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James,
Excellent comment!
I do not share the xenophobic dent of the article I
forwarded, but the economic description was good I think, concerning the fate
the US has brought upon itself, by its own doings.
I can't remember the article, but someone correctly
commented a few weeks ago that the Chinese boom depends on the US consumer and
credit system. However, since the mid-1990s China has deliberately developed its
interior production AND consumption, also for this reason. Whether domestic
consumption grows fast enough remains to be seen.
John,
I agree with very much but still have a few
comments.
Ad. # 1: Not only does the comments on China resemble the
situation with Japan in the 1980s, but also parallell Germany-bashing in
the 1890s etc etc.
Ad. # 2: Although it is futile to defend Mercantilism in
GENERAL, I suggest you take a more balanced view on Mercantilism and distrust
liberalist textbooks more. The core characteristic of Mercantilism is
'pragmatism', a hands-on approach guided by experience. E.g. a common reason for
state initiatives was lack of private initiative, but when sufficient private
initiative had been established, activities were 'transferred' to the private
sphere. Or, 'gathering' foreign coinage increased domestic circulation and ec.
growth.
Ad. # 3: I do doubt that the US has deliberately promoted
a more prosperous China, and suspect that htis has more been a side-effect of
policies that suited domestic interests. I also doubt that any such
promotion were for reasons of peace, as I fear that
the bad side of Mercantilist policies learned e.g. from the European colonial
master, especially Britain, have been kept well in mind in the US power circles.
This of course concerns power politics where rivals must be strangled in the
craddle before it is 'too late'.
>If those inflows ceased the CAD would
evaporate
OK, but what would then happen?...
Probably, either or : Interest rate would rise, dollar
sink, import sink, export rise.
In other words 'a normal adjustment' (if somewhat
abrupt)?
Arno
+47.66806373
----- Original Message -----
Sent: Wednesday, March 17, 2004 12:20
PM
Subject: RE: China's Deliberate Economic
Attack On America
Gentlemen
I have sympathy with your
efforts to make sense of what is going on economically, and would like to
suggest some perspectives which you might like to
consider:
First,
'China's deliberate attack on America':
- is very similar to the sorts
of comments which were being made about Japan's strategies in the 1980s -
and there are some who still hold similar concerns, though in fact it is
clear that Japan's success formula was severely disrupted in the
1990s;
- does not reflect an 'Asia
literate' perspective on what is going on. While I am not an expert on
China's methods, it is clear that the analysis makes assumptions about what
is going on that assume that what is happening is the sorts of things which
would apply in Western society. For example it assumes that China is
military dictatorship exploiting slave labour, rather than neo-Confucian
society. In Western society the protectionist and preferential treatment
given to Chinese firms would be a formula for disaster. It works (to the
extent that it does) in China only because of the use of arational /
intuitive means of problem solving within a social hiearchy [These
methods don't assume that central economic planners can really plan].
However, as in Japan, these methods rely on a massive savings effort - and
result in huge losses of those savings;
Second, the notion that "economics is
war" (and thus that China thinks that it is attacking America) is the East
Asian tradition - and thus it is almost certainly what is going on. However
mercantilistic strategies do not have a history of success (eg because they do
not create a sustainable economic system (because of the imbalance between
production and consumption); they distort society (because people don't get
the benefits of all their effort), they wind up producing things of dubious
overall benefit - because authorities rather than consumers select
them)
- the potential for an
economic bust that is implicit in the neo-Confucian dynamics of its economy.
While the US faces a 'cash flow' problem (ie a current account deficit)
China's (and Japan's) methods present themselves with a huge balance sheet
problem;
- risk of ecological disaster
- and severe problems in satisfying its resource requirements;
- potential for domestic
conflict which are only too real.
I suspect that the author
of 'China's deliberate attack on America' may
be quite correct in asserting that the US has been boosting global growth for
the past 10-15 years - but suspect that this may not have been accidental. A
prosperous China (for example) is much less of a threat to others than one
which was in the same condition as North Korea.
