Countries to watch in 2020:
Common Issues (worldwide):
On November 3, 2020, the USA will hold its presidential election. There will be a candidate running for the Democratic Party, Joe Biden, and a candidate for the Republican Party, current President Donald Trump. Whether you are a Democrat or a Republican, your vote will help determine America’s destiny. Whoever wins the presidency will have to confront the following issues facing America.
Observations / Possible Courses of Action:
Beginning in the early 1980‘s, American businesses started having their products produced overseas (primarily China) for a fraction of the US production cost. These goods (many of which were sub-standard in quality) were then shipped back into the USA to be resold at full retail prices. For example, if a pair of men’s shoes could be produced in a Chinese factory for $10, it was then resold in the USA for $100. Such a system has benefited American businesses (at the expense of American workers and consumers) and the Chinese economy (i.e. it enriches the factory owners, officers within the Red Army, and Chinese Communist Party officials who work in partnership with the business community). China has grown rich and powerful thanks in part to businessmen and businesswomen from many first-world countries, primarily the USA.
Possible Courses of Action:
Possible Courses of Actions:
Background: In 2017, there was an estimated 10.5 million illegal immigrants living in the USA: 62% overstayed their visa and 38% have crossed the border illegally. President Donald Trump has threatened to have mass deportations, but that may be easier said than done.
Possible Courses of Action:
Background: A Brief Summary of China’s Modern History
On October 1, 1949 the leader of China’s Communist Party, Mao Zedong, announced to the world the creation of the People’s Republic of China (PRC). Since then China has been ruled by the Communist Party.
There is absolutely no democracy permitted within China. Any criticism of the Communist Party is illegal.
Three important events have taken place within China that demonstrate the incredible sense of control that the Communist Party exerts over its people:
Misinformation: The new coronavirus (later nicknamed COVID-19) began in Wuhan, China in November 2019 which led to the first recorded case appearing on December 1, 2019. China’s ruling communist party has had problems at times even acknowledging that basic fact. They have begun to spread misinformation, at one point blaming the US military for bringing the coronavirus into Wuhan, and later even blaming Europe for spreading the virus and starting the pandemic.
WHO Involvement: Preliminary investigations have alleged that the communist government hid the severity of the new coronavirus not only from their own people but also from the World Health Organization (WHO) and the rest of the world.
SARS Epidemic: In 2003, according to the WHO, China’s communist leaders covered up the previous coronavirus pandemic (the SARS epidemic), which would give little credibility to any denial on the part of the current communist government in the COVID-19 crisis.
Compensation: For the first time, some Western countries such as the USA are pushing back and refusing to accept the misinformation issued by China’s communist government. The USA has even hinted at demanding that China reimburse the American government for all of its expenses in fighting COVID-19. This could easily amount to over $2.1 trillion US for the USA alone. If other countries follow suit, it could be very expensive for China.
Until recently, the communist government could promise foreign businessmen (and businesswomen) that it was safe to do business in China: as a western investor you could come and go without worry. That situation has now changed, as according to recent news media (e.g. CBC News) reports, western businessmen have begun to be arrested arbitrarily by China’s secret police, and effectively held for ransom.
If you are a businessman or businesswoman, you must consider the following before you decide to do business with China, particularly if you want to invest in its manufacturing sector (e.g. factories). The opportunity to make higher profits can come with a very high price, even affecting your safety and well-being such as:
Arbitrary Arrest: China has no individual rights. Unlike the USA, there is no Bill of Rights. The Chinese Communist Party decides what is right and wrong. No one can question their decisions nor their authority. If you are in China (e.g. conducting business), you or any members of your company or family can be subject to arbitrary arrest by Chinese secret police. Such an event happened to two Canadian businessmen who were in China both conducting routine business. On December 10, 2018, Michael Kovrig was arrested in Beijing and Michael Spavor was arrested in Dandong. Both were arbitrarily arrested, accused of breaking China’s national security laws, and thrown in prison where they have had no contact with the outside world since their arrest.
Asset Confiscation: Your company’s assets can be confiscated at any time without any recourse (i.e. the government can nationalize your company at any time).
Bribes: There have been ongoing allegations for years that foreign businesses will need to pay “administrative fees” (i.e. bribes) to conduct business in China. These fees are then paid to communist party officials, which enables that foreign company to undertake its business affairs. In 2017 a news media report stated that the typical annual salary of a communist party official was roughly $25,000 US; yet such communist party officials (or their families) are able to purchase luxury properties, particularly abroad.
