Jintao on the dollar

[bigbadwolf]

Ferguson, a conservative English historian, coined the term ‘Chamerica' and said that it was a marriage of convenience. It is like a marriage between a hardworking man (China) and a lazy but prestigious woman (America) who spends the hardworking man's money. Ferguson thinks that this marriage will last. I, however, have my doubts.
The problem is that China does not seem to want major changes in the global system. China is looking to get a higher status within the current global system and not [seeking] the transformation of the global system. China, as far as I understand, is not interested in the role of a hegemon, not because it is not ambitious but because the Chinese look at the world in a different way. They consider it unnecessary to accept all the problems, pains and difficulties connected to the role of hegemony. They are satisfied with the role of regional dominant power and being at the same time an increasingly important global economic power. Why should China try to imitate American takeover, it is not of interest to its national elite to become a global hegemon.
China is not trying to shape or change the global system, but is just improving its status, position and role within the system. That is exactly the contradiction. Having a higher role within a system that is going down is a very dangerous strategy because it means more trouble with a higher status in the system. This is slowly happening, as China has to spend more money on certain issues it is not interested in, as it cannot avoid them.[/quote]

 

[MSFHQ]

I am mobile so forgive my brevity.

1) We completely rebuilt Japan. Same thing with Europe. Japan might not have asked for our base, but Japan and the USA are close partners. We maintain a base, that's it. A lot different from colonial Europe. Our "territory" consists of bases in friendly nations. They are routinely closed or reduced when host nations say.

2) nothing is a zero risk. The USA is close to zero. If we default I don't think you're going to be on quantnet arguing with me. It is going to be a scary, global issus.

3) Comparing what we are doing in Afghanistant with the USSR is disgusting and insulting. We will leave. We are not trying to take over land and add to our states. We want a pro western, democracy with freedom. This is compared to the repressive, cruel and terrorist supporting regime it used to have.


4) You can thank US bases from stopping Communism from spreading. Sorry that you are upset with that. also, I dont really care what Germany and Italy want. You slaughter 6 million Jews and you get an American base.

 

[happypantsmcgee]

Spot on as usual Anthony.

 

[happypantsmcgee]

I realize I'm new here but they should really consider renaming this forum the socialist league of very ordinary gentlemen. Are you seriously comparing the number of casualties caused by a German Uboat to 9/11? I'm sure this will come as a shock, but you can hardly compare the actions of a military entity in war time to the actions of a sect operating out of a 'shell country' (for want of a better term). I really hesitate to majority of these comments simply because I love my country and it would seem trying to convince some of you that you should defend the nation that provided you with the very opportunities you are enjoying today would be a fool's errand.

 

[DominiConnor]

1) Anthony, the Brits did huge building in India, Oz, NZ, HK, Sg, et al didn't stop it being an Empire.All were friendly countries, hundreds of thousands of people from these countries volunteered to fight for Britain in both world wars. That's what empires do. Same with the Roman empire. The French empire was so loyal to France that when France was occupied by Germany in 1940 they started fighting the Brits.

2) I agree, if we'd started on the proposition that the US is a smaller default risk than any other top 10 economy, I'd have agreed, maybe even than the top 20 since size and default risk only vaguely correlate.

3) I was not comparing the ethical position of the USA and USSR, just that the costs and consequences might well turn out to be comparable. The actions of the USSR were the nasty end of imperial style policy, just like various American actions towards Cuba. I happen to believe that sadly the ethical position is irrelevant to the outcome. Actually, it might be better if the USA was trying to make Afghanistan the 51st state, since then it would stop pissing around with evangelical crap.

4) Actually Britain and all European nations do indeed owe the US a lot in helping to stop the Russians, and causing them to eventually give up much of their empire. I'm not upset by it at all.

Imperial US policy saved hundreds of millions of lives, there I've said it.