Fourth, the US position (as presented
by the honourable Alan Greenspan) may not be as serious as its indebtedness
suggests. What I suspect has been going on is based on deep thinking about the
nature of financial and economic systems - and developing strategies on the
basis of scenario analysis and 'gaming' to carefully evaluate the risks. My
version of why Greenspan may be right is in Structural
Incompatability Puts Global Growth at Risk. For
example:
- the current account deficit
the US has is significantly influenced by its capital inflows. If those
inflows ceased the CAD would evaporate - not HAVE to be financed in
desparation;
- because of the imbalances in
East Asian economies they are forced to keep supplying capital. And
currently they have to do this in the face of hedge funds who are trying to
force the $US down - which (if the hedge funds succeed) will massively
compound the balance sheet problem that the Asian banks face;
- all US debts are in their
own currency - which they can create credit to cover at the drop of a
hat. And there are no serious alternative global reserve currencies on
the horizon.
There is a global economic
problem which is very severe in my opinion. But I am not convinced that it is
mainly a US problem.
Regards
John Craig
Centre for Policy and Development
Systems
CPDS supports leaders developing enterprise,
economic, community and governance systems
Visit CPDS
website - which emphasises, but is not limited
to, Queensland issues
Note: Web page references in this email are encoded
in HTML tags. If your email client can't handle this, please ask for
details.
I just sent out to the groups an article on
Greenspan's latest speech "not to worry" that appeared in the New York Times
today. I wondered if the fellow is going nuts. All the debt is all right, he
said, times have changed that makes the mountain of debt okay. Now, I'm really
getting nervous.
----- Original Message -----
Subject: China's Deliberate Economic
Attack On America
Arno,
The key strategists in the "attack" by China on the US - admittedly,
the inadvertent strategists - were not the Chinese but the Americans
themselves.
With ever-growing momentum since 1969, and with transparent effect
since the Reagan Administration twenty years ago - though most people,
including all Americans of whom I have any knowledge, were unable to see
through the transparency - the Americans have been determinedly diminishing
the real growth of their own economy and stimulating the growth of
others.
That does not matter so much when the countries stimulated cannot, in
any forseeable circumstances, rival the United States in economic, political
or strategic power. But it does matter - and it matters a great deal - when
the economy to which the United States inadvertently transfers its strength
is an actual or potential rival of the significance of China.
What the Chinese have done of course is to take advantage of the
incredible opportunity offered to them.
When I visited Beijing, Shanghai etc in 1974, it was a long shot that
China would lift itself out of the Mao/communist shackles with which the
economy had tied itself in knots.
There was no real chance then, it seemed, that China could rival the
United States - not in several generations anyway, perhaps never.
But when I went there ten years later, the position had already
changed. The policies were well in place on the United States side to gloat
over the coming self-destruction of the Soviet Union but to be completely
unaware of what their own policies were doing to position a genuine and even
more dangerous rival in the Soviet Union's place.
In that same year, 1984, the beginnings were already there, on the
Chinese side, of the transformation, flowing from United States policies,
that would bring China back to the position she held centuries ago, as the
centre, in many ways, of world culture and of world power.
Not yet in 1984 but in prospect for those who had eyes to see, the
foundations were being laid for what even the greatest dunce and dullard
should now be able to see: that, unless the Americans come to their senses
right smart - and Bush and his mob of self-seeking mediocrities are unlikely
to be able to manage it - then the American "century" will
continue to fade and the Chinese "century" will continue to come into ever
sharper focus.
Will a Democratic Kerry Administration do any better?
I think it
will be better than the continuing debacle we can expect under Bush; but I
doubt that it can make the quick transformation of economic and other
policies that are so urgently necessary.
On the other hand, the United States is already in the midst of an
economic crisis whose dimensions are not yet adequately recognised except by
a few, and that crisis, as it deepens, might, willy-nilly, precipitate a
transformation sufficient to save the United States from a collapse, perhaps
of the dimensions of the Soviet Union more than ten years ago.
James Cumes
----- Original Message -----
Sent: Tuesday, March 16, 2004 8:38
AM
Subject: [gang8] China's Deliberate
Economic Attack On America
In spite of the xenophobic title, this article is
worthwhile reading.
