China

Gandalf

SuperModerator
Moderator
FOTCM Member
Link: _http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Last Updated: 8:39pm BST 10/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Blog - Dollar to collapse?
Fistful of dollars - China's trade surplus reached $26.9bn in June


Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.
 
L

Locksmith

Guest
The following is an opinion affirming the position that China is in the driver’s seat of this issue.

http://www.vdare.com/roberts/070809_china.htm

August 09, 2007
China’s "Nuclear Option" Is Real

By Paul Craig Roberts

Twenty-four hours after I reported China’s announcement that China, not the Federal Reserve, controls US interest rates by its decision to purchase, hold, or dump US Treasury bonds, the news of the announcement appeared in sanitized and unthreatening form in a few US news sources.

The Washington Post found an economics professor at the University of Wisconsin to provide reassurances that it was "not really a credible threat" that China would intervene in currency or bond markets in any way that could hurt the dollar’s value or raise US interest rates, because China would hurt its own pocketbook by such actions.

US Treasury Secretary Henry Paulson, just back from Beijing, where he gave China orders to raise the value of the Chinese yuan "without delay," dismissed the Chinese announcement as "frankly absurd." [Another Shot in Currency Fight Chinese Threaten Divestment , by Krissah Williams, August 9, 2007]

Both the professor and the Treasury Secretary are greatly mistaken.

(snip)
I believe Roberts has nailed the analysis of this issue by observing and deducting:

1. The Chinese made no threats. To the contrary, one of the officials said, "China doesn’t want any undesirable phenomenon in the global financial order."

2. China has raised about 300 million of its population into higher living standards, and is now focusing on developing a massive internal market some 4 to 5 times more populous than America’s.

3. China does not need foreign exchange reserves for the usual reasons of supporting its currency’s value ... (snip) The other reason is that China does not have foreign trade deficits, and does not need reserves in other currencies with which to pay its bills.

4. China’s large holdings of dollar-denominated financial instruments have been depreciating for some time as the dollar declines against other traded currencies, because people and central banks in other countries are either reducing their dollar holdings or ceasing to add to them.

5. … consider that if China were to increase the value of the yuan by 30 percent, the value of China’s dollar holdings would decline by 30 percent. It would have the same effect on China’s pocketbook as dumping dollars and Treasuries in the markets.

6. Consider also, that as revaluation causes the yuan … to move up against every other traded currency. Thus, the Chinese cannot revalue as Paulson has ordered without making Chinese goods more expensive not merely to Americans but everywhere.

7. With the yuan pegged to the dollar, China can dump dollars without altering the exchange rate between the yuan and the dollar. As the dollar falls, the yuan falls with it. Goods and services produced in China do not become more expensive to Americans, and they become cheaper elsewhere. By dumping dollars, China expands its entry into other markets and accumulates more foreign currencies from trade surpluses.

8. … consider the non-financial costs to China’s self-image and rising prestige of permitting the US government to set the value of its currency.


And, to elaborates on the magnitude of the problem presented in #4, above, I am pasting in some homework of the top 20 originating countries of US 2006 imports (in dollar terms); and the overall change in the US dollar versus those country's currencies:

http://www.census.gov/foreign-trade/Press-Release/2006pr/final_revisions/exh13tl.txt
http://www.oanda.com/convert/fxhistory

