Welcome to my video interview with Scott Chan. Below is a transcript that I’ve edited for the sake of concision. For additional details and several charts, watch my video.

Scott Chan is the lead analyst for Real World Investing and The Complete Investor. I sat down with Scott to discuss China and a range of related geopolitical topics as they affect investors.

Scott Chan moved from China to the U.S. with his family at the age of 10. He earned undergraduate degrees from New York University followed by an MBA degree from the Zicklin School of Business at Baruch College. Scott reads and speaks fluent Mandarin and Cantonese Chinese.

If anyone understands the world’s second-largest economy, it’s Scott Chan. My questions to him are in bold.

China has taken a sharper authoritarian turn, against not just Taiwan and Hong Kong but also against mega-cap technology companies. How big a threat is Beijing’s crackdown to the tech sector?

Chinese stocks have always carried a stigma. One reason is doubt, fair or unfair, about the legitimacy of the accounting. Another reason is that the Chinese Communist Party (CCP) can do whatever it wants. The crackdown on the tech sector limits the upside of these mega-cap Chinese tech companies.

But it’s important to make the distinction that the crackdown in tech has been limited to consumer tech companies. China hasn’t touched tech sectors like semiconductors, so China knows what it’s doing in regard to prioritizing what’s important to its standing in the world.

While the Chinese government’s crackdown on the technology sector has eased in recent months, it has clearly left a permanent sense of trauma among tech leaders and investors, eroding trust and making the sector skittish to even the whiff of new regulatory changes. Chinese companies as a whole have endured substantial earnings downgrades, as China grapples with a litany of economic problems.

Meanwhile, we’re seeing Sino-Russo coziness unfold during the Ukraine crisis. What does this geopolitical realignment mean for investors?

As the saying goes, the enemy of my enemy is my friend. It’s in the interest of both countries to reduce American influence in that part of the world.

China and Russia both want to reduce the dollar’s influence. In fact, whereas trade between Russia and China used to be almost entirely settled in U.S. dollars, over the past six or seven years the situation has changed a lot. Nowadays, most bilateral trade between the two countries is settled in the euro, which is still a third-party currency.

Chances are China will want to see if eventually it can work the digital yuan into the relationship. Perhaps to increase confidence, China could at least partially back the electronic Chinese yuan (e-CNY) with gold.

China’s debt woes, as epitomized by China Evergrande Group’s court-ordered liquidation, have shaken global investors. How bad is the debt situation in China and could it trigger global contagion?

There are a lot of bad things about the CCP, but in a crisis, an authoritarian government can get things done fast.

Stricter debt regulation was in fact what caused Evergrande to run out of money. For the time being, Beijing is willing to tolerate some short-term pain, to keep the debt bubble from continuing to grow and maybe getting impossible to control in the future.

However, at the same time, the CCP won’t let things get out of hand. The central bank has been incrementally lowering interest rates and if necessary the government will do more.

Inflation is a global threat, not just an American problem. To be sure, inflation has been coming down. The major inflation gauges have been on a downward trajectory. But inflation could rear its ugly head again at any time and it remains elevated. What are some of your favorite inflation hedges now?

At The Complete Investor and Real World Investing, we have long been wary of the threat of inflation posed by resource scarcity. Real World Investing, in fact, was created to help investors deal with the very issue of resource scarcity.

There are two mega-trends affecting every investor now. One is the continuing modernization of the developing world, with China playing a huge part. The other is the global transition to cleaner energy.

Both of these megatrends require tremendous amounts of natural resources. The pandemic exacerbated the situation, but inflationary forces were already in place.

We have long recommended natural resource plays to hedge against inflation as well as for growth and there’s no reason to change now that commodity-led inflation is here. These plays include energy producers, miners, and precious metals exchange-traded funds (ETFs).

Editor’s Note: Scott Chan just provided you with valuable geopolitical context for your investment decisions. But the above interview only scratches the surface of the expertise on our staff.

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John Persinos is the editorial director of Investing Daily.

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