00:04:58.980Denver, Rich, did Rich freeze up on us?
00:05:03.560All right, folks, I think I'll just follow up and continue.
00:05:07.280I think where Rich was going with that.
00:05:10.060And then if we get Rich back in in a minute or so, we'll go back to him.
00:05:14.300And otherwise, we'll switch over to Bradley Thayer.
00:05:16.600But roughly speaking, the story I wanted to say is that, you know, Rich was saying they copied our model under Deng Xiaoping.
00:05:25.120And now under Xi, Xi Jinping, he gave in his speech a year ago, he said, we're going to go full on Marxist-Leninist, no more economic reforms.
00:05:34.380And I think that's where Rich was going, market reforms, I mean, using markets.
00:05:37.720So they're no longer going to use the price system and they're no longer going to use free markets to guide themselves.
00:05:43.540So they're going internal and Rich is back with us.
00:05:46.140And so, Rich, keep going where you were.
00:05:54.920That's where I was going to go, was just in the time that Xi Jinping has been in charge, their economic growth rates have been cut in half.
00:06:01.500But more than that, you know, prior to him coming in, virtually no Chinese firms were underwater.
00:06:07.980Right now, close to a third of Chinese companies, including an enormous amount of manufacturing, are on life support, surviving on subsidies from the Chinese government.
00:06:21.360Now, you know, we all know it's hard to believe any numbers coming out of China, but the value of their industrial subsidies might be as high as $2 trillion a year.
00:06:33.080That is close to the entire value added of the entire U.S. manufacturing industry.
00:06:40.160And so you might be looking at China stealing from the future, running up the massive debts you're talking about, and stealing from productive industries to throw more good money after bad into their manufacturing sector that's no longer globally competitive,
00:06:55.720where they're seeing their own industrial base being sent to India and Vietnam and Poland, of all places.
00:07:01.260So, you know, when you look across the board, those move away from market fundamentals, a move back towards dictatorship and communism,
00:07:08.400it has neutered the economic growth in China to the point where they're now built on a house of debt.
00:07:17.960And then recently I've been stumbling on some fairly intelligent analysts out there.
00:07:24.760You know, they're not household names or whatever, but they're talking about, you know, the shift over into these high-tech verticals with lasers and chips and all this.
00:08:29.120And you and I both know whenever the government gets in, whether it's a good thing or not, the government ruins the party.
00:08:33.880So, you know, part of what's happening here is that the government is trying to take over good industries there, as I was talking about, you know, moving subsidies over from all these other sectors to prop up industries that the government's favoring.
00:08:46.820So it's hard to know how much progress they're making.
00:08:50.200It's one thing for the government to say, look, we want to switch industrial bases, but can you do it in a way that's truly profitable?
00:08:56.720And what we're seeing here is that as much as there's some real innovation, there's also theft.
00:09:01.860They're trying to smuggle in NVIDIA chips so they can make server farms and build large language models that are competitive.
00:09:08.140The government is pouring just an enormous amount of money in the propping up solar panel, EV production, chip production that probably is decades, not decades, but years behind where the state of the art is.
00:09:20.260That's behind in terms of efficiency. Frankly, they're creating industries that wouldn't survive without the government subsidies.
00:09:27.680Now, to your question of where are they getting the money, they're stealing it from the four and a half decades of good economic growth they had before.
00:09:34.900And, you know, the U.S. has been stealing on two centuries of good economic growth over the last 50 and 60 years.
00:09:42.040So China's got more room to steal from that, but they're doing what all the developed countries are doing.
00:09:46.500They're rejecting the methods that produced a robust economy and falling in prey to a large government that just shuffles deck chairs around the Titanic.
00:09:55.560Yeah, one or two minutes on the close.
00:09:58.680The reason, you know, we're interested in this is because of this Russia-Ukraine war.
00:10:04.260And we're supposed to be pivoting to the Pacific away from the Atlanticists.
00:10:09.080But the Atlanticists have a slush fund in the hundreds of billions paid for by the U.S. taxpayers, which is sickening.
00:10:17.520And so when you're doing the geopolitics of this, as Steve would, you know, what's your prognosis on the U.S. strategy moving forward with China?
00:10:26.120Are they strong enough to take on a Taiwan?
00:10:30.020Are they strong enough to be in a position to want to go after us?
00:10:34.100And the part that was sickening to me this week is when I saw them negotiating with Trump.
00:10:40.300And it looked like they had leverage on us, on the rare earth refining in particular, right?
00:10:46.020Because and we care about our people, right?
00:11:51.060They're really military spending masquerading as industrial subsidies.