2006 EXPORTER (CUR) US RANK & SHARE USD SPENT 2002 – 2007-Q2
CANADA (CAD) IMPORT RANK 001, 16.3% USD LOSS 34%
CHINA (CNY) IMPORT RANK 002, 15.5% USD LOSS 8%
MEXICO (MXN) IMPORT RANK 003, 10.7% USD GAIN 19%
JAPAN (JPY) IMPORT RANK 004, 08.0% USD LOSS 7%
GERMANY (EUR) IMPORT RANK 005, 04.8% USD LOSS 35%
UNITED KINGDOM (GBP) IMPORT RANK 006, 02.9% USD LOSS 29%
KOREA, SOUTH (KRW) IMPORT RANK 007, 02.5% USD LOSS 30%
TAIWAN (TWD) IMPORT RANK 008, 02.1% USD LOSS 6%
VENEZUELA (VEB) IMPORT RANK 009, 02.0% USD GAIN 133%
FRANCE (EUR) IMPORT RANK 010, 02.0% USD LOSS 35%
MALAYSIA (MYR) IMPORT RANK 011, 02.0% USD LOSS 9%
ITALY (EUR) IMPORT RANK 012, 01.8% USD LOSS 35%
SAUDI ARABIA (SAR) IMPORT RANK 013, 01.7% USD GAIN 0%
IRELAND (EUR) IMPORT RANK 014, 01.5% USD LOSS 35%
NIGERIA (NGN) IMPORT RANK 015, 01.5% USD GAIN 7%
BRAZIL (BRL) IMPORT RANK 016, 01.4% USD LOSS 20%
THAILAND (THB) IMPORT RANK 017, 01.2% USD LOSS 26%
INDIA (INR) IMPORT RANK 018, 01.2% USD LOSS 17%
RUSSIA (RUB) IMPORT RANK 019, 01.1% USD LOSS 17%
ISRAEL (ILS) IMPORT RANK 020, 01.0% USD LOSS 11%
 
Is China the key to Africa's development?

This article covers some of the good, the bad and the ugly aspects of China's increasing economic involvement with Africa.


slate.com said:
Though the United States and Europe still loom large here as cultural and economic icons, China is making inroads into Africa in rivulets. In this city, Tanzania's second largest, the rivulets take the form of manufactured goods, construction projects like roads and cell-phone towers, and a smattering of Chinese restaurants. For a desperately poor country like Tanzania, this "South-South" trade with China has created massive new opportunities for accelerating economic development.

In recent years, the increase in trade flows between sub-Saharan Africa and Asia has been dramatic—exports from Asia to Africa have grown at an annual rate of 18 percent since 2002. Part of the equation is that low-cost goods from China fit economies like Tanzania's well. Goods like those sold by Charles are low-quality and sometimes fake, but they are creating new microenterprise opportunities for entrepreneurial Africans. Charles told me he, like many other Arusha vendors who had regular jobs before going independent, worked in a shoe shop until he was laid off.

The new opportunities to trade with China are so tantalizing for Africans that some are returning from abroad to invest in their homelands. Georgine Spake is an elegant, tall Congolese woman who speaks English with a thick French accent and lives in the leafy suburbs of Washington, D.C., with her American husband and four children. Upon visiting her birthplace of Kinshasa last June, after a nine-year hiatus, Spake told me she was dumbfounded to discover that most of her friends and family were traveling to and from China to do business. Lured by the promise of turning her own respectable profit, Spake flew to the bustling manufacturing hub of Guangzhou, China, to investigate import opportunities with a cousin who was already importing security cameras and telephones. She stayed for a month, paying a Congolese man who lived there $150 to be her translator and fixer throughout her stay. By the end, she arranged for the shipment of 30 tons of garlic to be sold at wholesale in Kinshasa. She chose garlic, she said, because there has been great demand for it since the eastern Democratic Republic of Congo, which traditionally cultivated garlic and onions, fell prey to conflict.
Supplement - aid versus investment. This seems to compliment the above article nicely.


asecondhandconjecture.com.com said:
Aid not only crowds out local entrepreneurship, it makes governments lazy and deprives countries of the incentive to build effective institutions. Public revenue derived from taxes makes governments directly responsible to their citizens. Free money builds white elephants and bloated bureaucracies, it being far easier to create new government jobs than implement policies to fight unemployment, especially when someone else is footing the bill.

The perverse result is that many of Africa’s best and brightest become bureaucrats or NGO workers when they should be scientists or entrepreneurs. Which is why some are wondering: why not just take the aid money and invest in local business?
To the last sentence of the above snippet - Hmmm, good question, it seems so simple. Wonder why it hasn't been done yet....
 
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bluenorther

The Force is Strong With This One
This is exactly what's mentioned in Steven Hiatt's book "A Game As Old As Empire", where the Chinese are taking up the same predatorial methods that have been used by Western countries for many years.
 

