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China’s Take On (or Takes On) the US
Graham’s
note: the following is an excerpt from my latest issue of The Phoenix World Views Digest my monthly newsletter devoted to
presenting the REAL situation in the world from a socio-economic-political
perspective.
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Phoenix World Views Digest
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There are times in life when one witnesses
something so outside the scope of one’s normal experience, that one simply
ignores it.
Captain Cook’s diaries tell us that upon
first seeing his ships offshore in Australia, the aborigines expressed neither “neither surprize [sic] nor concern.” Cook notes that it was
not until he and his men approached the shore in smaller, more familiar vessels
that the villagers reacted, arming themselves as “the sight of men in small boats was comprehensible to them: it meant
invasion.”
This phenomenon is related to “change
blindness,” a psychological trait in which subjects fail to notice dramatic
changes in their environment. Lest you believe this only pertains to indigenous
cultures, consider that Harvard psychologists have performed experiments
revealing that 75% of subjects fail to notice when the person they were
speaking to was replaced by a second individual who not only looked different
from the first person, but was wearing different colored clothing.
This phenomenon can also play out on a
national stage.
Indeed, the US, like all crumbling
empires, is so caught up in its self-centered notions of superiority and “bread
and circus” entertainment (in today’s world McDonald’s
hamburgers and garbage TV like Jersey
Shore) that it is TOTALLY “change blind” to the fact that China has not
only ascended from a communist backwater to THE key player in the world’s
global economic balance (more on this in a moment)… but is now holding MOST if
not ALL of the trump cards from a global monetary/ economic standpoint.
Ask most Americans what they know about
China and the focus is usually on social issues. Indeed, the average American’s
perspective of China has transitioned over the last 50 years from “Red
commies,” to a fascist regime that runs over students with tanks, to the
producer of low-quality goods/ sweatshop hellhole where multi-national
corporations outsource our jobs.
At best, Americans might have some understanding that China owns a lot of our debt
(courtesy of a Saturday Night Live
skit, not the news) but that’s about as far as their understanding of China’s
economic import extends.
It’s not particularly surprising when you
consider the coverage the mainstream media allocates to China. Take, for
instance, the below headline from a Washington
Post article dated October 6,
2009 (a time when China’s economy had already turned around and was
dramatically outpacing the US).
Can China Lead a
Recovery?
When Zizheng wheeled his shopping cart
down one of the aisles at the Carrefour store near his house and paused in
front of the bottles of Remy Martin, Johnnie Walker and Hennessy, each selling
for an amount about equal to the annual salary he earned when he was a young government
employee.
But those days were about 30 years ago,
around the time Deng Xiaoping launched China on a path of economic reform and
opening up. Now China's thriving economy has made it possible for people like
Chen, a 67-year-old semi-retired aerospace industry official, to plop down
1,168 yuan, or $170, for a bottle of liquor at a branch of a French
"hypermarket" chain.
"It's not that expensive for
ordinary Chinese people now," he said, adding that he planned to serve
Johnnie Walker Green Label to guests he was expecting to share moon cakes with
during last weekend's mid-autumn festival.
"As Chinese society has developed
and opened up, people have a better appreciation of imported liquor," said
Chen, who used to buy the traditional Chinese stiff drink known as maotai.
"When you choose a gift, other people will look at it and if it is brand
stuff they will feel respected because you chose it for them."
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/05/AR2009100503601.html
While the article’s headline and content
appears innocuous enough at first glance, their subtext is all too clear:
China’s economic growth is important not
because it is ascending to superpower status and will soon be butting heads
directly with the US, but because the Chinese are SO keen to consume just like
us Americans that they’re going to literally SHOP until the world economy is
back on track.
In metaphoric terms, China’s economy is
portrayed as a kind of tugboat that will help pull the larger, slower vessel
that is the US economy back on track. China is a helper, not a threat. After
all, the Chinese want nothing more than to make money so they can go buy liquor
and shop for brand names just like us Americans.
After all, how could China, a COMMUNIST
country, POSSIBLY overtake the US?
Well, it’s already starting to. The
mainstream media with its “western ethnocentric” mentality doesn’t mean to
report on this, but if you read between the lines, you can see a notable shift
in tone regarding our biggest creditor nation.
Consider the below headlines taken from
the period 2009-2010. Note the subtle shift in dynamic even though almost all
of the sources are Western-centric media outlets.
