The Return Of History: China And Taiwan

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The great geopolitical analyst and theorist Robert Kagan wrote a long article on Chinese ambitions for the WSJ’s Review section this past weekend: “Challenging The US Is A Historic Mistake” [SUBCRIPTION REQUIRED]. I highly recommend it for laymen like myself trying to get an overview of the current geopolitical moment.

While Kagan makes a compelling case that China would not win a war against the US and its liberal allies, that doesn’t mean it won’t try. History is full of ambitious leaders that made poor decisions in pursuit of world dominance. Putin’s invasion of the Ukraine is just the latest. Germany overreached in WWI and WWII as did Japan when it bombed Pearl Harbor. All of these were irrational – and costly – decisions that ran up against the reality of US power. China has global ambitions similar to Germany in WWI and WWII and Japan in WWII. The risk from the standpoint of the US and the liberal world order is another irrational decision by Xi Jinping and China.

What if China goes after Taiwan? While I’m not qualified to speculate on this kind of thing, it should be on your radar as a citizen and investor. In addition to inflation and recession, add geopolitical conflict to your list of concerns. As an investor, consider owning some defense stocks in your portfolio as a hedge. As a citizen, pray that it doesn’t come to this. President Biden will surely have some things to say about China in his State of the Union address Tuesday night.

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