Why one Wall Street titan is investing $100 million in US-China relations

Oct 24, 2016 by

Zack Guzman –

The rhetoric this election cycle has many on Wall Street worried, perhaps no one more so than Blackstone’s billionaire CEO Steve Schwarzman.

Unlike many of his banking peers, though, taxes aren’t top of his mind. Instead, what bothers him is the alarming amount of frustration aimed at China. The animosity has led him to double down on his new immersive scholarship program Schwarzman Scholars, which he funded with a $100 million donation.

The program, which launched last month, brought 110 students from around the globe to Beijing’s elite Tsinghua University for the opportunity to learn more about international leadership. But the need for a China-focused Rhodes Scholars equivalent grew more and more apparent, Schwarzman says, as China became more of a political target.

“I wanted to start Schwarzman Scholars because I saw in the rise of populism the potential unfortunate outcome,” he said.

“I looked at where I thought populism was going and I thought it was inevitable that China would be on that list of groups to be angry at,” he said. “They’ve been a huge winner through globalization. Jobs have moved around the world, but to Asia, in particular in China, as the largest beneficiary.” That is a point raised by Donald Trump repeatedly on the campaign trail.

Harvard professor Graham Allison stresses the possibility of a war with China, a conclusion he came to after analyzing 500 years of history and finding that bloodshed was the result in 12 out of 16 past situations where a rising country has challenged a long-established power. Pointing to Allison’s research, Schwarzman underlines the seriousness of the situation.

“I worry about a situation that could get out of control particularly with weapons in the modern world,” he said. “So I looked at that and I said, ‘What can I do as a person to try and lower the temperature and avoid extreme outcomes?'”

By its launch in September, the program’s endowment had swelled to $435 million, securing contributions from more than 70 international corporations, and had gained the support of advisors like former Secretary of State Henry Kissinger and former British Prime Minister Tony Blair.

China and its investors represent an area of focus for Blackstone. The company received $3 billion from China in 2007 for a 10 percent stake in the company that had $356 billion under management as of the end of June. Still, Schwarzman insists the program is in no way a Blackstone project.

“I’ve been in rooms when Chinese leaders discuss some of these issues and I see their anger in return,” he said. If all goes well with the Schwarzman Scholars chosen this year and beyond, he hopes both sides will be “sure that we have a much more reasonable dialogue than just anger.”

Source: Why one Wall Street titan is investing $100 million in US-China relations

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