Yesterday I went top of r/ China over a post regarding China's current economic downturn. I got a lot of good and constructive feedback from it, but it had me thinking of is there an actionable way to actually hedge the economic risk for the average Joe. Given the probability of a China-Taiwan war is uncertain and hard to time, we'd need to find a security that is simultaneously 1. going to increase in value in case of conflict with Taiwan, 2. undervalued to purchase right now, and 3. enough of a bellwether to hold its value even without that conflict occurring immediately (if you didn't know 0DTEs sorta suck for making money). Ideally, the company to invest in would also have high-growth prospect.
Introducing CSCO: Cisco is the largest broadcasting equipment manufacturer outside of China. In case China does invade Taiwan, a huge $500B market, the largest non-petroleum, non-IC, segment of the global economy, will empty into a huge power vacuum that only Cisco can fulfill. Cisco at one point during the dot-com bubble was the largest company in the world before China took their lunch money. In case China declines, Cisco would naturally return to the forefront. Further, when 6G eventually arrives, they'll almost certainly be the only provider that's going to have licensing rights in the collective West (USA + Eurozone), since Huawei would be sanctioned. I'd also like to make a case that 6G could be bigger in the near term than AI: 6Gs low latency capabilities could facilitate reliable outsourcing of basically every job. We don't need self-driving tractors, construction equipment, taxi drivers, or even surgeons (I can't post videos here due to the autobot but watch the “surgery on a grape” video to see how surgery could feasibly be done remotely) if in near real-time, we could train people in Latin America or other emerging markets to perform the jobs at specialized kiosks for a fraction of the cost. That new form of outsourcing could also provide the necessary data for AI too so it's a bet on AI too.
Tl;dr: China's Macro Leverage Ratio (an equivalency of total debt to GDP that's preferred when talking about China because of fundamental differences in how debt is financed there) is now higher than the US despite less growth and weakness in the Yuan prevents further monetary easing => risk of confrontation with Taiwan or any conflict increases due to desperation from the People's party => China's most important export category, telecoms equipment (the cellphone towers you see when driving around) loses value and Cisco takes their spot.
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