Possible Future Criminal Charges: At some point in the future, if China does become a democracy, you could be charged by the new democratic Chinese government of “aiding and abetting” the communist regime. Even if that event does not happen for some time, the current communist regime could charge you with trying to bribe a government official (even though such a practice is apparently quite common). Corruption within the communist government is an ongoing issue for its leaders. The division between rich and poor is getting wider, and that does not look good for a so-called communist government (whose basis is supposed to be equality amongst everyone in society).
Poor Quality Control: The goods that your company wants manufactured in China will more than likely be of poor quality, as there is little quality control. For example, years ago when steel was imported into the USA from China it was found to be substandard, easily fracturing which made it a poor building material. Even products not manufactured such as fresh seafood have had quality control problems, riddled with contaminants such as antibiotics.
Health Concerns: If you spend time in China, your physical health can be comprised due to high levels of air and water pollution. The lack of environmental controls is part of the reason why China is able to cheaply manufacture products.
Former British Colony: Hong Kong used to be a colony of the British Empire. This city (and its surrounding territory) was returned to China in 1997 where it became a special administrative region, retaining a separate government and economic system from that of mainland China.
Wealthy City: Before its return, Hong Kong had become one of the world’s most wealthy and successful capitalist cities. It was truly “the jewel in the crown” for China to have added this city to its territory. The Chinese communist government recognized Hong Kong’s tremendous economic worth, and promised to retain Hong Kong’s way of life, so that it could continue to generate huge revenue from international trade. Chinese government officials even used the slogan “One country, two systems” to demonstrate their commitment to Hong Kong’s special status.
Ongoing Protests: As time has progressed, the Chinese communist government has forgotten its promise to Hong Kong, and tried to subordinate it to the governance of the mainland communist government. The end result has been ongoing protests from Hong Kong residents who do not want to see their way of life destroyed and assimilated into the communist system.
National Security Law: In May 2020 the Chinese communist government imposed a National Security Law, which basically removes Hong Kong’s autonomy and the civil liberties of its residents. If China proceeds with its assimilation plans, it will more than likely destroy Hong Kong as we know it, effectively “killing its golden goose”! This should not be surprising as the hallmark of China’s communist government has always been to ensure control and conformity to its policies, no matter what the cost. In protest, the American government has threatened to end Hong Kong’s special trade status, a move that will cost China billions of dollars in lost revenue.
Russia has been ruled by President Vladimir Putin since May 7, 2000 (now over 20 years). As former head of Russia’s notorious secret service (the KGB), he has ruled Russia with an iron fist, strengthening Russia and ensuring that it remains a world power. However, it has come at a huge cost, especially economically and politically to most Russians.
No COVID-19: Until fairly recently, Russian government officials claimed that there was no problem with the coronavirus (COVID-19). Putin himself assured the world that Russia had been “lucky” and was spared from the epidemic.
Epidemic: As of May 25, 2020 Russia has had 353,427 people who have become infected with COVID-19 with 3,633 deaths. It now has the world’s third largest number of COVID-19 cases.
Questionable Statistics: The official infection and death rate numbers are already been questioned by health officials outside Russia, particularly Russia’s remarkably low death rate. According to some news media reports, Russian doctors have been instructed by the government to classify coronavirus deaths as being due to pneumonia, not the coronavirus (so as conceal the true extent of the epidemic spreading throughout Russia).
Putin’s Rule: Putin has ruled Russia as its president for over 20 years. He is now 67 years old. He refuses to step down and make way for a younger leader.
President for Life: In May 2020 Russia’s State Duma approved changes to Russia’s constitution so that Putin could stay on as president to 2036 (at which time Putin will be 83 years old).
Dictatorship: Putin has turned Russia into a dictatorship: elections are meaningless (as the successful candidates have already been selected); all of the major news media companies are controlled by the government (so you only hear what the government wants you to hear); and anyone who stands up to Putin is either sent to prison or mysteriously murdered (such as Boris Nemtsov).
Russia’s GDP: Since 2008, the GDP of Russia has stayed the same. Many Russians have seen a continual drop in their standard of living. The average monthly pension, for example, is now only $210 US per month, which is not enough to live on. Many Russian seniors are starving, as they don’t have enough money to buy food or pay for heating.
The Oligarchs: Russia’s wealth (e.g. its vast oil reserves) are siphoned off by Putin and his oligarchs (businessmen who have been given monopolies by Putin). They live in total luxury while the rest of Russia lives in misery and poverty.
Personal Wealth of Putin: Apparently Putin is one of the world’s most richest men. In 2019, the US Senate Judiciary Committee was informed that Putin’s personal fortune is estimated at $200 billion US. Putin believes that what belongs to Russia, belongs to him.