Seems to me that the Chinese are playing the game
better than the US, and that the response the US could give, a traditional
mercantilist strategy, would require a complete transformation of US
economic policy, and therefore won't happen soon to say the least. Is
the US economy 'doomed'.....?
(Peter Myers forwarded this article)
Arno
Full article:
.............
Excerpts (without repetitions and
commercials):
China's Deliberate Economic
Attack On America
................
"Beijing's
Secret War on America" How China Expects To
Win "The first
rule of unrestricted warfare is that there are no
rules, with nothing
forbidden." - Col. Qiao Liang & Col.
Wang Xiangsui China's People's
Liberation Army, and co-authors of
Unrestricted Warfare
Has there ever been a rising
power, in the pages of history, that has
picked up economic
momentum... packed on military might... and then
decided not to flex it's
muscles?
The answer, as you well know, is that there hasn't.
Power is power. The
nations that have it chomp at the bit to use it.
Which is exactly what
China is doing now. But you
don't have to take my word for it. Roger W.
Robinson Jr -- head of the
U.S.-China Economic and Security Review
Commission -- gave this
testimony to the U.S. House of Representatives
back in October 2003. He
laid out the
Chinese blueprint for undermining
the U.S. economy:
°
First, they devalue their
currency by as much as 40%
° Then they issue tariffs on
foreign goods
° They cut foreign firms
off from local marketing channels
° They chaperone and handpick partners
for international joint ventures
° They give preferential loans to
their own factories from state banks
° Chinese companies
get privileged
listing on the Chinese stock market
° Chinese companies
get special tax
breaks not available to
foreigners
................
China has an unbelievable
history. They have lots of culture. Three
thousand years ago,
they were building palaces... while my ancestors
were making mud
patties on the English moors. So no, I'm under
no
delusions about the greatness China is
capable of. But that doesn't
change the rest of the facts I'm
about to show you. When I show them to
you, I'm confident you'll come
to the same conclusions I have. You'll
see instantly that what's quietly unraveling the
fabric of the American
economy... the exploding deficits, the
massive trade gap, the
joblessness, and even some secret aspects of the
war on terrorism... is
not only no accident, but
it can all be traced back to, shockingly
enough, Beijing. Here's the
"real" truth: Without a doubt, China's
military government
has actually masterminded adeliberate assault on the
American way
of life.
I'm going to show you how they've done it. It's a
war. Not with tanks or
missiles. Not with jets, bullets, or guns. Or
hand grenades.
The "combatants" in this
battle wear business suits. They hit you with
handshakes,
contracts, and smiles. But don't be fooled. This is war
without
rules. In the words of one of their own military
officers,
"nothing is forbidden."
Without drawing a drop
of blood, Beijing fully expects to win...
and
here's how they plan to do it: Guerilla
Economics! Step back for a
second. And remember... When we talk
about modern China, we're not
talking
about a democracy. We're talking about a
military dictatorship.
Even now, in 2004. This is the way
they do business. I'm calling it
"guerilla economics." The goal is to destroy the
competition. And at the
same time... create a guaranteed
money-making environment for China's
own
entrepreneurs.
Is it
working.
For China, absolutely... Ding Lei is 32
years old. He's also the richest
man in China. His
NetEase.com outfit didn't crank out a nickel of profit
until 2003. But
his stock is up
50-fold thanks to ecstatic American
investors, and Ding is now
personally worth $900 million! Chen
Tianqiao
is just 30. In 1999, he ran a cartoon Web site. Now he
runs Shanda
Networking, an online gaming business out of Shanghai. New
York venture
capitalists
helped him get started. Now he's personally worth $480
million.
Larry
Rong's dad is Rong Yiren, founder of CITIC. CITIC is the
biggest
company in China and a
magnet for U.S. investment dollars.
Larry
is personally worth $850 million. His family is worth closer to
$2
billion.
The military government of
China has their hands deep in
the pie too.
