Next Major Bill May Focus on Curbing China

by Greg Valliere, AGF Management Ltd.

YOU WANT A TRULY BIPARTISAN BILL? Then focus on China, which is “eating America’s lunch,” Joe Biden famously declared last year. There’s growing support in Congress for legislation that would challenge China’s economic clout.

WE’VE TALKED WITH AIDES IN BOTH PARTIES in recent days, most of whom have little stomach to plunge immediately into a bitter debate over a green infrastructure bill or a major tax increase. When they look for common ground, one theme dominates: Washington’s antipathy toward Beijing.

THE PLAYER TO WATCH is Chuck Schumer, a persistent China critic, who suddenly is the most powerful person in Congress. Schumer wants to move legislation, soon, that would focus on boosting U.S. manufacturing and supply chains.

A CATALYST, WHICH WE HEAR CONSTANTLY, is that U.S. companies — especially in the auto industry — face a dire shortage of semiconductor chips. Demand far exceeds supply, shipping lanes are clogged, and a skilled labor shortage persists in the U.S. Schumer’s bill would address that.

KEY MEMBERS IN CONGRESS are preparing to move legislation from Schumer and Sen. Todd Young (R-Ind.) later this spring, The Washington Post and others are reporting that they’re ready to move soon. (A massive infrastructure bill and a tax hike are not ready to move, we’re hearing.)

SCHUMER WANTS TO SPEND MONEY, OF COURSE: He supports legislation that would fund 5G networks, expand U.S. ports, and support U.S. production of more semiconductors. There’s no price tag yet for his plan, but it’s likely to soar into the tens of billions — small change compared to the Covid relief bill.

SCHUMER AND GOP SEN. YOUNG have already proposed a bill that would seek to counter China’s relentless drive to gain superiority. It’s an understatement that the Chinese government is viewed as a villain in Washington — because of its treatment of dissidents, its lack of transparency on Covid, and its recent hacking of U.S. firms.

THE MORE IMMEDIATE CONCERN is U.S. reliance on Chinese-produced health goods, ranging from face masks to crucial medical supplies. The Trump Administration imposed tariffs — which probably will persist — but there’s a growing mood in Congress that the U.S. response should be shoring up American competitiveness; there’s a strong desire to compete with Huawei in the G5 ramp-up.

BOTTOM LINE: Biden knows he can win bipartisan support for legislation that would seek to curb China by ramping up U.S. production. Since money is no object any more, he can allocate billions to U.S. firms; this would be a popular move even among Trump supporters, who have a populist dislike of the Chinese government.

WHETHER BIDEN WILL MENTION THIS in tonight’s address is unclear. He will proclaim that Covid is retreating, and he will sell his Covid relief bill (which already is very popular). But Biden knows that much more needs to be done, so why not go for an easy win against China before moving on to green infrastructure and tax hikes?

 

 


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2021 AGF Management Limited. All rights reserved.
This post was first published at the AGF Perspectives Blog.
Total
0
Shares
Previous Article

Tech Talk for Thursday March 11th 2021

Next Article

In the Know: Is Crypto a Speculative Play, or Here to Stay?

Related Posts
Subscribe to AdvisorAnalyst.com notifications
Watch. Listen. Read. Raise your average.