Barry Sternlicht says the ‘deck is stacked’ in China and he is not a fan of investing there

World investor Barry Sternlicht instructed CNBC on Wednesday he continues to carry a cautious view on investing in China.

“We’re not traders straight in China,” the chairman and CEO of Starwood Capital Group stated in an interview on “Squawk Field.” “It isn’t a China factor, a lot as international locations the place we predict the deck is stacked or we will not underwrite the political threat of the funding. It is simply, why hassle?”

Sternlicht’s feedback Wednesday comply with Beijing’s latest regulatory crackdown on all method of industries, together with expertise and personal schooling corporations. The developments thrust again into the highlight considerations many abroad traders have had about working in China, the place the communist authorities could be unpredictable in exerting its far-reaching energy over companies.

Sternlicht, whose agency largely focuses on international actual property, has for years warned concerning the challenges of investing in China. For instance, in a 2015 Bloomberg interview, he stated the Chinese language authorities’s central planning is “not at all times that apparent to the overseas investor” and advised he would not get sufficient return for the chance he is taking over.

Starwood Capital has, nevertheless, partnered with Chinese language developer Shimao Property Holdings to function a lodge three way partnership within the nation, which is house to the world’s second-largest economic system. In keeping with a 2017 press launch, Shimao owned 51%, whereas Miami-based Starwood owned 49%.

Past that Shimao enterprise, Sternlicht instructed the journey information web site Skift final yr that his agency was “not able to be adventurous” in China. “It isn’t my consolation zone,” he added then.

Extra broadly, Sternlicht stated he holds considerations concerning the financial implications of U.S.-China relations proper now, significantly because it pertains to Beijing’s latest encroachments on Taiwan.

Earlier this month, the U.S. State Division stated in a press release it was fearful about China’s “provocative navy exercise close to Taiwan” and urged Beijing to “stop its navy, diplomatic, and financial strain and coercion” towards the democratic self-ruled island.

Taiwan holds a key place within the international economic system due to its dominance within the semiconductor business. Nevertheless, China claims Taiwan as a part of its personal territory.

Whereas saying the U.S. is unlikely to go to “bodily battle” with China over Taiwan, Sternlicht fearful that the Biden administration might ratchet up financial sanctions and intensify the commerce battle that started beneath former President Donald Trump.

“It could strategically be a nightmare for the US,” Sternlicht stated. “Semiconductors shall be extra necessary than oil for this nation,” he added. “Overlook reserves. We’d like a semiconductor reserve as a result of your washer will cease working. It is a critical subject.”

“That’s, actually, the chance to the fairness market as a result of we are going to most probably begin with a sanction, international sanctions towards China. They suppose in 100-year intervals. Now we have traders that purchase corporations for weeks, not even months, so they may wait us out,” he added. … They’ve an enormous aggressive benefit.”