Analyst: Key signs of coming China war are financial

FPI / July 20, 2023


After outlining the financial signals of the Chinese Communist Party’s preparations for war, an analyst said the key to prevent the invasion of Taiwan is for the U.S. government to prepare severe financial sanctions against the communist regime in Beijing.

In 2017, Xi Jinping was dubbed “chairman of everything” after he put himself in charge of economic, propaganda and other major functions. That reversed a consensus for the ruling inner circle to avoid power struggles by sharing decision-making. / Li Tao / Xinhua via AP, File

“I think it’s highly likely he (Chinese leader Xi Jinping) invades Taiwan,” J. Kyle Bass, a hedge fund manager and board member at the Hudson Institute’s China Center, said in a speech on July 12.

As it takes clear steps to prepare to invade Taiwan, China has also taken steps in recent months to insulate its dollars holdings from U.S. sanctions such as those imposed after Russia invaded Ukraine, Bass said.

“U.S. capital markets are the deepest, most liquid markets in the world and also currently have the highest interest rates in the developed world, China would be expected to be buying U.S. Treasury bills and bonds with said surpluses,” Bass said. “Instead, they have been selling.”

The communist regime in Beijing also recently took steps to cut off data from the West, including large amounts of economic information, which Bass said is a key sign that China is prepping for war.

China is also intentionally defaulting on dollar-denominated bonds, with an estimated 65% of China’s property developers’ $170 billion in bond holdings already in default, Bass said.

Beijing is also diversifying away from dollars to gold, announcing in April that it raised its holdings of gold by 8.09 tons to a current stockpile of 2,076 tons. Grain also is being stockpiled in anticipation of a coming conflict, Bass added.

“What I’m advocating for is — if 86% of cross-border settlement for all of China’s daily transactions are in dollars, we could hobble their economy if we press one button,” Bass said. “I’m not a military strategist or analyst. I’m a financial analyst. Looking at all the writing on what I call the great wall, it sure looks like it’s headed in one direction.”

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