00:11:55.680But it's really military spending because what are they doing?
00:11:58.540They're building up the critical mineral processing technologies.
00:12:01.420They're building up car industries with the aim to destroy ours and Europe's car industries.
00:12:06.880They've taken over nearly half the world's ship production.
00:12:10.020And it's things like that where you can see that while they're inefficient, while they're sapping their future growth, they are at least being strategic in prop-yup industries that would allow them not just to make the materiel of war but to supply a war front.
00:12:24.260And that has given them a strategic advantage.
00:12:27.080And it just goes to show you that, you know, government corruption is bad all the way around.
00:13:32.920But part of this is you also have people in China who are just tired of the oppression, who were following their government transitioning to more like, frankly, the transition out of a military dictatorship that South Korea made decades ago that, you know, many countries in Europe have made.
00:13:48.420And so there's a real revolt against the reversion here, against the sapping of growth.
00:13:53.580But, you know, the other country I'd tell you is, you know, the global bond market vigilantes, they're always looking for among governments the one-eyed man in the world of the blind.
00:14:02.500And, you know, we talked in the 90s about Japan, and they came close to overtaking the U.S. economy.
00:14:07.900Frankly, if China had committed 50, 60 years ago to the kind of economic system we have, we wouldn't even be close.
00:14:16.380They would have triple our economy right now.
00:14:20.760You know, so at the end of the day, and you and I have both noticed we talk about this a lot, governments always find a way to screw it up.
00:14:27.620Sometimes it's an advantage when it's a government like China's, but we've got to be on the lookout for it, both here and above.
00:17:31.560The local communist party is stressed, because their revenue depended, of course, on the real estate market.
00:17:40.100And that adversely affects not just the party, of course, but the Chinese people, for whom the value of their apartment is most of their wealth.
00:17:48.480It also stresses the financial sector, which is known to be corrupt.
00:17:52.640So when we're talking about the economy of the People's Republic of China and the numbers that the Chinese themselves are generating, we always want to keep in mind the Mary McCarthy rule, right?
00:18:05.040Every word is a lie, including and and the, and she famously dismissed Lillian Hellman and her writings.
00:18:12.360So whatever the PRC is saying, we want to keep that in mind.
00:18:15.460They're going to be lying about the numbers that they generate.
00:18:18.440And finally, Dave, the Trump administration's tariff and investment denial policies are really hurting the economy.
00:18:26.180So as Rich mentioned, there are really strategies that they're seeking to develop to get out of that.
00:18:36.220That is internal investment, which doesn't seem to be working.
00:18:39.960Second, as Rich stressed, there is the idea of new technologies to develop.
00:18:50.320And I think that's certainly an element there.
00:18:53.760But we also want to keep in mind, of course, that they're not reducing military spending.
00:18:59.200So they certainly have prioritized the military, and that has not changed whatsoever.
00:19:08.180So even when they're in economic crisis, they're still going to maintain utmost military spending against us.
00:19:17.460The final point, Dave, is to mention what the party is talking about.
00:19:22.600The Chinese Communist Party is talking about what they've announced as their two priorities.
00:19:28.280And their two priorities, as they identify them, are first, the execution of key national strategies,
00:19:34.640and second, the enhancement of security capabilities in key sectors.
00:19:41.460Now, both of those are ominous for us.
00:19:45.800So we need to think through really what they're conceiving, what they're thinking of when they talk about two priorities.
00:19:53.200And, Dave, we need to understand that power is relative in international politics.
00:19:59.240So one thing that hurts, that helps China and the Chinese economy is hurting us.
00:20:07.720So if they can damage us, that actually is helping their economy, if you will, in a relative sense.
00:20:14.920So when they're talking about two priorities, we want to keep in mind that a part of that is certainly going to be doing their utmost to damage our economy,
00:20:26.340either through attacks on Taiwan or, secondly, unhinging our alliances, as in South Korea,
00:20:33.420or direct economic attacks on our infrastructure or cyber means, the salt vault typhoon, essentially cyber attacks that have been unveiled,
00:20:50.400or through other means, Dave, to hurt our economy.
00:20:54.240So that's very important to keep in mind.
00:20:57.220Fundamentally, the Chinese Communist Party rules for itself, does not rule for the Chinese people.
00:21:05.120And the Chinese people will incur the costs, whatever the Chinese Communist Party essentially imposes upon them.
00:21:15.460And their targets remain us and our allies in the Indo-Pacific region.
00:21:21.880Right. Let me close it out in a minute or so.
