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

4 days ago

Global investor Barry Sternlicht told CNBC on Wednesday helium continues to clasp a cautious presumption connected investing successful China.

"We're not investors straight successful China," the president and CEO of Starwood Capital Group said successful an interrogation on "Squawk Box." "It's not a China thing, truthful overmuch arsenic countries wherever we deliberation the platform is stacked oregon we can't underwrite the governmental hazard of the investment. It's just, wherefore bother?"

Sternlicht's comments Wednesday travel Beijing's recent regulatory crackdown connected each mode of industries, including exertion and private acquisition firms. The developments thrust backmost into the spotlight concerns galore overseas investors person had astir operating successful China, wherever the communist authorities tin beryllium unpredictable successful exerting its far-reaching powerfulness implicit businesses.

Sternlicht, whose steadfast mostly focuses connected planetary existent estate, has for years warned astir the challenges of investing successful China. For example, successful a 2015 Bloomberg interview, helium said the Chinese government's cardinal readying is "not ever that evident to the overseas investor" and suggested helium wouldn't get capable instrumentality for the hazard he's taking on.

Starwood Capital has, however, partnered with Chinese developer Shimao Property Holdings to run a edifice associated task successful the country, which is location to the world's second-largest economy. According to a 2017 property release, Shimao owned 51%, portion Miami-based Starwood owned 49%.

Beyond that Shimao venture, Sternlicht told the question quality tract Skift past twelvemonth that his steadfast was "not acceptable to beryllium adventurous" successful China. "It's not my comfortableness zone," helium added then.

More broadly, Sternlicht said helium holds concerns astir the economical implications of U.S.-China relations close now, peculiarly arsenic it relates to Beijing's recent encroachments connected Taiwan.

Earlier this month, the U.S. State Department said successful a statement it was disquieted astir China's "provocative subject enactment adjacent Taiwan" and urged Beijing to "cease its military, diplomatic, and economical unit and coercion" toward the antiauthoritarian self-ruled island.

Taiwan holds a cardinal spot successful the planetary system due to the fact that of its dominance successful the semiconductor industry. However, China claims Taiwan arsenic portion of its ain territory.

While saying the U.S. is improbable to spell to "physical war" with China implicit Taiwan, Sternlicht disquieted that the Biden medication whitethorn ratchet up economical sanctions and intensify the commercialized warfare that began nether erstwhile President Donald Trump.

"It would strategically beryllium a nightmare for the United States," Sternlicht said. "Semiconductors volition beryllium much important than lipid for this country," helium added. "Forget reserves. We request a semiconductor reserve due to the fact that your washing instrumentality volition halt working. It's a superior issue."

"That is, really, the hazard to the equity marketplace due to the fact that we volition astir apt commencement with a sanction, planetary sanctions against China. They deliberation successful 100-year intervals. We person investors that bargain companies for weeks, not adjacent months, truthful they volition hold america out," helium added. ... They person a immense competitory advantage."