China has “stolen $2trn to $3trn in intellectual property” from America over the last decade, claims hedge-fund manager Kyle Bass. That needs to be addressed firmly in any trade deal if the US is to see any real benefit from the current talks, he says. “The US’s number-one asset… is our ingenuity… our ability to innovate,” Bass tells CNBC’s Brian Sullivan. “That’s our game and they’re stealing our game from us. It’s really important for this new agreement to be measurable and punishable.”
Bass, a long-term China bear, is not keen to invest in Chinese stocks, despite recent gains. “Can the Chinese run up their stockmarket? Absolutely. Domestically, they control the price, they control the printing press, they control the police, they control the narrative,” he says. But “why would you invest in a country where there is no rule of law?”.
That said, Bass is not a huge fan of other global stockmarkets either. Bass expects both Southeast Asia and Europe to face recession before the end of this year, citing fragile economic data in China, Italy and Germany. The US, on the other hand, is still enjoying an afterglow (a “fiscal impulse”) from the tax cuts pushed through under Donald Trump.
“The US is the tallest midget at this moment in time.” Yet even that will wear off by 2020, argues Bass. Indeed, he is so downbeat that rather than invest in US shares, he is hunkering down in “safe-haven” bonds. “US interest rates are going to head back to 0% in 2020, so we’re long a lot of bonds.”