What is China’s Grand Strategy?

America’s foreign policy establishment believed that China’s economic ascent would lead to political liberalization, and that China in the long term would become a benign actor in world affairs. That view has been falsified, but there is no consensus about what China wants and what threat it might pose to American interests. China is seeking technological self-sufficiency and even superiority in key industries. It has concentrated military spending on advanced technologies. Its Belt and Road Initiative proposes a trillion-dollar investment program to project China’s influence across the world. What is China’s grand design, and how should the United States respond to it?

David P. Goldman is a columnist at Asia Times and a principal of Asia Times Holdings LLC. He contributes regularly to the Claremont Review of Books and other conservative outlets, including PJ Media, where he writes the “Spengler” column. During 2013-2016 he was a managing director at Yunfeng Financial, a Hong Kong investment bank. Previously he was global head of debt research at Bank of America and head of credit strategy at Credit Suisse. He is the author of several books including “How Civilizations Die” (2011).

Moynihan Grows Into Role as BofA Chief

Mr. Moynihan, 58 years old, got the top role after CEO Kenneth Lewis unexpectedly announced his retirement in fall 2009. During that period, Bank of America faced major financial problems following acquisitions of Countrywide Financial Corp. and Merrill Lynch & Co. To stay afloat, the bank had to take $45 billion from the government.

.. After Donald Trump’s surprise 2016 election, bank stocks broadly jumped. Bank of America shares surged 74% between then and the end of 2017.

.. For the full year of 2017, the bank posted a $21.1 billion profit, excluding an adjustment from the tax cut, roughly matching the bank’s all-time profit record from 2006.

.. The bank issued millions of new shares during the crisis, however, so its per-share earnings remain far below where they were precrisis. Likewise its shares, unlike those of competitors such as JPMorgan Chase & Co. and Wells Fargo & Co., remain below precrisis levels.

.. “Bank of America has done a sensational job under Brian Moynihan,” Mr. Buffett said

 

Warren Buffett’s $5 Billion Bank of America Bonanza: Thank You, President Trump

The ‘Oracle of Omaha,’ often critical of the 45th president, has made hay in the past few months

Financial shares have been among the best stock-market performers since the surprise election victory on Nov. 8. Among those, Bank of America has been the standout: the stock’s more-than-40% rise since Election Day is the best among the biggest U.S. banks and is 15 percentage points higher than the gain for the KBW Nasdaq Bank index.

.. The Bank of America windfall is thanks to a savvy investment Mr. Buffett’s Berkshire Hathaway Inc.made in the bank in August 2011. At the time, the bank’s shares were foundering and markets were questioning whether Bank of America would have to raise additional capital lest it sink under what some feared was a looming deluge of mortgage-related legal claims.

 .. The terms were expensive for Bank of America: The preferred stock paid a chunky 6% annual dividend, or $300 million a year, and if the bank wanted to repurchase the shares it would have to pay Mr. Buffett a 5% premium.
.. The real sweetener, though, was that Mr. Buffett also received warrants to purchase 700 million shares of common stock at $7.14 apiece at any time over the next 10 years. Although this was roughly where the stock was trading at the time, some investors groused this was overly generous to Mr. Buffett
.. The halo effect of Mr. Buffett’s investment helped to quell some concerns around the stock, which rose.

Oil-Price Rebound Gives Banks New Reason to Cheer

The higher oil prices stemming from OPEC’s agreement to cut crude production should give some banks a boost.

.. In particular, higher oil prices could mean that banks will release some of the reserves they set aside earlier this year to protect themselves against soured energy loans. Such releases would increase banks’ earnings.

.. Bank of America Corp. rose more than 4% on the day, Wells Fargo—2%, J.P. Morgan Chase & Co.—1.6% and Citigroup Inc.—1.6%.

.. Fifteen of the largest U.S. banks amassed a combined $6 billion in reserves for energy loans, according to a Barclays analysis.