Take China's biggest TV and cell
phone maker, TCL
Corp. It's state
owned. Last year they exported 3.83 million
TVs. They expect to ship 5
million more!
"All Beijing has to do is
to mention the possibility of a sell order
going down the wires.
It would devastate the
U.S. economy more than
any
nuclear strike." Asia Times, Jan.
23, 2004
The top 100 richest
people in China now have an average wealth of
$230
million. Another 10,000 or so more Chinese are worth at
least $10
million so far. And that's up from zero
millionaires in China as
recently as
1979.
Of course, most of the companies
listed on the Shanghai exchange are
still
state-owned. The top 14 Chinese car-makers are state owned --
with
bloated bureaucratic budgets. But that doesn't matter -- in 2003,
U.S.
investors
poured millions and millions of dollars into China
Brilliance
Automotive shares -- and it's stock shot up 232%!
For
all appearances, it
looks like China has cracked the code of
Western
capitalism. Three years ago,
for instance, China didn't manufacture
a
single laptop. NOW they make 40% of all laptops sold
worldwide! They're
also ranked as the world's biggest maker of
computer hardware...
consumer electronics... even steel
(remember when that used to be
Pittsburgh?).
China
cranks out 38% of
the world's cell phones. And half of the
world's
shoes. Plus most of the
wooden furniture, video
games, and
televisions
in
the United
States. But guess what happens when you
take a look at the
other side of the coin...
Is This the End of
the American Miracle? We're feeling the China
boom
right here at home, too. But somehow it's not the
same...
Here in the United
States, American Metal
Ware had made nearly 2.5
million pots in their Wisconsin factory... before they had to shut
it
down.
Chinese manufactures
stole the design and cranked out copies at half
the
price.
To compete, Metal Ware
had to move over to China.
Levi's were the
all-American brand. They once had 63
U.S. plants.
They
just closed the last two and fired all the workers. Levi's will be
made
in China now.
Walt Disney was
an all-American success story. But Disney's "Winnie the
Pooh" dolls are made
not here, but in the same place as Dr. Scholl's
sandals and Foster
Grant Sunglasses -- China.
How
about Wilson tennis balls or
Black & Decker
drills? Silk flowers,
sneakers, wood furniture, and hand-held
"Game Boy" video games? All sold
here, but all
manufactured in... China.
A mind-blowing 80% of
all the toys,
bikes, and Christmas tree
ornaments
sold in the Unites States came from
China. Along with 90% of
the
sporting
goods and 95% of the shoes.
Motorola spent
over $1 billion
moving operations from the US to China.
Thousands lost their
jobs -- replaced by 10,000 Chinese workers in four
new plants on
the coast of the Yellow Sea. Look, there's nothing
wrong
with making money. And you can't fault anybody for just
doing business
and looking out for their own best interests. But at what cost?
And
whose expense?
A New Hampshire radio show made a public
dare: "Take $400 an hour at
Wal-Mart. Buy as many
'Made In America' goods as you can." Two listeners
took the
challenge. An hour later, they hit the checkout line with a
basketful
of 40 items. Guess
how many actually were made in America?
Just 10.
It's no wonder. Sam Walton,
Wal-Mart's founder, wrote an
autobiography called
"Made In America." But today, Wal-Mart alone
imports a
mind-blowing $12 billion of goods from China
every year...
That's more than China's trade with either
Russia or the
United
Kingdom!
How did this happen?
Beijing's Ugly SECRET #1: "Crush the
Competition
With Slave Labor!" Chinese workers average
61¢ an hour. US factory
workers average $16 an hour. In other
words, US workers make more in two
weeks than most Chinese laborers
make in a whole year! Nobody outside
of
China can compete with
that. "We are beholden to the Chinese by our
Treasuries. That
worries me."
Carla
Hills, Former U.S. trade
representative China gets an endless
supply
of labor for just pennies. And there's a
waiting list
nearly 200
million people long to take over those
jobs when the current workers
drop from exhaustion (they work 12
hour days, 7 days a week). Moral or
not, Beijing's slave-labor strategy does
exactly what they hoped it
would... It's sucked the life out
of America's more costly
industrial
complex! Just check out the numbers: Over 450 U.S. companies
are based
in China.