Tigersoap

The Living Force
I took this snippet from the second article

“If you make Africans rich, they’ll be less poor,” said Idriss Mohammed, a financier who wants to raise a private equity fund for Sub-Saharan Africa. “Forget making poverty history. I want to make Africans rich.”

Audacious, blasphemous, foolhardy—possibly—but that philosophy is precisely how China has been able to lift millions out of poverty in only a few decades and become a magnet for foreign investment.
This is ridiculous, how will neoliberalism save anyone ?
By consuming even more ? By "saving" them in stopping the much needed help ?
This article seems a good excuse to push neo-liberal measures even more osit.

And since when did China lift millions out of poverty ? By converting to neoliberalism which shifted the money and security into a few priviliged hands ?

This whole system is messed up, look at any country that really tried to enact some deep changes (Chili , Venezuela...) and how they ended up or are cast out as "enemy".
Africa is so beaten down that they don't have much choice but to submit to neoliberal ideas osit.
 
A visual aid to help clarify the picture and illuminate things (no pun intended). This map of the earth shows that a picture is certainly worth a thousand words where Africa, China, the German lebensraum concept, and potential for future development on the continent are concerned...

earth_at_the_night_1024x768.jpg
 

Tigersoap

The Living Force
Telperion said:
A visual aid to help clarify the picture and illuminate things (no pun intended). This map of the earth shows that a picture is certainly worth a thousand words where Africa, China, the German lebensraum concept, and potential for future development on the continent are concerned...
Would you mind clarifying what you're trying to say because i am still in the dark ?
Do you suggest that the non-lighted areas will be the new places of "conquest" for China ?

Thanks.
 

PopHistorian

The Living Force
FOTCM Member
Having flown over China's busy eastern seaboard at night, I noted that its light is, literally, still quite dim itself, compared to, for example, eastern Japan or eastern USA.
 

PepperFritz

The Living Force
Telperion said:
A visual aid to help clarify the picture and illuminate things (no pun intended)....
I'm not sure either what point Telperion is trying to make re China and Africa. However, the "visual aid" he provides is "illuminating" on many levels....
 
Tigersoap said:
Telperion said:
A visual aid to help clarify the picture and illuminate things (no pun intended). This map of the earth shows that a picture is certainly worth a thousand words where Africa, China, the German lebensraum concept, and potential for future development on the continent are concerned...
Would you mind clarifying what you're trying to say because i am still in the dark ?
Do you suggest that the non-lighted areas will be the new places of "conquest" for China ?

Thanks.
Sure - Well, I don't mean conquest in the traditional military sense but certainly in an economic sense. As China/Africa relations continue to grow and become increasingly interconnected the West will certainly began to see this involvement as more of a threat than it does now. At the moment everyone in the US and Europe is so absorbed in the happenings of the manufactured Middle East soap opera there seems to be little room other considerations. China seems to be exploiting his tunnel vision. Many governments and private industries in the West have for hundreds of years taken for granted that Africa and it's vast resources will always be there as a grab bag of sorts but now the equation is changing.

afpc said:
Beijing's motives are clear. China's growing industries demand new energy and raw material suppliers; its exporters want markets; its diplomats require support in international organizations; and its propaganda still seeks support from allies to advance Chinese interests and, when necessary, to counter the United States.

Africa has become central to these strategies. In part, China's courtship of Africa is a resource grab. Rapid Chinese economic growth coupled with dwindling domestic Chinese petroleum and mineral deposits have encouraged Beijing to look abroad for resources. Last year, China became the world's second-largest consumer of petroleum products, and its imports of natural gas, copper, cobalt, and other key resources are rising by as much as 20 percent annually.

Within the next decade, China's domestic oil production is likely to continue diminishing, and the country will surpass the United States as the largest global consumer of oil. And China possesses no significant strategic petroleum reserve. According to energy analysts such as Erica Downs of the Brookings Institution, who follows the debate on oil within the Chinese leadership, Beijing is convinced that it must become less dependent on market-dictated pricing in case of a global crisis or a deliberate US attempt to cut China's energy supply lines.

