Security-Minded Investors Suddenly See China As The New Safe Haven - Forbes

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Throughout the country factories are restarting, employees are going back to work, and even travel restrictions are being lifted in Hubei province .
Meanwhile, the rest of the world is stuck in a form of purgatory. Governments are trying to stem the virus without crushing their economies or disrupting daily life, but they are slowly finding out that things are not so simple. Due to concerns about infringing on privacy rights or civil liberties, democratic nations have so far been unwilling to replicate China’s model .
This hesitation clouds the true scope of the problem, exacerbating investor panic and flights beyond safety to just maximum liquidity. Additionally, these trends are likely to continue in the months and years ahead.
This means that while the rest of the world sputters, China is going to be starting along the long road to recovery. The country has already taken bold steps to stabilize the banking sector , and now any stimulus efforts will have a better chance to succeed given the fact that the country has a proper assessment of the extent of the problem.
This type of certainty is a siren call to investors, who avoid making moral judgments with their money.
Plus, the domestic recovery will be wind in the sails of China’s multinationals that are expanding across the globe and stepping over the U.S. in the process.
By Land and Sea
As an example, domestic telecommunications champion Huawei is making progress in penetrating 5G networks in the U.K., Europe, and several other nations throughout the world, despite vehement protestations from the U.S.
Need another example, while the U.S. is struggling to give its front-line medical workers necessary equipment such as face masks and ventilators, Alibaba Chairman Jack Ma is busy donating masks, testing kits, protective suits, ventilators and thermometers to dozens of countries in Europe, Asia, and Latin America.
Countries will remember who helped them out in a time of need.
Plus, all of this is separate from China’s Belt and Road initiative , which aims to link China with Central, South, and Southeast Asia, as well as the Middle East and Europe through the expenditure of over $1 trillion.
A Word of Caution
However, China still has a few obstacles in its path before it ever becomes the center of the financial world.
First, even if China’s economy rebounds, which is uncertain given that COVID-19 could return, it will be unable and likely unwilling to decouple itself from the world economy. This exposure will leave some vulnerabilities.
Additionally, as the scope of the problem becomes clearer around the world and the bear market bottoms out traditional safe havens should recover and behave normally again. It remains to be seen if investors come back in the same way however.
The Case for Bitcoin
With all of that said, by the time all of this plays out the world will have absorbed trillions of dollars in new stimulus measures . This manufactured inflation will depress returns and shake the confidence of investors, especially those of younger generations that did not live through the Great Recession.
They will want to protect themselves against what they expect to be another round of dovish policies into response to the next crisis or stimulus package, and so they may find bitcoin appealing for no other reason than its built-in scarcity.
While bitcoin crashed nearly 40% earlier this month along with the rest of the market, dropping down to $3,867 on March 13th , it has since recovered to $6,629.
Perhaps this will become the next, next, big shift in capital markets. Check out my website . I am the Social Media/Copy Lead at Kraken, a cryptocurrency exchange based in the United States. Before joining Kraken I served as Chief Operating Officer at the Wall… Read More I am the Social Media/Copy Lead at Kraken, a cryptocurrency exchange based in the United States. Before joining Kraken I served as Chief Operating Officer at the Wall Street Blockchain Alliance, a non-profit trade association dedicated to the comprehensive adoption of cryptocurrencies and blockchain technologies across global markets. Before joining the WSBA, I was the Lead Associate within the Emerging Technologies practice at Spitzberg Partners, a boutique corporate advisory firm that advises leading firms across industries on blockchain technology. Previously I was Vice President/Lead Strategy Analyst at Citi FinTech, where I drove strategic and new business development initiatives for Citigroup’s Global Retail and Consumer Bank business across 20 countries. I also served five years as a Senior Intelligence Analyst at Booz Allen Hamilton supporting the U.S. Department of Defense. I have a B.S. in Business Administration from the Tepper School of Business at Carnegie Mellon University and a M.A. in International Affairs from Columbia University's School of International and Public Affairs. Additionally, I am a Certified Information Privacy Professional (United States, Canada, and the European Union) ...