It's an interesting question what would have happened if the USA had simply gone home. My bet would have been almost certain nuclear war, since the UK bust a gut to get nukes very quickly even though this was a period when just feeding people was becoming a worry. France followed quickly, and a mix of British V bomber and German V2s could have been used. Would have been as bad as bad can get. The only reason Anthrax wasn't used on the Germans in WWII was that Churchill wasn't convinced it would kill enough of them to make it worthwhile. A war between Britain, which was until the late 1950s the worlds most advanced military power and a country that sees losing a few million people as OK would have left scars visible from space. The Germans would have chipped in too, on both sides.

 

[bigbadwolf]

Trying to get back to the subject of the thread, here is an amusing RT report on the Bank of China's presence in NYC. Anyone watching this YouTube video should do so with the caveat that RT is provocative on matters American and they have their share of schadenfreude.

Postscript: This is a much more serious RT video, with, inter alia, Michael Hudson arguing there's going to be no reserve currency. I recommend it.

 

[Andy D.]

Ferguson, a conservative English historian,

If this is Niall Ferguson we are talking about, he's Scottish and a professor at Harvard (just to be picky about the facts there )

 

[bigbadwolf]

If this is Niall Ferguson we are talking about, he's Scottish and a professor at Harvard (just to be picky about the facts there )

Yep, Niall Ferguson and you are right, sir.

 

[FEnzo]

A Russian perspective from Kagarlitsky:

I agree. but only for now. Eventually China's gonna reach a stage where it can't help but to start actively intervening other coutries which it has economic or political interests in.

 

[bigbadwolf]

I agree. but only for now. Eventually China's gonna reach a stage where it can't help but to start actively intervening other coutries which it has economic or political interests in.

Read the FT article I referenced here for a point of view similar to yours:

http://www.quantnet.com/forum/showpost.php?p=64614&postcount=15

The Chinese are already facing a bit of a dilemma in Sudan. Just as the US navy is patrolling vital oil-carrying sealanes and the US army is guarding (indirectly) oil and gas sources, the Chinese are going to have to move in a similar direction to safeguard strategic investments and interests.

 

[DominiConnor]

Of course the definition of "other countries" is not that clear cut.

Taiwan for a start.
Then there's the border disputes which the PRC has on pretty much every side. Also, some of the border regions are far from stable and shit may spill into the PRC from outside. Imagine millions of N.Korean refugees for a start. In the "good old days" the PRC would have simply machine gunned them, but now that planet Earth has more video cameras than people, it would look bad.

But I think the most likely flashpoint will be it's astoundingly naive policy towards Africa. Since they seem to see themselves as somehow genetically superior they seem to genuinely believe that their investments in that region are safe.

This is a lesson that the British, French, Americans and even Russians have learned not to be even remotely true from Africa, the middle East and even China itself.
Easy to see China being sucked into an African war.

Step one: China builds and funds a mine for some important mineral, that it views as critical. A good candidate for this being Tantalum, rare, used in capacitors amongst other things.

Some bunch of men and children with guns take it over, they may be called a "government", but that makes very little difference. Ironically the odds are that they think of themselves as Communists.

China may call for sanctions, which a) never work against anyone, ever, b) really don't work against gangs like this.

Or it can send in troops. Yes, China has a lot of troops but the Red Army is optimised to murder Chinese civilians, not black insurgents far away. So it is very unlikely to win a decisive advantage, Vietnam 2.0 ensues.

 

[MSFHQ]

Agree with DC. Africa is extremely important to China and they are involved with some less than ideal allies on that continent. Eventually something will happen which requires boots on the ground. It will be a real eye opener for the Chinese when it happens.

I really think all this Chinese fear and worrying is unfounded. China has 1 billion + people to keep happy. The last thing they want is another Tienanmen Square. For all the wealth and economic advancement that country has made, it is still very repressive and very poor.

In my opinion, China will be internally focused for a good long time. Overseas military action is an expensive and risky ordeal. No need to roll the dice unless absolutely necessary.