This search for resources takes Chinese officials to commodity-rich Africa, home to major oil producers, including Nigeria, Sudan, Angola, and Gabon, as well as some of the richest deposits of minerals in the world. China already imports about 28 percent of its oil and gas from sub-Saharan Africa, compared with about 15 percent for the United States, and it has made sizable copper purchases in Zambia, the Democratic Republic of Congo, and other African states. Although Zimbabwe lacks oil, it has the second-largest deposits of platinum in the world; those riches remain largely untapped, as do Zimbabwe's deposits of more than 40 other minerals, including ferrochrome, uranium, gold, silver, and copper.
http://www.afpc.org/china-africa.shtml

As for the dark areas representing undeveloped sections of the earth, I was trying to point out which areas of the world are approaching serious population issues and which ones are still ripe for settlement in the future. I see a conflict arising over this in the future between China and the West. Europe solved its population problems in the past mostly due to the existence of North and South America, Australia, settlements in Africa/India, WWI, WWII, and the flu/small pox epidemics. China, by instituting the "one child" policy managed to curb or at least minimize it's own population crisis for the meantime. In the western world especially it seems to me there is another overpopulation crisis looming and there are only a few parts of the world left that would be favorable for resettlement. In the event of cataclysmic climate change, meteor bombardments etc, China and the West would be in direct competition for favorable "living space" and access to resources.
 

anart

A Disturbance in the Force
Telperion said:
In the event of cataclysmic climate change, meteor bombardments etc, China and the West would be in direct competition for favorable "living space" and access to resources.
This seems to be quite the assumption. Considering what a 'bombardment' would entail, it's highly likely that there would be no competition afterward for anything other than day to day survival exactly where one happened to survive. The same would likely apply with rapid glacial onset and even nuclear war. If 94% of the world's population is headed toward extinction, then future 'living space' isn't really an issue.

Of course, if everything stays as it is and there are no major changes or decreases in population in the next five to ten years, then, sure - it might be theoretically relevant. Considering the current geopolitical/economic/environmental/astronomical climate, however...
 
I agree with Anart. If 94% of the population i.e. about 6,389,330,000 individuals are going to perish then there will not exist an organized system of government on the planet thus any interest China may have in taking advantage of Africa's current situation will not be of significance. It seems to me that a discussion detailing such an event is eclipsed by the overwhelming evidence that our planet may soon be bombarded by numerous celestial objects. Of course I may be incorrect, but I think analyzing issues associated with China's economic interests in Africa is a distraction. Thus, any time spent on discussing an issue that is inherently insignificant is time wasted. I believe that we need to be less focused on these type of events but more on how this forum may maximize its ability to educate others of upcoming catalysmic events. Of course, only educating others of the possible existence of these cataclysms may not be sufficient. This forum also educates others in how to gain self-knowledge, rid one's self of numerous programs, and orient one's self towards service to others. Understanding how to best serve others seems to be a concept in which we are lacking understanding. Though these discussions are presented with good intentions in mind, would it not be best to focus on the bigger picture and discuss topics/concepts that hold tightly to this idea and maximize its potential to best serve others?
 
SeekingtheTruth said:
If 94% of the population i.e. about 6,389,330,000 individuals are going to perish then there will not exist an organized system of government on the planet thus any interest China may have in taking advantage of Africa's current situation will not be of significance.
This is BIG if. Granted, I feel fairly certain a major world changing event is on the horizon, but do I think it will be the disaster predicted by some?...I'm not at all sure, and no one really knows. If in the near future 94% of the world was going to be wiped out then what would be the point of educating people about it? Who would really even want to know this terrible information if the probability of their survival or the survival of their kin was almost nil? In any case, remember that many of the early Christians were living in expectation of the rapture occurring during their lifetime, and you see what happened there. While they were all preparing for the end of the world the Roman Catholic church was solidifying its power.