00:21:25.100So, you know, I am so angry at our policymakers.
00:21:29.760We don't seem to have any strategic vision, you know, 10 years out, 20 years out, 30 years out.
00:22:40.120Well, every presidential administration, Bill Clinton's presidential administration, blew it by abandoning any type of human rights commitment
00:22:51.400to renewal of most favored nation status and putting them on the path to the World Trade Organization.
00:22:57.660So that's Bill Clinton and Robert Rubin.
00:23:30.600Share this platform with everyone you know, because we want to help Steve.
00:23:35.840Steve is the mastermind, right, that is the strategic thinker we all follow, so share this.
00:23:42.000And we want to give a special call-out and a special transition over to Bernie Carrick right now.
00:23:48.700The War Room, we followed the funeral this morning, but what a great man.
00:23:52.700And so here we go with War Room's tribute to Bernie Carrick.
00:23:56.060Former NYPD Police Commissioner Bernie Carrick is dead.
00:24:02.620He passed away Thursday at New York's Presbyterian Hospital, surrounded by family and friends.
00:24:07.800A new era begins for the New York City Police Department, as Mayor Giuliani passes on the golden badge to a new top cop.
00:24:17.160Today, Mayor Giuliani said he was simply overqualified for the job, citing the fact that he is a former police detective and a proven administrator.
00:24:24.780He brings a quality of leadership that I believe can give us the opportunity to build on a record that is a very, very difficult one to match.
00:24:40.400So important for Bernie Carrick, but it's also about the aspect of remembrance, the Christian faith, Catholicism, what ties us together as Christians, what ties us together in the Judeo-Christian West.
00:24:53.500In the name of Bernie Carrick, our dear friend, have arrived with the Honor Guard.
00:25:04.160Rudy Giuliani and Bernie Carrick are historic figures for all of New Yorkers.
00:25:10.220These events where the community gets together to honor people, this is iconic.
00:25:13.940He was a colleague and a friend, but also a major part of the MAGA movement.
00:25:39.320And a major part of the history of just not New York City, but the entire country, given the 9-11 attack.
00:25:45.760Carrick was known as America's cop following the 9-11 terror attacks.
00:25:49.980Bernie Carrick is one of the most accomplished and effective leaders of law enforcement in America.
00:25:55.100As police commissioner on September the 11th, 2001, Bernie Carrick arrived at the World Trade Center minutes after the first plane hit.
00:26:03.560A passenger flight ran into the north side of the World Trade Center.
00:26:07.680He was there when the Twin Towers collapsed.
00:26:13.640He knew the faces of the rescuers who rushed toward danger.
00:26:18.800He attended the funeral of the officers who didn't come back.
00:26:24.240Bernie Carrick understands the duties that came to America on September the 11th.
00:26:29.520The resolve he felt that morning will guide him every day.
00:26:32.140There isn't a day that has passed since the morning of September 11th that I haven't thought of the sacrifices of those heroes and the losses we all suffered.
00:26:44.140I promise you, Mr. President, that both the memory of those courageous souls and the horrors I saw inflicted upon our proud nation will serve as permanent reminders of the awesome responsibility you place in my charge.
00:27:05.840There's a lot of talk about government debt, but after four years of inflation, the real crisis is personal debt.
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00:28:05.340Most clients end up with more money in their pocket month one, and they don't stop until they break you free from debt permanently.
00:28:13.700Look, take a couple of minutes and visit donewithdebt.com.
00:30:10.080A former CIA, Pentagon, and White House advisor with an unmatched grasp of geopolitics and capital markets.
00:30:16.700Jim predicted Trump's Electoral College victory exactly 312 to 226, down to the actual number itself.
00:30:25.380Now he's issuing a dire warning about April 11th, a moment that could define Trump's presidency in your financial future.
00:30:33.140His latest book, Money GPT, exposes how AI is setting the stage for financial chaos, bank runs at lightning speeds, algorithm-driven crashes, and even threats to national security.
00:30:45.340Right now, war room members get a free copy of Money GPT when they sign up for Strategic Intelligence.
00:30:51.940This is Jim's flagship financial newsletter, Strategic Intelligence.
00:31:12.220Soldiers, sailors, and airmen of the Allied Expeditionary Force, you are about to embark upon the great crusade toward which we have striven these many months.
00:31:25.940The hopes and prayers of liberty-loving people everywhere march with you.
00:31:30.060In company with our brave allies and brothers in arms on other fronts, you will bring about the destruction of the German war machine, the elimination of Nazi tyranny over the oppressed peoples of Europe, and security for ourselves in a free world.