Princeton Energy Advisors is not historically a China shop. We monitor conditions and risks associated with oil markets. Nevertheless, in the last year we have identified China as the principal 'black swan' risk to not only oil markets, but more broadly to capital markets, commodity producers, and goods importers. As a consequence, we have built out our expertise and since last fall have included specific daily briefings on China risk to our clients. We now extend these services to non-oil clients as well.
Our view is informed by more than fifteen years of consulting experience in post-communist Eastern Europe. During that time, we had an opportunity to consult to a number of clients similar to China's President Xi. These clients did not behave like European or US managers. They were far more aggressive and far less attuned to feedback and guidance. They almost inevitably misjudged US and European reactions to their initiatives. We see much the same pattern in China.
We take President Xi seriously. He has managed to undermine thirty years to collective rule in China--no easy feat. He has not hesitated to purge the bureaucracy and eliminate senior Politburo members. He is an extraordinarily determined leader, and therefore unlikely to be deterred. We grant him more respect than do most other analysts. What you see is what you get. And we see an aggressive military posture and a willingness to engage in direct conflict.
We also see a leader playing, in his own view, the Big Game, looking to re-write two centuries of British and American ascendancy in world affairs. To him, this is a historic prize, one worth a military struggle. Tactics and strategies, unthinkable to others, are part of his vocabulary. In this, we hold the most conviction. That sets us apart from other consultants. We don't think President Xi is kidding.
At the same time, we look at risks from a business, not national security, perspective. Business impacts can be felt, in fact are already being felt, far short of war. For financial and strategic investors, it is the business implications which count, and we focus our efforts there.