Income Inequality: The distribution of wealth within Russia is so stark that Putin and his oligarchs have basically re-created the society that existed before the 1917 Russian Revolution with Putin acting as Czar Nicholas II and his oligarchs acting as Russia’s aristocracy (the dukes, counts, and princes). The czar and his aristocrats all lived in splendour while the masses slowly starved to death. It was this vast disparity in income that eventually turned the Russian people to revolt in 1917; and it may be the catalyst to foment revolution again at some point in the very near future.
Secret Police: To maintain his hold on Russia’s citizens, Putin uses his secret police, the Federal Security Service (FSB). The FSB is the successor to the infamous KGB (of which Putin was its head). Apparently Czar Nicholas II did the same thing: his secret police arrested, tortured, and murdered anyone opposing the rule of the czar. History appears to be repeating itself.
Greek Debt: Since 2010, the Greek government, a member of the European Union (EU), has borrowed 320 billion euros, primarily from the EU and individual EU countries. The amount of loans to Greece has been the biggest financial rescue of a bankrupt country in mankind’s history. As of 2015, Greece owed individual countries such as Germany 56 billion euros, France 42 billion euros, Italy 37 billion euros, and Spain 25 billion euros.
Greek Bailout: So far, Greece has had 3 major bailouts from the EU. No doubt more bailouts will be necessary. Financial analysts have described Greece as a bottomless money pit, draining financial resources from the EU with no end in sight. During the last bailout, German Chancellor, Angela Merkel had the opportunity to correct this dire situation; instead she agreed to continue the EU’s financial support of Greece and allow Greece to stay on the euro currency. It is common knowledge, however, that Greece will never be able to re-pay the massive amounts of monies that it has been borrowing. Given this situation, Germany will need to write off all of Greece’s bad loans, and charge everything to German taxpayers.
European Central Bank: Germany contributes almost 21.5% of the capital of the European Central Bank, but has negligible authority on its Governing Council as to how the money should be spent.
EU Budget: In 2018, Germany’s contributed 20.78% to the EU’s budget, the highest of any EU member state, more than Italy (11.74%) and Spain (8.31%) combined.
EU Budget Increase: In 2020, Germany’s net annual EU budget contribution (i.e. the amount of money Germany pays in excess of what it receives back) is 15 billion euros. The EU wants to steadily raise Germany’s annual net contribution so that by 2027 it will be paying up to 33 billion euros (over a 100% increase in its budget payments to the EU). Apparently a major reason is that the EU needs Germany to help make up the budget shortage caused by the United Kingdom (UK) leaving the EU in 2020.
Corona Bonds: Several EU member states are in financial trouble, particularly Spain and Italy. As of 2020, Italy, for example, has a debt of 2.5 trillion euros due to the Italian government overspending in the 1980’s and 1990’s. Italy’s debt is now 130% of its GDP (second only to Greece). Even before the coronavirus (COVID-19) pandemic, Italy’s banks (as well as Spain’s) were on the verge of bankruptcy. Italy, Spain, and France have requested the EU to issue common debt financial instruments known as Corona Bonds. These countries want the massive debt that would need to be repaid on the books of the EU, not individual countries. In other words, Italy’s debt would become part of Germany’s debt, not its own. At the moment, Italy is kept financially afloat due to the European Central Bank buying its debt in the financial markets.
Coronavirus Financial Damage: All EU member states have been financially hit by the coronavirus (COVID-19) pandemic, even Germany. The German government has had to spend billions of euros propping up its own businesses and banks as well as providing financial support to its own people. To date, these payments have amounted to 7% of Germany’s GDP, and there is no end yet to the coronavirus pandemic.
NATO Contributions: All member states of the North American Treaty Organization (NATO) agreed many years ago to spend a minimum 2% of their Gross Domestic Product (GDP) on national defence. American President, Donald Trump, has emphatically stated that it’s not the USA’s responsibility to be the world’s policeman. He wants to reduce the USA’s financing of everyone else’s protection, particularly with NATO (which is responsible for Europe’s defence).
American Contributions: Even though there are 28 member states, it was reported in 2017 that the USA contributes 22% of the NATO budget. Also, in 2017 the American president stated that the USA was spending 3.61% of its GDP towards national defence while Germany was only spending 1.2% (a little more than Canada’s 1.02%).
NATO Budget Targets: Again all member states of NATO are supposed to be equal, but as of 2017 only 5 member states were meeting the 2% target. The German government under Chancellor Angela Merkel has denied that Germany is not contributing its fair share towards defence spending, yet the statistics prove otherwise. The USA will not continue the status quo, so Germany will have to reluctantly devote more financial resources to its own national defence and not rely so heavily upon the USA (which it has done since the end of World War II). Apparently Germany will not be able to meet’s its NATO defence spending goal until 2031. That may not be acceptable to the USA and other allies, as many would argue that Germany is not taking its NATO responsibilities serious.