That's more than 10 times the number of
U.S. companies there
in
1990.
They've got combined
annual sales of $23 billion. And more than 250,000
employees. In
fact, U.S. investment in
China is now a record $33
billion
a year!
Meanwhile...
Nearly 2,250 American manufacturing
jobs here in the Unites States have
disappeared... every single
day!
That's a not something new... it's been the trend day
in and day out,
over and over again... for 40 months
straight!
What are the Chinese up to? They learned this trick from
the Americans.
Especially
mega-rich superstars like Andrew Carnegie, John
Rockefeller,
and
J. Pierpont Morgan. It's
the genius
strategy of any savvy monopoly
maker: First, move in and CRUSH the
competition with cutthroat
pricing.
Then... take away his
business and leave him high and
dry!
Thanks to slave labor,
Chinese companies can crush U.S. competition with
lots of cheap
goods that USED to be made right here in America. In
exchange, they not
only get our purchases... they get our companies,
when they're
forced to pack up and move over to China so
they can take
advantage of the same cheap labor strategy. What's more,
China also gets
to send a
whole new kind of export to America... Chinese STOCKS! And
in
return for
that, they get
billions more in investment capital. Straight
from the trading
accounts of private U.S. investors. Imagine. We're
literally paying
Beijing to "rip the heart" out of the
U.S.
heartland!
But it gets even better.
Because that's only the FIRST dirty strategy
engineered and overseen by
Beijing.
Here's the second... Beijing's Dirty
SECRET #2:"Bait the Trap
With Treasury Notes!" Another fallout from
Beijing's supercheap labor strategy is
America's massive trade
deficit
with China. It just keeps
exploding.
As you can see in this chart, it's already passed
a gap of over
$120
billion. That means we actually BUY $120 billion more in
goods from
China than we manage to SELL to
them. A household can't get rich... or
stay rich... if it spends more
than it takes in. Neither can a nation.
Yet, no matter what we try to do
to stop the gap from growing... weaken
our dollars,
create trade tariffs, perfect production and slash
costs...
America just can't keep
up.
The trade deficit is now
exploding $1.5 billion per
day. Putting that in
perspective... that means we spend an
additional $1 million on Chinese
products... every single passing
minute! But that's not the worst part.
Guess what
China is doing with all that
money?
° First, the money we
send China gets reinvested in the
PLA, China's
massive
military. (New reports say China has just built
low-profile
military bases on several disputed reefs in the
Philippines!).
° Second, it goes back
into funding more huge
Chinese factories. With
200 million Chinese
looking for jobs, China needs to build
places for
them to work! It also needs to buy HUGE
stockpiles of raw resources
to
keep the factories running. ° Third, and most
dangerous of all, the
Chinese government uses a lot of their extra
exporting income... to pile
up an
absolutely SICK number of U.S. Treasury bonds!
That's right. China
spends nearly $7.8
million an hour... or $187 million a day... snapping
up US Treasuries
and dollars.
The movers and shakers
in China now hold the
U.S. hostage to over
$120
billion in Treasuries!
Now ask yourself: If it's obvious that U.S.
interest rates have nowhere
to go but up... if it's obvious the
U.S. dollar has nowhere to go but
down... and if it's obvious that
Washington right now is literally
spending America into
oblivion...
Why
would the Chinese government sock so much faith in U.S.
treasuries?
Simple. It's not a vote in America's
future at all. Instead, it's
Beijing's way of backing America
into a corner!
Think about it. The Feb. 5, 2004 Wall Street
Journal has already
reported that other Asian countries --
who altogether with China and
Japan included -- hold an
eye-popping $1.9
TRILLION in U.S. foreign
reserves -- are starting to dump
U.S.
debt. Korea and
Thailand dumping
is one
thing. But
when a massive holder like China stops buying
U.S.
debt and starts
dumping, it's a much, MUCH bigger deal.
Pressure on
U.S. bond yields will
skyrocket. Other foreign
investors
will run from dollar-priced securities in a panic.
