China’s Economic Isolation and Response Strategies

China’s Current Economic Situation and Global Isolation

Recently, major global countries have shown increasing moves to isolate China.
Western countries, led by the United States, have attempted to decouple from China’s supply chain,
but China is building an independent economic structure by completing its own supply chain.

Policy Impact of Trump and Biden

The trade war with China during the Trump administration became an opportunity for China to strengthen its internal supply chain.
The Biden administration also tried to curb China’s economic growth,
but China continues to grow, recording a trade surplus of $1 trillion.
Despite the containment of the United States, China has achieved technological upgrades on its own.

China’s Policy Changes and Directions

1. Economic Policy Shift

China is now shifting its economic focus from production and export to domestic demand and people’s livelihood.
New policies are likely to be introduced to revitalize national consumption.

2. Financial and Fiscal Policy

Monetary Policy

China needs to carefully consider cutting interest rates.
It is possible to adjust the reserve requirement ratio (RRR) to allow banks to operate funds more efficiently.

Fiscal Policy

Plans to expand finances through treasury bonds and local government bonds and implement national-level economic stimulus measures.
There is a possibility of issuing local and national bonds worth 4 to 4.5 trillion yuan.
Shifting direction from existing infrastructure investment to policies to promote domestic demand.

Currently, China’s urbanization rate is officially 66%, but the actual urbanization rate based on household registration is low at 48%.
It is essential to strengthen the social security of migrant workers (workers who migrate to cities to work).
The plan is to increase job stability and revitalize the consumer economy.

China’s Technology Policy and AI and Robotics Industry

China continues to secure strong competitiveness in the AI and robotics industries.
Full-scale development of ‘humanoid robots’ to distribute more than 2 to 3 million units by 2030.
Various robotics companies are growing rapidly in China.

Future Global Environment and China’s Response

Regulations on China by Western countries, including the United States, are likely to be further strengthened.
US pressure is expected to continue in key industries such as AI, semiconductors, and cloud.
China’s specific policy direction will be announced at the Two Sessions (兩會) in March,
and the economic policy and market situation are expected to become clearer afterward.

< Summary >

China is building an independent economic structure by completing its own supply chain instead of being isolated from the global economy.
Despite US economic sanctions and trade wars, China is maintaining a trade surplus and growing its economy.
The focus of the Chinese economy is changing from production and export to domestic demand and people’s livelihood.
Monetary policy is likely to smooth the flow of funds by lowering the reserve requirement ratio.
Fiscal policy is proceeding in the direction of increasing economic vitality through the issuance of national and local bonds.
Efforts are being made to increase national consumption by strengthening urbanization and social security policies.
Making large investments in the AI and robotics industries, with plans to supply 2 to 3 million robots by 2030.
Specific economic policies will be announced at the Two Sessions in March, and the direction of the market is expected to be determined afterward.

[More…]

Reality and Response Strategies for China’s Economic Isolation
👉 https://nextgeninsight.net/?s=%EC%A4%91%EA%B5%AD
The Future of the AI Robot Industry, China’s Growth Strategy
👉 https://nextgeninsight.net/?s=%EB%A1%9C%EB%B4%87

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Analysis of the Establishment of the First Sovereign Wealth Fund in the U.S. and Beneficiary Stocks

Background and Key Contents of the U.S. Sovereign Wealth Fund Establishment

The first sovereign wealth fund in U.S. history is scheduled to be established.
Officially announced by President Trump through an executive order.
The Secretary of the Treasury and the Secretary of Commerce will announce detailed plans within 90 days, with the goal of completing the establishment within one year.
Main goals: Efficient management of national assets, securing economic stability for future generations, and reducing the tax burden on households.

Anticipated Investment Areas of the Sovereign Wealth Fund

National Infrastructure: Investment in critical national infrastructure such as advanced manufacturing facilities, healthcare, and the defense industry.
Strategic Asset Protection: Curbing Chinese overseas investment, potential acquisition of ports, transportation networks, and key strategic locations.
Cryptocurrency and Fintech: Potential investment in Bitcoin, cryptocurrency-related stocks, and fintech companies.
Energy Independence: Potential investment in domestic oil, gas, and nuclear power projects in the U.S.

Comparison with Major Global Sovereign Wealth Funds

Norwegian Sovereign Wealth Fund: Valued at $1.7 trillion (approximately ₩2,000 trillion), primarily invests in stocks (especially U.S. tech stocks).
China Investment Corporation: Valued at $1 trillion, based on foreign exchange reserves.
Saudi Sovereign Wealth Fund: Valued at $1 trillion, based on oil money investments.
Expected Size of the U.S. Sovereign Wealth Fund: Initially targeting $1 trillion, with the potential to expand into the world’s largest.

Expected Beneficiary Sectors and Stocks

Overall U.S. Stock Market: Expectation of an overall market rise due to the influx of sovereign wealth fund capital.
AI and Data Center Related Stocks: Positive impact on NVIDIA, Microsoft, AMD, etc., due to increased investment in the domestic semiconductor and AI industries in the U.S.
Fintech and Financial Stocks: Potential benefits for JP Morgan, Goldman Sachs, BlackRock, etc., in the operation of the sovereign wealth fund.
Energy and Natural Gas Related Stocks: Potential investment in oil and gas companies, with attention to ExxonMobil and Chevron.
Core Strategic Industries: Expectations of benefits for companies related to the defense industry, semiconductors, and manufacturing.

Trump’s ETF Strategy and the Connection to the Sovereign Wealth Fund

Trump Media plans to launch three ETFs
1. Made in America ETF: Focused investment in U.S. manufacturing and infrastructure companies.
2. Energy Independence ETF: Concentrated investment in companies related to U.S. energy independence.
3. Bitcoin & Crypto ETF: Potential inclusion of cryptocurrencies and related companies.
Even if there is no direct connection to the sovereign wealth fund, there is a high possibility that it aligns with policy priorities.

Easing of Financial Regulations by the Fed and Positive News for Financial Stocks

Relaxation of stress test criteria and easing of regulations → Positive impact on financial stocks.
Financial stocks may serve as a safe haven amid tariff issues.
Continued expectation of the Trump administration’s Wall Street-friendly policies.

Points for Investors to Note

If the establishment of the sovereign wealth fund becomes a reality, a positive impact on the overall stock market is expected.
Specific investment targets and strategies of the sovereign wealth fund need to be confirmed 90 days after the announcement.
Pay attention to sectors such as infrastructure, energy, technology, and financial stocks in line with Trump’s key policy trends.
Although short-term uncertainties exist, the potential for growth in the U.S. stock market and specific sectors is high in the medium to long term.

< Summary >

The establishment of the first U.S. sovereign wealth fund has been officially announced.
Goal to announce plans within 90 days and begin operations within one year.
Expected investment areas: Infrastructure, strategic assets, fintech, energy, and cryptocurrencies.
Positive impact on the U.S. stock market, financial stocks, tech stocks, and energy stocks is expected due to the creation of the sovereign wealth fund.
Trump Media announced the launch of three ETF types → Potential synergy with the sovereign wealth fund.
Growth momentum secured for financial stocks due to the easing of financial regulations.
Attention should be paid to future announcements of the sovereign wealth fund’s investment strategy and funding methods.