| Dear Reader, A few months ago, SIC speaker and Over My Shoulder contributor Louis Gave wrote something in a Gavekal report that has stuck with me ever since: Even if Xi and President Donald Trump exit their G20 meetings singing Kumbaya, China is likely to keep planning for a long, drawn-out cold war with the US. In the report, Louis made the case that “from Beijing’s perspective, the US’s new China policy seems to be containment—technologically, economically, and geographically.” To save face and their economy, the Chinese will do whatever it takes. One near-term objective is dealing with China’s greatest weaknesses: its dependence on overseas supplies of technology, energy, and US dollars. I chose the deadly sin of Envy for today’s theme because of the rampant counterfeiting, industrial espionage, and intellectual property theft that keeps preventing a smooth relationship between the two countries. How can you trust someone who will steal, cheat, and lie to you over and over? I do agree that something needed to be done about this, but I’m not so sure the administration’s way of doing it is the right one. Needless to say, I’ve been watching the ongoing standoff between the US and China with some trepidation. This is a geopolitical powder keg, and both parties are holding lit matches. I’m glad my team and I could enlist Louis Gave, who is the co-founder and CEO of Hong Kong-based Gavekal Research, for one of our “7 Deadly Economic Sins” interviews. He is one of the most knowledgeable people I know on the Chinese markets and economy. Having his company’s headquarters on Beijing’s doorstep certainly doesn’t hurt either. Make sure you don’t miss this clip. To paraphrase the old saying: When a butterfly flaps its wings in China, it might cause a hurricane in the US and Europe. And I sure don’t want to be caught in that storm. Tomorrow’s guest is George Friedman, who will be talking about political polarization. Your wary of cold wars analyst, John Mauldin
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