Prior to COVID, China was the world’s second largest economy and seem to be growing towards number one economy of the US and people suggested it was not going to long before China was number one. The Chinese economy was generating income from their huge balance of trade exports and needed to spend the money somewhere. It had already become the largest buyer of US Treasuries. Two of the methods to spend money were the Silk Road and Belt and Road initiatives. The Silk Road is the connection between Europe and China that has existed for hundreds of years, you can think about Marco Polo and his adventures in 1271 to 1295. China built roads and trains to connect the Silk Road. The other initiative is the Belt and Road.

The Belt and Road is for China to build ports and Chinese military bases in other countries, both for commerce and military purposes. The Chinese offered countries large infrastructure investments and a possibility of expanding exports from their country to China. It turns out Chinese companies did the work using Chinese personnel and Chinese financing, there was very little for the host country, but new infrastructure. The Chinese were and have used their economic power to go to target 150 countries.

One of the G20 countries, China signed agreements was with Italy about 4 years ago. Politicians come and go in Italy and every other country and a new government was elected in Italy. The Italian Defence Minister Guido Crosetto said his government is working to break the agreement because it did very little for the economy of Italy. The benefits seemed one side towards China. The Prime Minister of Italy, Giorgia Meloni, was more diplomatic saying she wanted the deal changed by December because China is both a competitor and a partner.

Linking to dividend paying stocks, countries similar to companies develop alliances and partners across the world. Sometimes companies use subsidiaries, sometimes they use partners, whatever works to grow the revenues of the company. Partners can change over the years, it is a balancing act and human relationships as well as the company can it bring in more revenues if it does it internally. There usually is no one answer and it is not uncommon to see new partnerships based on different circumstances. Do you like the partnerships of the companies you invest in?

There are more questions than answers, till the next time – to raising questions.