Billionaire CALLED OUT on China! Threw Down His Napkin and Walked Out of the Room
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It seems to me that if you're Xi Jinping, an absolute dictator, you try and do something like that and just don't care about whatever impact it would have on the Chinese people. You try to hope that China can come out with some kind of technology like AI that makes it the dominant player and save the economy that way. Correct. Or...

You just throw it all out and launch a war on Taiwan. Well, I mean, you could also try to dupe, you know, Wall Street into pumping...

I don't know if that's like really more money on the table. I mean, I know, I think they're going to try. I don't know if they can. Could you could try that, but the institutional resistance now, um, is pretty, uh, it's at, it's at the highest level it's ever been. There's no new duping going on. There certainly won't be passive flow set up. There will be discussions of those passive flows being severed. And the institutional community now realizes that, uh,

having to discount no audits, Xi Jinping risk, the potential risk of war, no rule of law. All those things are pretty bad. And if you're going to make a, just think about this, if you're an institutional investor, if you're especially a pension, if you're an ERISA-based investor, if you're a pension plan manager, you're held to a higher standard. It's called the prudent manual. So your sense of fiduciary duty and obligation is actually much higher than

And so now that you know everything you know, and if your option is we can invest where there is a rule of law, where there is growth, where there is respect for human rights, where you don't have to discount the leader deciding, well, post-secondary education, take that sector out. We're not doing what she did. If you're going to invest in another nation where you have to discount all those things, your implicit necessary rate of return has to be much higher. And if you invested in China's largest index,

Let's call it 18 years ago, you invested in the Shanghai, Shenzhen 300. They've grown their GDP 505% in 18 years. How have you done if you plowed all your money into their stock market over that same period of time? You've lost a third of your money. So let me get this straight. We invested in Chinese companies 18 years ago, and the Chinese government grew their economy 500%. And I still got my ass whipped? Like, how is that even possible?

So you have to you need a return an expected return much higher to discount all those risks and that message has been given across the US today and These institutional managers. I mean, of course, there are a few that aren't they don't feel that way but writ large That's how they feel. So the BlackRock kind of triple your investments in China. That's not really the game anymore My god

Um, some people are impossible and they're able to stop. Uh, you know, I've, I had this, um, I had this like out of body experience with, um, with Schwarzman. Um,

I got a call and said, I need you to be at a lunch in New York City. And it was from the Secretary of State. I said, Roger that. I'll be there. And you get there and it's a roundtable and they're, you know, your name cards. And I see that my name card is next to Schwarzman.

and i'm thinking oh this is going to be a fun lunch and the secretary of state opened the lunch and he said um i'd like to have each person here introduce themselves and give two minutes on where you think the u.s china relationship is today and where and and he went clockwise so he intentionally hit schwartzman before he hit me and um when he was talking schwartzman said you know china's misunderstood now mind you this is um

This is in Trump won at the end. So this is the end of Trump won the administration back then. So put your put your take your mind space back to that day. And Schwarzman said, you know, China is just being misunderstood. He says, you know, the hardliners are running the places, but you really need to listen to the reformers. The reformers are the up and comers.

They're coming through. And we just what we need to do is meet them halfway. We need to not be so punitive on China. We need to meet them halfway and welcome them in some more. And then the secretary looked at me and said, you know, Kyle, and I said, all right, well, I'm just curious. How do we show? So we should just let them take half a million Uyghurs and put in concentration camps.

Should we let them just steal 200 billion a year instead of 400 billion of IPM? I'm curious how we meet them halfway. They took his napkin out of his lap, put on the table and he left, not engaged in the conversation. And by the way, yes, I went at him. But like, let's talk about these gorillas that are in the room. Right. Because Wall Street's never forced to talk about them.

Right. They just they're they're chasing the next the next RMB or shekel or whatever they're chasing in China at the end of the year. You know, it's just like pot at the end of this rainbow of one point four billion people. They can't wait to figure out how to harness the profits there. And what China is so good at is creating cheerleaders like Ray Dalio, like Trump.

Schwartzman like, you know, they give special access as a way to create someone that says, oh, you just don't understand. Like I'm making all this money. I'm doing amazingly well. So when you create cheerleaders like that, you create champions that are going to go lobby for you in the U S and then everybody else gets fleeced. So you create a few people that you allow to win and

so that everybody else loses. And that's China's genius at doing that. - It's almost like a pyramid shape. - It's genius because you know what I'm talking about. Special access to a market is analogous to bribery, right? If you're the only one in with a license,

well that's interesting you know um and if you're the only firm that's able to build a chinese presence because they happen to like you but not everyone else and then you become the the the soothsayer i mean people listen to you because you're a billionaire and you're and you run a big company and well hell if it's working for you it's got to work for me and that's just not the case yeah even the idea of the 1.4 billion people like they may they may not have 1.4 billion people

That's true. And, you know, almost a billion of them are still in abject poverty. Yep.

I mean, I think I'm kind of encouraged hearing you say this because those people are often the loudest voices in, you know, when you look at American media, what they're reporting on, like China financially, yeah, Bloomberg, whatever. Reuters had a story yesterday related to the PBOC thing where it was talking about how, oh, because of the U.S.'s chaotic tariff, you know, management or whatever, like investors are fleeing the dollar and going to,

You know the euro and Asian assets and then there are people who are like that's not true at all But like why is Reuters saying this you know, it's so it's just it's hard to gauge. What's actually happening Yeah, I what I think is really important especially about the dollar You know the people that that take you back and say didn't we learn anything in Smoot-Hawley? Okay, like throw the flag

In Smoot-Hawley days, we were a surplus-driven economy. We ran a trade surplus with every single counterparty that we had. We were not a deficit-producing nation. So invariably, if you're going to impose tariffs when you're running surpluses, it is going to decimate your economy. If you are the largest deficit-producing country in the world from a balance of trade perspective and you institute tariffs, it will certainly help your economy.

And in this case, it's analogous to a currency devaluation. So we knew when we said we're going to go 10% across the board with everyone because we ran a trillion two in a trade deficit on trade. And we run about a $250 billion services surplus. So let's say we're just running about a trillion dollars of trade deficits. Our move for 10% across the board, we knew would drop the dollar 10%, which is about what happens.

We knew that that was a de facto currency devaluation. And what that's going to do from an external revenue perspective is bring in about $300 billion in an external revenue account. So that will help us with our fiscal deficit a little bit. So I believe Trump's not great at communicating what I just communicated to you. Yeah.

That is certainly the plan. And then with China, it's a very different situation because they are a state actor acting uneconomically to put some of our businesses out of business and we have to defend ourselves there. So that's a different bucket of tariffs. But the across the board tariff was a 10 percent currency movement and we knew it was coming.

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