s LZTV|
|Richard Manning||President, Americans for Limited Government|
|Rod Martin||Former Senior Advisor to the founder of Pay Pal; Founder and CEO of the Martin Organization|
|Hon. Tidal McCoy||Former Acting Secretary of the Air Force|
|Faith McDonnell||Director for the Religious Liberty Programs at the Institute on Religion and Democracy|
|Hon. Robert McEwen||Former Member of Congress from Ohio; Executive Director, Council for National Policy|
|Lt. Gen. Thomas McInerney, USAF (Ret.)||Former Assistant Chief of Staff, U.S. Air Force|
|Col. John Mills, USA (Ret.)||Former Director, Cybersecurity Policy, Strategy, and International Affairs, Office of the Secretary of Defense|
|Greg Mitchell, Esq||Co-Chairman, International Religious Freedom Roundtable|
|Stephen Mosher||President, Population Research Institute|
|Maura Moynihan||Tibet specialitst, former Radio Free Asia/Nepal bureau chief and columnist with The Asian Age|
|Chet Nagle||Former naval aviator and Defense Department official; former Director, Committee on the Present Danger|
|Benedict Peters||Businessman, entrepreneur and energy industry pioneer; CEO of Aiteo Group|
|Miles Prentice, Esq.||Attorney, entrepreneur|
|Dr. Peter Pry||Former CIA Senior Analyst Nuclear Weapons and Strategy; former Chief of Staff, Congressional EMP Commission; Executive Director, EMP Task Force on National and Homeland Security|
|Dr. Mark Schneider||Former Senior Executive Service official, Department of Defense; former Foreign Service Officer|
|Dr. Suzanne Scholte||Seoul Peace Prize Laureate; President, Defense Forum Foundation; Chair, North Korea Freedom Coalition|
|Mark Stokes||Executive Director, Project 2049 Institute|
|Dr. Bradley Thayer||Fellow at Harvard’s Kennedy School of Government and St. Antony’s College, Oxford|
|Hon. Ed Timperlake||Marine aviator, former Assistant Secretary, Department of Veterans Affairs|
|Dr. Arthur Waldron||Lauder Professor of International Relations, University of Pennsylvania|
|Dr. Michael Waller||Vice President for Government Relations, Center for Security Policy|
|Hon. Frank Wolf||Former Member of Congress|
|Hon. R. James Woolsey, Esq||Former Director of Central Intelligence; former Under Secretary of the Navy|
|Dr. Jianli Yang||Former Chinese dissident; founder of the Foundation for China in the 21st Century|
|Lt. Col. James Zumwalt, USMC (Ret.)||Marine Infantry Officer, Vietnam Veteran, Author|
Kyle Bass is also Chairman of Chinese oligarch dissident Guo Wengui´s organization Rule of Law Foundation:
- To permit the people of China to live under a national system based on the rule of law, independent of the political system of the People’s Republic of China (“China”).
- To expose corruption, obstruction, illegality, brutality, false imprisonment, excessive sentencing,harassment, and inhumanity pervasive in the political, legal, business and financial systems of China.
· Core Values
- To practice high ethical standards of integrity and accountability;
- To bring justice to the people in China;
- To protect and assist individuals victimized in China, particularly those penalized for speaking out against injustice; and
- To promote the freedoms of speech, the press, to congregate, to freely own private property, and religion; and create general public oversight of government activities. „
After Chinese exile oligarch Guo Wengui made the prognosis in the video with Kyle Bass that China will abolish the Hongkong dollar in order to internationalize the Yuan and chakllenge the dollar, Kyle Bass now speculates against the Hongkong dollar:
„Kyle Bass called the housing crash. Now he’s launching a new fund that will reportedly use 200-times leverage to bet on a Hong Kong currency collapse.
- Kyle Bass is creating a high-risk bet that Hong Kong’s currency will break free of its peg to the US dollar, Bloomberg reported Tuesday.
- The founder of Hayman Capital Management has already shorted the currency for more than a year and now plans to use options contracts with 200-times leverage to bet the peg will collapse in 18 months.
- The connection — officially set at 7.80 Hong Kong dollars to a US dollar — has been targeted by investors for decades but remains sturdy.
- Should a combination of coronavirus fallout, anti-government protests, and economic recession break the peg, Bass and his investors stand to print massive gains. If not, his clients will lose all the cash they raised.
- Visit the Business Insider homepage for more stories.
