The Only Contest between the US and China That Matters

Two teams walked onto the stage in front of a packed Hong Kong stadium.

The first team was from China, the second from North America. Looking at each player you would think they were all under the 25. But they had been training for years in their living rooms, just for this moment.

It was one of the biggest eSports (competitive computer game) contests of last year.

And it was China that came out ahead.

China and the US are like twins. They don’t just compete when it comes to sports of all genres. They compete with each other on everything. Politically, militarily, economically, technologically…you name it, China and the US both want to be number one.

Just look at how trade tensions between the two countries have escalated. Trump believes China is taking him for a ride. China believes they’re an integral part of global trade and should benefit for it.

But there’s really only one competition between the two that really matters. And it will determine who will be the world superpower of tomorrow. And it’s not video games…

A new contender

Decades ago, the US cared little about China. The only reason they engaged with them in the 1970s was to form ties to undermine the Soviet Union.

The Wilson Centre explains:

How China may orient itself to the rest of the world was not given much thought at that time, but American leaders generally assumed that as China integrated more with the outside world, it would increasingly define its interests along with those of the international community.

For decades, China’s geopolitical weakness meant that any question of whether or not China’s views aligned with those of the liberal international order were largely academic.

However, starting in the 1990s as China’s rise became more noticeable and of great consequence, American leaders began to call for China to act in greater accordance with the liberal international order. Most famously, in 2005, Deputy Secretary of State Robert Zoellick called on China to act as a “responsible stakeholder” that contributes to addressing international issues in accordance with the liberal order we had established after World War II. 

As we enter 2018, the US cares a lot about anything China does.

China’s plan to build a massive network of infrastructure to increase trade has the US worried.

Restrictive Chinese policies towards foreign businesses wanting to sell and operate in China is just one reason Trump believes trade between the two is unfair. China’s technological development is forcing the US, in many areas, to play catch up.

As you’d imagine, countries are deciding whether they’re team China or team US as their contest heats up. Pew Research says places like Latin America and the Middle East are team China, while Europe and Asia-Pacific are team America. But this might not have been that hard to guess.

Money Morning 2-05-18

Source: Pew Research

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This could just be the beginning of the contest between China and the US, according to the Wilson Centre. ‘2018 is likely to see the outbreak of explicit competition between China and the United States across multiple fronts.

But to me, the only contest that really matters is the one of technology.

Technology is China’s best opportunity

If you read yesterday’s Money Morning, you’ll know I firmly believe China has a good chance of becoming the world’s superpower. But to do so, they’ll first have to become a world technology leader.

As The New York Times wrote earlier this year:

China, under President Xi Jinping, has launched an ambitious plan to dominate mobile technology, supercomputers, artificial intelligence and other cutting-edge industries, putting huge resources behind an effort that it considers crucial to the country’s government, military and economy. Beijing wants to build its own technology champions and is encouraging companies to acquire the engineering, expertise and intellectual property from big rivals in the United States and elsewhere.

‘…The fight over technology is redefining the rules of engagement in an era when national security and economic power are closely intertwined.

It’s why the US has blocked China from buying US telecom companies and semiconductor firms. They don’t want China’s tech industry to speed ahead any more than it already is.

But it could already be too late to stop them. With large, dominant tech companies of their own and a population hungry for data, connectivity and innovation, the tech dragon of the East might soon topple the famed Silicon Valley.

And that will be their key to becoming the world’s undisputed economic power. 

The opportunity for you is to invest in innovative companies which stand to gain from China’s exploding tech scene. Because there’s little chance this tech race between China and the US will slow down anytime soon.

There could be huge returns up for grabs. Of course, you’ll have to pick the right stocks to profit. It’s why I’ve launched a brand new advisory service to do exactly that.

It’s called Wealth Eruption.

Like the name suggests, we look for stocks on the verge of erupting. Right now, there are five ASX listed stocks I believe could climb significantly higher on the back of China. One in particular could climb as high as 2,880%.

To find out these names and more, click here.

Regards,

Härje Ronngard,
Editor, Money Morning


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read. Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.


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