China's Stance Grows More Aggressive – Commodity Investors Take Precautions

At the Munich Security Conference, China and the USA engaged in an open confrontation. However, the tensions between the two nations did not begin with a shot-down alleged spy balloon. Already last year, China’s power plays in the South China Sea kept us on edge, where the People’s Republic has built numerous fortified islands. (We reported) The Middle Kingdom’s recent proposal to provide a peace plan for Ukraine caused even more surprise.

However, we must not be misled here. China is most likely not concerned with peace. The People’s Republic is presumably more focused on exerting influence over developing and emerging countries. Many of these are aligned with China in the way it conducts trade and interprets human rights. To “recruit” these countries and bring them onto its side, China offers infrastructure investments in key sectors, such as raw material extraction.

Some of these countries are still undecided as to whether the “China system” is right for them. However, this does not change the fact that the People’s Republic is increasingly gaining the trust of large parts of the world through its infrastructure projects. Europe must pursue a two-track approach here: on the one hand, it should present itself as a visible alternative to China for still undecided candidates such as South Africa. On the other hand, it cannot simply sever diplomatic relations with the Middle Kingdom. As the still most important trading partner for technology metals and rare earths, China can at any time drive up prices through supply stoppages and tariffs.

With an investment in technology metals and rare earths, our clients are definitely on the safe side. Because prices are almost certain to rise, one way or another. Therefore, there is no way around the possibility of attractive returns, including tax-free purchases and tax-free profits.