Kyle Bass is stepping up his bearishness toward Hong Kong and making a high-risk bet that its currency’s peg to the US dollar will crumble, Bloomberg reported Tuesday.
The founder of Hayman Capital Management has been shorting the currency for more than a year on the basis that Hong Kong’s exchange fund will lose control of the HKD-USD connection. Bass now plans to use options contracts with 200-times leverage to bet the currency pairing — officially set at 7.80 per US dollar — won’t last for the next 18 months, sources told Bloomberg.
Should the fund manager’s conviction stand true, his investors stand to make colossal gains. If he’s wrong, his clients lose their entire position.“
Steve Bannon and Kyle Bass as Guo Wengui see the Chinese financial system as the weak point of the CCP. A report in the South China Morning Post is also speaking of a coming dollar shortage of China:
„Could US sanctions over Hong Kong national security law worsen China’s US dollar shortage?
- Analysts say the proposed national security law for Hong Kong could mark the beginning of a process cutting China’s access to US dollars (…)
Either China has to ensure that dollars keep flowing or the globalised dollar world excludes China, which is equivalent of putting a ‘bamboo curtain’ around the country Michael Every
Michael Every, Asia-Pacific senior strategist at Rabobank, said if this were to happen, a key question would be whether large, globally interconnected Chinese banks conducting business with those individuals would then be subject to the same sanctions.
Depending on the exact nature of the sanctions, this could force other international financial institutions to limit or even sever their relationships with these Chinese banks, cutting them off from much of the global US dollar market.
“Either China has to ensure that dollars keep flowing or the globalised dollar world excludes China, which is equivalent of putting a ‘bamboo curtain’ around the country,” said Every, a play on the Cold War term the Iron Curtain that described the separation of the free capitalist world and the Communist states of the Soviet Union and eastern Europe.
The sanction threats from the US over the national security law proposal in Hong Kong come on top of existing concerns that the nation may be running short of US dollars, which is still the primary choice for international trade, investment and payments.
Hong Kong and the US: how much do they rely on each other economically?
The shock wave caused by the coronavirus has created an acute need for US dollars in China to pay for its massive imports and payments on
because of its sharply reduced ability to earn foreign exchange income through exports, tourism receipts and foreign direct investments.
That led to China recording a negative current account balance – the difference between current receipts from abroad and current payments overseas – in the first quarter of 2020, the first deficit since 2018 when Washington and Beijing began their trade war.
For most of the last decade, China’s current account posted large surpluses, a key source of US dollars, but it fell to a deficit of US$29.7 billion in the first quarter, down from a surplus of US$40.5 billion at the end of 2019, making China a net exporter of US dollars.
China’s US dollar shortage may still worsen further as the US-China trade war moves ahead, with many analysts expecting China to shift to a near zero trade balance over the medium term.
China’s trade position could deteriorate further if the governments of the US, Japan and the European Union succeed in luring manufacturing firms out of China and bringing the production of goods back to their respective home countries in response to supply chain disruptions stemming from the coronavirus.
In May, China posted a record
of US$62.93 billion, largely down to a sharp drop in imports due to weak domestic demand, but analysts warned this is unlikely to last, as exports deteriorate due to a sharp drop in orders from the US and Europe as the coronavirus outbreak ravages demand.
Partly to mitigate pressure from its US dollar shortage problem, and partly as a result of the terms of the US-China phase one trade deal, Beijing is pinning on hopes that its domestic financial reforms will boost portfolio investments inflows into its capital markets, especially through the Stock Connect and Bond Connect schemes for foreign investors.
Credit Suisse last week took control of its China securities joint venture, Credit Suisse Founder Securities, becoming the latest foreign bank to take advantage of Beijing’s relaxation of foreign ownership rules. It joins US banks JPMorgan, Goldman Sachs and Morgan Stanley, as well as Hong Kong’s HSBC, Switzerland’s UBS and Japan’s Nomura, as foreign majority owners of China-based securities firms.
Daniel Tabbush, founder of Asian bank research firm Tabbush Report, said the opportunities resulting from China’s huge market and growth potential would likely continue to entice foreign capital from large foreign financial institutions to do businesses in Hong Kong and China despite the uncertain political climate.
“There might be some moral suasion [from the US government], but if there’s a big deal to be done, Wall Street investment banks are unlikely to give up on the deal,” Tabbush said.
Last year, American banks played key roles in some of the biggest listings in Hong Kong, helping many Chinese firms raise foreign capital. US banks accounted for 19 per cent of investment banking fees booked in Hong Kong last year, or about US$309.8 million, according to data provider Refinitiv.