Long interest-rates
will jump. And U.S.
consumers, businesses, and investors will get
crushed in the jaws of a
very powerful "Treasury Trap"!
It won't take more than
a whisper -
"sell." And
that's your signal. I
promised earlier to show you how to
protect yourself from exactly this
kind of disaster. And that's
precisely what you'll discover in your FREE
e-mail report "Total Profit
Protection From the Coming China Crisis! "
But before we dig into all
that, let me share with you just one more
piece of this sinister
puzzle...
Beijing's Dangerous Strategy
#3:"Lock the
U.S. Dollar in a Death
Struggle" To finance all its
foreign debt, the United States has to
spend a
breathtaking $55 million per
hour... or $1.3 billion per day...
just to keep enough
liquidity in the system to cover overseas
interest-payment
obligations.
Washington treats the Federal Reserve
like a money machine: Walk up,
punch the buttons on the printing
press, and out comes the cash! Why?
Because the more dollars
there are, the
less they're worth. And the less
they're
worth, the easier it is to cover those interest
obligations
without wincing. "America's growing
reliance on high quality, low-price
Chinese imports
eventually might undermine the
U.S. defense
industrial
base." US-China Security Review Commission
Report
Trouble is, no government --
not even one as
large as America's -- can
keep up
with that kind of program. Especially when you're
overextended
on your own personal spending budget by nearly half a
trillion (with a
"t") dollars! So just by holding U.S. Treasures,
Beijing
already has us
trapped. But they haven't stopped there.
China has ALSO hoarded
piles
and piles of ever-cheaper U.S .dollars. They've now got
more than $310
billion in U.S
.dollar reserves! Again, you have to ask: If U.S. dollars
are
backed by an overextended federal government... and if other
major
governments worldwide are already talking about switching
reserves to
gold and euros... if America's money isn't worth the paper
it's printed
on...
Why would
China want to keep so much of
their newfound wealth in the
U.S. dollar, a currency that's
already down more
than 50% since October
2000? Again, it's simple. Since 1995, the Chinese
currency -- the yuan
-- has been pegged to the dollar
at the weak exchange rate of 8.28 to
the dollar. No matter how low the
dollar goes, the yuan goes with it. So
no matter how low the
dollar goes... it's virtually
impossible to
close
any currency-related
trading gap
we've got
with China! It's like
seeing
how long two enemies can hold their breath under water. Whoever
can
withstand having a dirt-cheap currency the longest wins. But so
far,
judging just by the trading deficit, it looks like
China is winning. And
the
U.S. is running out of
options.
Could a stronger dollar shake loose the yuan's
death grip? Not at all.
This is how the sinister yuan strategy works.
If the dollar rises, the
yuan rises in lock step. If the dollar drops,
so does the yuan. China's
trading advantage
never disappears... but we risk popping our own
real
estate bubble, slashing trade with Europe, and knocking the legs out
from under
stocks and bonds.
Meanwhile, China
still has $310
billion in dollar reserves... which it
can trade for euros or
gold at any time... and use to throw the dollar
into a final
death spiral. When Beijing starts
dumping,
what follows
could be worse for dollars than anything since
Nixon broke with Bretton
Woods in the 1970s.
Your FREE copy of
"Total Profit Protection From the Coming China
Crisis!" will also show
you to protect yourself against this inevitable
dollar collapse... with
a strategies that can turnsevery $1,000 invested
into as much as
$78,400 or more. But first... Still wondering how or why
all of this
could have been a planned economic attack... rather than
just an
accident of free-market capitalism? Still think all this is
a
coincidence?
That's ok. But before you make up your
mind to the contrary, you'd
better read
this... http://www.agora-inc.com/reports/DRI/china324/
Please note: Any
subscription issues, write us at: Order Processing
Center Attn:
Customer Service P.O. Box 925 Frederick, MD 21705
This article
comes from Alternative News Network, Cairns, tropical north
Queensland,
Australia http://us.altnews.com.au
The URL for this story
is: http://us.altnews.com.au/article.php?sid=6639
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