 

[FEnzo]

In my opinion, China will be internally focused for a good long time. Overseas military action is an expensive and risky ordeal. No need to roll the dice unless absolutely necessary.

I am guessing Africa isn't China's first choice, but only choice.
I do agree with you that military action is far from what Beijing would deem optimal for the country. But probably sooner than later, Beijing will start to exert its power in adjacent regions due to the rapidly expanding economy. GDP per capita had never looked good for China, but collectively does adds up to some pretty impressive numbers. On top of that, the economy is growing so fast, to my understanding faster than most people's expectation, that it basically doubles every 6-7 years. That's how some articles get the magical number 2019 I think.
Outside of the topic, DC has some pretty discriminatory comments that makes me really uncomfortable.

And yes, N.K. is creating quite a bit of ruckus for the region. I am quite interested to see how this will play out - will it just crumble to the ground or will it, with the new leader, go through similar economic transformation like China.
The Taiwan issue can have a peaceful solution, based on what I have observed. The two countries have very very close economic and cultural ties. Maybe sometime in the future after some serious political reform in China, China and Taiwan will start to address this problem peacefully to both sides benefit.
As to China's stand on African policy, naivete is far from what I would use. Establishing footholds in Africa benefits both sides, at least according to the plan. The risk must have already been taken into account - this is when a single party totalitarian regime has an advantage.
And to the obvious animosity DC has towards China, give it time, it will get better. Every country had gone through similar processes one way or another, it is just the cost of progression. China is actually doing quite well when you compare it to countries that have similar GDP percapita.

 

[DominiConnor]

Fenzo, I was articulating the PRC Chinese view of Africans, one I do not share.

I agree that the Taiwan situation may be resolved peacefully, but political reform in the PRC is a big ask, and history is not on the side of peace.

I can see why Fenzo suspects I have an "animosity" towards China, not quite so. My position is that I do not hate Chinese people and thus see no reason why they should suffer under a government that by many measures is amongst the worst in the world

When the current regime comes down I will be sad, because I cannot see it letting go without a fight, and it's record for brutality is the source of my comment about it's army being optimized for murdering unarmed civilians, rather than attack distant lands. So my sadness will be the suffering of Chinese people, not it's government whose foul stench corrupts all who come in contact with it.

 

[FEnzo]

Fenzo, I was articulating the PRC Chinese view of Africans, one I do not share.

I agree that the Taiwan situation may be resolved peacefully, but political reform in the PRC is a big ask, and history is not on the side of peace.

I can see why Fenzo suspects I have an "animosity" towards China, not quite so. My position is that I do not hate Chinese people and thus see no reason why they should suffer under a government that by many measures is amongst the worst in the world

When the current regime comes down I will be sad, because I cannot see it letting go without a fight, and it's record for brutality is the source of my comment about it's army being optimized for murdering unarmed civilians, rather than attack distant lands. So my sadness will be the suffering of Chinese people, not it's government whose foul stench corrupts all who come in contact with it.