Beijing remains ‘very firm’ on national security law for Hong Kong, says city’s leader Carrie Lam
Beijing remains ‘very firm’ on national security law for Hong Kong, says city’s leader Carrie Lam
The US, however, has begun ratcheting up scrutiny over such flows to China. At the end of May, Trump instructed a presidential working group of top financial regulators to study “differing practices of Chinese companies listed on US markets with the goal of protecting American investors”, particularly their practice of not complying with the auditing requirements for other listed companies. The comments followed his executive order in early May banning the main government pension fund from investing in Chinese stocks.
Another source of US dollars for China comes from the money raised by Chinese firms in the US. In total, Chinese firms have raised over US$1 trillion by listing their shares on US stock exchanges. But a bill passed by the US Senate with broad bipartisan support would require Chinese firms to comply with US auditing requirements, as well as make disclosures about government shareholdings in their firms and members of the Communist Party in management positions, which could lead to delisting of Chinese firms that do not comply, potentially preventing other Chinese firms from pursuing initial public offerings in the US.
On the surface, China should be the last country in the world to worry about a US dollar shortage – over half its US$3.1 trillion worth of foreign exchange reserves, the world’s largest, are believed to be held in US dollar-denominated assets.
How long can China really sustain its economy [amid a US dollar shortage] by cutting back on its imports and depend on self-reliance? Kevin Lai
But analysts said the huge foreign reserves do not reflect the underlying stresses of the economy. The reserves are maintained only because authorities are clamping down on outbound remittances through draconian capital controls on its citizens, which do not support China’s integration into a globalised, US dollar-dominated world, said Rabobank’s Every.
Beijing’s reserve assets cannot readily be turned into cash in the case of a major financial shock nor can a significant amount be drawn for payment of foreign debt without hurting market confidence, said Kevin Lai, the chief economist at Daiwa Capital Markets.
A combined total of US$9.38 billion in US dollar loans and debt issued by Chinese entities will mature in June and US$10.66 billion in July alone, according to Refinitiv.
“How long can China really sustain its economy [amid a US dollar shortage] by cutting back on its imports and depend on self-reliance?” Lai said.
Similar to Kyle Bass, Brian Mc Carthy principal at Macrolens LLC claims that China will face a dollar shortage which will end its long growth phase for quite some time. According to the model of the impossible trinity ( open bank accounts-fixed exchange rate-domestic monetary control—three goals of which you can only achieve two of the three goals), China in his opinion could face three scenarios: The Japan scenario, the Argentine scenario or the North Korean scenario in which China would totally isolate itself which was unlikely as Xi Jinping wanted China to be a global power.
China tries to get out of the dollar trap by starting its digital currency which should in the longterm replace the US dollar:
„While the rest of the world is focused on recovering from the coronavirus pandemic, China has made another powerful move in the realm of global finance that could have major long-term geopolitical implications. The country is preparing to launch a pilot run of a central bank digital currency (CBDC), making the People’s Bank of China the first major central bank to translate its extensive digital currency efforts into a ready-to-use product. China began internal tests of its CBDC in early May, though the official launch is not expected until later this year.
As the first entrant in the CBDC market, China has a head start in a race that could change the future of money. Perhaps most noteworthy, a digital currency backed by the People’s Bank of China could play a key role in the country’s efforts to dethrone the U.S. dollar as the world’s primary reserve currency.(…)
A Long Way to Go
The renminbi may be garnering acceptance as a hard currency in parts of Asia and Africa, but it’s nowhere near replacing the dollar as the world’s default reserve currency. While China increases its share of global trade and builds trust in the RMB, several challenges to greater dominance remain. The country’s protectionist policies, tight control on capital flows, and lack of transparency around monetary policy hamper the RMB’s potential as a reserve currency.
Going forward, trust in the information flowing out of China will be key. A shift in the world’s default reserve currency will require enormous change. While global willingness to adopt such a change depends on many factors, it remains highly unlikely in the short term, given the massive financial disruptions caused by the coronavirus pandemic and suspicions around China’s initial response to the outbreak.“
Conclusion: For China there is no short- or even midterm escape from the US dollar. The China hawks and Kyle Bass by Hayman Capital are just trying to fight this economic war as they think that China is vulnerable and that they could start a financial crisis which will lead to a revolution or let the CCP be so afraid that it makes compromises according to America First.