Observation: It does not help Germany’s case when by all observations Germany seems to have no problem allocating massive amounts of extra funds (hundreds of billions of euros) to willingly take in over 1.3 million refugees, giving them access to German’s generous welfare system (many of these refugees were living in Turkey and were not living in war-like conditions), yet it can’t find the money to pay its fair share of NATO costs.
Germany had a national election on September 24, 2017 and its results were quite shocking, particularly for its longtime chancellor, Angela Merkel. Even though she was re-elected as chancellor for a 4th term, her policies allowed a right-wing pro-nationalist political party to enter the German Parliament (the Bundestag) for the first time since World War II. The AfD (Alternative for Germany) party won 94 seats in Parliament, and is now the third largest political party.
Interestingly, support for the AfD was highest amongst those aged from 35 to 44 years and lowest amongst those age 70 and older. Afd has vowed to rein in Angela Merkel to prevent her from allowing refugees and migrants indiscriminately into Germany (where they can gain access to Germany’s welfare system). The Afd is not a fan of the euro and wants Germany to return to its previous currency, the Deutschmark.
Net Contributor Status: The German economy is the strongest in Europe. Given that fact, Germany could easily abandon the euro and return to the Deutschmark. It will be interesting to see how much longer the average German taxpayer is willing to fund (and basically prop up) many of the poor economies within the European Union (EU) such as Italy, Greece, Portugal, Spain, and Ireland. It is making less and less economic (business) sense for Germany to fund the EU. It’s financial contributions are steadily increasing with no end in sight. It is officially classified as a “net” contributor, which is a nice way to say that it pays more into the EU than it receives back. (The United Kingdom was also a net contributor for many years, and this fact became the major reason why the United Kingdom decided to leave the EU.)
High Health Care Costs: In many ways, Germany does not need the European Union as much as the European Union needs Germany. New political parties such as AfD can easily argue that German taxpayers funds should be spent on such initiatives as trying to reduce the amount that Germans have to pay each month for their ever increasing health care costs (which on average can be between 400 to 700 euros – $440 to $769 US – per month with 50% of that cost covered if you have an employer) as opposed to Germany spending its tax revenue trying to endlessly prop up other EU countries (many of which are mismanaged and have little incentive to change, especially since Germany is basically bankrolling the EU).
National Security: Prime Minister Shinzo Abe of Japan has warned that North Korea’s threat to launch nuclear weapons upon Japan is the greatest threat to Japan since the end of World War II. Since 1945, Japan has solely depended upon the USA for its national security. In 2017, American President, Donald Trump, informed the Japanese government that it has to take more responsibility for its national security, and cannot rely solely upon the USA to protect it from other hostile countries. This is a huge shift for Japan to make, as it has a pacifist constitution, preventing it from re-arming.
Missile Attacks: Since 2017, North Korea has launched the following missiles towards Japan:
Given the fact that since 2017 North Korea has continued its pattern of aggression towards Japan, the Japanese government may not have any other option but to re-arm its country. North Korea has embarked on a dangerous arms race creating nuclear weapons and threatening to use them against other Asian countries as well as the USA.
Security analysts have speculated that either Communist China or Russia has been secretly assisting North Korea with its nuclear weapons program, which would explain how such a poor and backward country like North Korea could suddenly have unlimited funds to develop an expensive and technologically sophisticated nuclear weapons program.
Threat to National Security: In 2019, for the first time in Japan’s modern history, Japan has placed communist China as a bigger threat to national security than North Korea.
China’s Belt and Road Initiative (i.e. the building of railways, roads, ports, etc.) has been singled out by the Japanese government as a potential threat. So far more than 130 countries worldwide have either signed agreements with China or expressed an interest in the Initiative. Critics view such an Initiative as a “debt trap”, especially for emerging countries. These expensive construction projects can leave a host country with massive unpaid debt, and give the Chinese government influence over the host country’s government (e.g. allow China’s military to set up a military base in that host country).
Japan is worried that China may use its Belt and Road Initiative to place its army throughout Asia and the rest of the world.
First Overseas Military Base: The country of Ethiopia in Africa is a recipient of China’s Belt and Road Initiative and has now allowed China to set up its first overseas military base for the People’s Liberation Army (PLA) in Djibouti.
Military Spending: China’s military spending is increasing each year. For 2019 it was $177 billion US. It has expressed the desire to obtain stealth fighter aircraft and aircraft carriers. The latter would suggest that China has definite imperialist ambitions. In comparison, for 2019 Japan’s military spending was only $48.6 billion US.