SeekingtheTruth said:
Thus, any time spent on discussing an issue that is inherently insignificant is time wasted. I believe that we need to be less focused on these type of events but more on how this forum may maximize its ability to educate others of upcoming catalysmic events.
You may certainly see the issue under discussion in this thread as insignificant and that is certainly your right, but of course not everyone is going to see it that way. For those who feel that we are not living with a sword of Damocles dangling over our heads, and that some thought should be given to the future, maybe this is a topic that bears some consideration. Of course trying to imagine a future with the rise of a power equal to or greater than the West is quite a stretch of the imagination for some, granted. But if we all aren't wiped out in a disaster it's a distinct possibility.

As for meteor bombardments I think it bears remembering that 65 - 70% of the earth's surface is covered by oceans...but if a meteor(s) did strike land and wreak havoc, say smack dab in the middle of some area of the Western world do you really think all geopolitical concerns would be thrown out the window? If everyone wasn't killed outright the surviving governments would on the second day be planning how to best exploit/come out on top of the situation.
 

Tigersoap

The Living Force
Telperion said:
If in the near future 94% of the world was going to be wiped out then what would be the point of educating people about it?
I always had the impression that only the people who wanted to know the truth would be interested anyway.
That's maybe the whole point, make it available to as many people as possible no matter the outcome.
You never know what could happen osit.

Telperion said:
You may certainly see the issue under discussion in this thread as insignificant and that is certainly your right, but of course not everyone is going to see it that way. For those who feel that we are not living with a sword of Damocles dangling over our heads, and that some thought should be given to the future, maybe this is a topic that bears some consideration. Of course trying to imagine a future with the rise of a power equal to or greater than the West is quite a stretch of the imagination for some, granted. But if we all aren't wiped out in a disaster it's a distinct possibility.
The problem is that what you're saying should also be filed under "IF", and could as well be irrelevant because you and I probably don't know exactly what the PTB have in mind, although the SOTT seems to make pretty good "prediction" based on factual datas and not "IFs".

Do you want everyone to feel as scared as you are from the economic expension of China and future land grab which might never happen at all ?

Telperion said:
As for meteor bombardments I think it bears remembering that 65 - 70% of the earth's surface is covered by oceans...but if a meteor(s) did strike land and wreak havoc, say smack dab in the middle of some area of the Western world do you really think all geopolitical concerns would be thrown out the window? If everyone wasn't killed outright the surviving governments would on the second day be planning how to best exploit/come out on top of the situation.
Well I think they already planned it and are waiting for it grinning, which makes me wonder if you ever read the articles posted on the Sott ?
No offence but that's the impression I get from your posts sometimes.
 

ScioAgapeOmnis

The Living Force
FOTCM Member
Telperion said:
Granted, I feel fairly certain a major world changing event is on the horizon, but do I think it will be the disaster predicted by some?...I'm not at all sure, and no one really knows.
I agree, the future is open.

Telperion said:
If in the near future 94% of the world was going to be wiped out then what would be the point of educating people about it?
Well I could think of a few reasons. One, as you mentioned, nobody really knows and anything is possible. But even if the 94% dying thing was a certainty, then the reason may be so that the remaining 6% might have a chance to build a different kind of civilization based on knowledge and empathy, and maybe not repeat the mistakes of the civilization that was just destroyed. Also, there is a possibility that people might carry what they learn with them beyond this life, and the possibility that "the Wave" is real and so people might be able to be positively affected by it if they had the right knowledge, even after death, who knows. Not to mention, if you're at a point where seeking and spreading knowledge is "in you to do", then really, you'd be doing what's in you to do because that's all you can do.

Telperion said:
Who would really even want to know this terrible information if the probability of their survival or the survival of their kin was almost nil?
I'm sure some people would. Some would because of "hope" that they'd be part of the remaining 6%. Others would just to learn for its own sake and addressing their blindness and sleeping state, even if that's the last thing they do before they die. Maybe just for its own sake, or because maybe they hope to carry the knowledge with them after death. Whatever the reason, the "drive to Knowledge" usually does not need a reason other than Knowledge itself, even if death is in about 5 minutes.

Telperion said:
In any case, remember that many of the early Christians were living in expectation of the rapture occurring during their lifetime, and you see what happened there.
Yes but that's because they were following blind faith, not data.
 
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