The ongoing evolution of Asia

China continues to pursue its ambition of being not just one of the world’s largest economies, but one of its largest powers. The passing of the new Hong Kong security law — which happened in secret, bypassing Hong Kong’s own legislature, and the content of which was only revealed one day before it went into effect (absolutely not coincidentally going into effect on the anniversary of the territories return to Chinese rule) — tells you everything you need to know about China’s intent. Meanwhile, Xi Jinping is telling European leaders that, “Our two major economies [China’s and Europe’s] should play the role as dual engines of the world economy, drive the recovery of global economy, jointly support a scientific and orderly resumption of work and production, strengthen macroeconomic policy coordination, and keep global industrial and supply chains stable and smooth,” while simultaneously conducting cyber attacks on European hospitals in the middle of the global pandemic.

The question now is, how is the world going to deal with this new China? Necessarily, responses from around the world will be different, but India is currently showing a surprising degree of statesmanship and leadership in how they’re handling China. As discussed a couple of weeks ago, the border skirmish in Tibet was all about sending a message, not just to India, but to all of Southeast Asia. India has taken a few actions since then to show they’re not going to be intimidated by China, while simultaneously making sure that physical warfare doesn’t escalate. First, they’ve blocked 59 Chinese apps, including TikTok and WeChat. Second, they’ve ordered their customs people to slow-roll Chinese imports. The blocking of the apps may have the most immediate and interesting side effects. India is a huge market, and has a huge amount of software talent. There are now several immediate holes to be filled (e.g., India is TikTok’s largest external market, with 200 million daily active users — you can bet there will be an Indian TikTok now).

Also, this illustrates the problem with stock picking and market timing. If you’re a US adult and see the teens obsessed with TikTok, and take a position in ByteDance (TikTok’s owner), you’re probably not paying attention to border skirmishes in Tibet. Going forward, it’s going to be worth watching how both governments (in particular the UK vs. the EU, now that they’re no longer the same) and corporations handle this (WhatsApp has temporarily suspended responding to HK law enforcement requests for users’ data). China continues to pursue its ambition of being not just one of the world’s largest economies, but one of its largest powers.

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Chris Richardson has strong opinions on just about everything. Just ask.