Balanced Budget Promise: In 2015, newly elected Prime Minister Justin Trudeau held a press conference and re-iterated his campaign pledge to balance the federal government’s “books” within 4 years. This promise, he swore, was “very” cast in stone. The only problem with making such a promise was the fact that he and his fellow liberals had made billions of dollars of campaign promises.
The Canadian federal government’s budget deficits (on an annual basis) since 2015 are as follows:
Observation: Ever since Justin Trudeau became Prime Minister, he has not kept his promise to balance the federal governments “books”. Even though Canada’s economy was booming, his government had record high budget deficits every fiscal year.
During the coronavirus (COVID-19) pandemic, Prime Minister Trudeau has isolated himself in his Ottawa mansion. Each morning he stands in front of his mansion and tells the media what financial support his government will give Canadians. The government’s lockdown measures have imposed a huge financial cost to Canadian workers and businesses. So far he has not detailed how his government intends to kickstart the Canadian economy nor how to get it back on a stable financial footing.
Number of Lost Jobs: Due to Canada’s lockdown measures against the coronavirus (COVID-19) Canada lost a total of 3 million lost jobs by the end of April 2020.
Jobs Made Part-Time: According to Statistics Canada, in addition to the 3 million lost jobs the number of workers who worked less than half of their usual hours increased by 2.5 million.
Job Summary: In summary, by mid-April 2020 the number of Canadians who were either unemployed or working substantially reduced hours was 5.5 million.
City Unemployment Rates: In metro Montreal (Quebec) the unemployment rate in April 2020 was 18.2%. In comparison, the city of Toronto (Ontario) was 11.1% and in the city of Vancouver (British Columbia) it was 10.8%.
Student Unemployment Rate: For students aged 15 – 24 years old in April 2020 the unemployment rate was 31.7%.
National Unemployment Rate: According to Statistics Canada, the national unemployment rate for April 2020 was 17.8%. In comparison, the national unemployment rate for January 2020 was 5.5% (before the coronavirus pandemic).
Trudeau and China: For the past several years, Canadian Prime Minister Justin Trudeau has encouraged Canadian businesses to do business with China. He has even personally led teams of Canadian businessmen to China in order to cement business relationships between Canada and China.
Unlike the American President, Donald Trump, Canada’s Prime Minister has never adhered to a “Made in Canada” stance. Prime Minister Trudeau is a firm believer in Free Trade and is not concerned that much of Canada’s manufacturing sector (primarily from Quebec and Ontario) has moved overseas.
Not Safe for Business (or Travel): As reported above in the case study of China, it is no longer safe for western businessmen (and businesswomen) to do business in China. China’s secret police has started arresting Canadian businessmen for no reason and throwing them in prison (on false charges). Canadians in particular (and more than likely any foreign nationals) travelling to China as tourists also run the risk of being arbitrarily arrested and imprisoned.
Kovrig & Spavor: Such an event happened to two Canadian businessmen who were in China both conducting routine business. On December 10, 2018, Michael Kovrig was arrested in Beijing and Michael Spavor was arrested in Dandong. Both were arbitrarily arrested, accused of breaking China’s national security laws (which they denied doing), and thrown in prison where they have had no contact with the outside world ever since. To date there has been no trial.
Observations / Suggestions:
Trudeau’s Response: When questioned by the press, Prime Minister Trudeau has refused to answer what he is doing to obtain the release of these Canadian businessmen. It would appear that Trudeau has done nothing, and does not want to deal with this “delicate” situation, since he does not want to offend the Chinese communist government. (As Prime Minister, Trudeau has lavished public praise on China’s communist government, even saying how much he admires their efficiency.)
Arbitrary Arrest – Foreign Nationals: These two incidents should make those in the business community (as well as the tourism industry) take notice. If you enter China even for legitimate reasons, you run the risk of arbitrary arrest. This can easily happen to anyone regardless of their nationality, i.e. China’s secret police can easily arrest American or German businessmen (or tourists) for no valid reason and imprison them.
Asset Seizures: Even if you don’t personally visit China, your company’s assets can be seized at any time by the Chinese government or your Chinese-based factory can be ordered to make what the Chinese government wants. (This has recently happened to those companies making Personal Protection Equipment – PPE.)
Do Business Elsewhere: Your company may want to look elsewhere to do business. China does not have a manufacturing monopoly. Other countries can easily produce your products without the unsafe business conditions (e.g. Canada, USA, Europe, Vietnam, Thailand, Taiwan, India, etc).