Open Book: Don't Ignore the China Threat

As for the three main takeaways of The Coming China Wars, let me offer the following:

1. China's emergence as an economic superpower is creating conflicts around the world over energy and other natural resources; grain, soybeans and other agricultural products; environmental resources and regional air basins; and, of course, world markets. Understanding these conflicts will make you a better investor by attuning you to how these conflicts will affect the supply and demand of key resources and the cost structures of companies.

2. The chronic trade imbalance between China and the U.S. is leading to a loss of American economic, financial and political independence because of how China is strategically recycling surplus dollars back into U.S. bond and stock markets. Understanding this dynamic will help both stock and bond investors spot market trends and potential turning points. Currency traders will likewise be better able to anticipate market moves, while U.S. policymakers should be motivated to address the unfair trading practices of China that are giving rise to the projection of Chinese power.

3. China is hardly as politically stable as the popular mythology of an omnipotent Communist Party would suggest. As I illustrate in several chapters discussing China's "wars from within," protests in China are rapidly growing over issues ranging from rampant government corruption and growing income disparities to land seizures, horrific pollution and a collapsing health care system.

Investors, therefore, need to understand all the risks of a China investment strategy.