I can't find any evidence that would support your "the Chinese is investing in Africa because of their sense of superiority" argument, I believe you meant it in a sarcastic kind of way?
Anyway. Political reform is actually already happening in China. I feel like a lot of people, esp in the west, are failing to appreciate the complexity of China's political system. Just because there is only one party in power does not make it ANY LESS complex than the two party system. There are many voices in the party, left to right.
Hu Jintao’s Limits Come Into Focus as China Rises - NYTimes.com
The pressure to transform is probably, to many's surprise, coming from inside the party. What I believe is, when the GDP percapita surpasses the 10000 dollar(today's money) sign, the transformation will be more visible as the process is universal - only after you feed yourself will you have the energy and passion to seek for greater political freedom. And this partly answers to DC's comment on how the Chinese gov. is treating its citizens. Labor intensive manufacturing has never been been the dream job for anyone. but it is the most effective way of modernizing a largely agrarian country that had gone through foreign invasions and social unrest. There is no other way.
India is a perfect comparison, while they have a very competitive IT industry, it's economy is only one third the size of China's. Plz do note that India and China started off almost identical, in terms of GDP percapita and total size of economy. And yet today, a average Chinese is expected to be 3 times more affluent than his/her Indian counterpart. The difference doesnt just stop here, China has outpaced India in almost every aspect of health and education. (I am NOT trying to offend or humiliate anyone, this is just for argument sake. )
To sum up, I believe the Chinese gov has done hell of a good job in terms of the economy. There are a lot of human rights issues in China, but that is universal for anyone with the similar GDP per capita. China will get better as its economy progresses just like any other country.
Sorry. gone a bit off topic there, but back to the political reform issue. I actually believe that it is not only possible but likely that the reform will be peacefully (relatively). Taiwan had gone through the same process 20, 30 years ago. There was times when KMT(the only ruling party then) imprisons their opponents. But eventually, without too much turbulence, everything turned out okay. Of course, China is much bigger and more complex in almost every way, but it is still possible.

 

[Tsotne]

the Chinese is investing in Africa because of their sense of superiority

USA has already been investing in Africa for a long time so it'll take Chinese decades (if ever they manage) to overtake American investments there. American Dollar flow to China is a bit recursive since Chinese invest back in America to get a guarantee of having American offshore investments next year. So the downturn of American economy will be a downturn of Chinese economy too. The strategy they choose is not to attempt to weaken US economy in order to have outsourced investments for themselves. This might be considered as one of the main source of Chinese economic ascent. Even in this crisis the rate at which the Chinese economy is growing has been slowed down but in absolute function it continues increasing at much higher rate than other leader countries. Africa has always been a strategic place for massive investments in natural resources and human capital. Especially in the colonial times. The Chinese political stability is kind of artificially handled since many people there volunteer to cooperate with the government for money. So, I don't think that the Chinese government will take a capitalist path and push lots of investments in Africa. They have their own population to satisfy first. GDP per capita is not growing as the rate of the whole economy.So what gets people really angry is that the growth of the economy (which is based on their own hard work) is not reflected in their well being since the mainland of China is still very poor.

 

[FEnzo]

GDP per capita is not growing as the rate of the whole economy

I think you are referring to the average disposable income?

 

[Tsotne]

I think you are referring to the average disposable income?

Exactly. GDP per capita not as the whole GDP divided by the population number.
I actually meant that. Well being of an average Chinese family is not following the development of economy. I recently read this quote somewhere: "The strength of a nation is not in the size of population but in the number of educated people." What the Chinese government does is that it often pays money to people who are willing to leave the country.

 

[bigbadwolf]

Lawrence Solomon's point of view:

The Chinese economy today parallels that of the latter-day Soviet Union — immense accomplishments co-existing with immense failures. In some ways, China’s stability today is more precarious than was the Soviet Union’s before its fall. China’s poor are poorer than the Soviet Union’s poor, and they are much more numerous — about one billion in a country of 1.3 billion. Moreover, in the Soviet Union there was no sizeable middle class — just about everyone was poor and shared in the same hardships, avoiding resentments that might otherwise have arisen.

In China, the resentments are palpable. Many of the 300 million people who have risen out of poverty flaunt their new wealth, often egregiously so. This is especially so with the new class of rich, all but non-existent just a few years ago, which now includes some 500,000 millionaires and 200 billionaires. Worse, the gap between rich and poor has been increasing. Ominously, the bottom billion views as illegitimate the wealth of the top 300 million.

How did so many become so rich so quickly? For the most part, through corruption.

China is a powder keg that could explode at any moment. And if it does explode, chaos could ensue — as the Chinese are only too well aware, the country has a brutal history of carnage at the hands of unruly mobs.