Clinton: US and China can “help lead
world recovery”
Euronews
2/21/2009
http://www.euronews.net/2009/02/21/clinton-us-and-china-can-help-lead-world-recovery/
China's
Economic Recovery Gathers Steam
Time
7/20/2009
http://www.time.com/time/world/article/0,8599,1910875,00.html
Recovery
Picks Up in China as U.S. Still Ails
NY
Times
9/17/2009
http://www.nytimes.com/2009/09/18/business/global/18yuan.html?_r=1
IMF: China Has Key Role In Global Recovery
11/15/2009
RTT
NEWS
http://www.rttnews.com/ArticleView.aspx?Id=1129871&SMap=1
IMF calls on China to lead
coordinated rise in Asian currencies to reconfigure economies
10/6/2010
San
Francisco Examiner
China Poised
to Lead World in Patent Filings
10/6/10
New York
Times
http://economix.blogs.nytimes.com/2010/10/06/china-poised-to-lead-world-in-patent-filings/
What we see here is a gradual, but clear
transition from China as underling meant to drag the developed world (US) to
safety, to China as economic leader/ standalone power in its own right.
Indeed, nothing indicates China’s new
might like its recent tussle with Japan over a fishing accident in which China
was at fault and yet came out on top.
On September 7th, a Chinese
fishing vessel crashed into not one, but two, Japanese coast guard ships off
the coast of the Diaoyu Islands: a group of eight islands that have been a
point of international tension between China, Taiwan, AND Japan for years as
all three countries claim ownership of the islands.
Japan responded to the incident by
arresting the fishing crew and its captain. China responded to this by ENDING
exports of rare earth minerals to Japan.
In order to comprehend the significance
of this move, you must first know that rare earth minerals are used in the
production of virtually EVERY electronic device. China controls 93% of the
global production of these minerals. And Japan’s economy, which is heavily
reliant on electronics manufacturing and exports, NEEDS them in order to
operate.
And China simply CUT. ALL. EXPORTS. TO.
JAPAN.
In vernacular terms, this is what you
call a “head shot”: a fatal move your opponent can neither respond, nor refute,
nor survive from. It’s the economic equivalent of China saying, “this conversation is over, either you give
us what we want or you perish.”
Japan responded by immediately releasing
the fishing crew and captain. But even that was not enough for China which then
demanded (not asked) for both compensation AND a formal apology for the
incident.
Remember, the Chinese fishing boat
crashed into the Japanese coast guard
vessels. And here’s China DEMANDING, at the point of an economically loaded
gun, a formal apology from Japan for arresting the boat’s captain and
crew.
To date, Japan has issued no formal
apology and the issue appears to have reached something of a stalemate (China
has renewed rare earth exports to Japan). However, it stands as a major warning
of how China will conduct its foreign affairs going forward.
In plain terms, China is not, in any way,
afraid to throw its weight around when it comes to its interests. Consider that
by all counts this fishing boat issue was largely symbolic in nature and having
absolutely NO real relevance to China’s economy. And yet, China was willing to
completely cripple its opponent to get what it wanted.
If you’re living in the US, this story
should give you a shudder as it is an obvious prelude to China’s eventual
confrontation over monetary policy with the US. That confrontation may occur in five years or it may occur
sooner. But whenever it does, you should know that when push comes to shove,
China’s more than capable of playing its trump cards.
To continue
reading the rest of this issue, click here.
Good
Investing!
Graham
Summers
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The very idea that China could lead recovery is stupid.
One main pressure behind outsourcing is that the US has accumulated so much wealth over decades that the US environment is no longer suitable to host certain jobs/activities.
The whole US territory has been shaped by this pressure generated by the US developpment model, each revenues bracket having their environment in the US.
Thinking it would stop at borders was stupid.
This makes that China can not lead a recovery. Because the US can only comprehend a rising consumption in China if this provides US citizens with jobs. This can not be achieved. The wealth accumulated in the US is there for long and consumption increase in China might mean more jobs in China and some other parts of the world but it cant mean mass addition of jobs in the US.
On the contrary, the US is and will keep striving to spoil China's efforts to consume more as a success in more Chinese consumption would only reduce the US share of world consumption.
The US will keep the same trend as today: fleecing the poorest in the world so that no threat from an exterior can ever emerge as resources to build up such a challenge will no longer exist.
One main pressure behind outsourcing is that the US has accumulated so much wealth over decades that the US environment is no longer suitable to host certain jobs/activities.
The only thing that keeps offshoring going is the amount of fraud in First World countries allowed to happen. It covers for the shoddy products, it covers the black-bagging of critics, it covers for the whitewashing of Chinese government action. Whether it's private sector or government support of a totalitarian China, offshoring has no legitimate function in any current implementation.
The only thing Deng Xiaoping did was allow the private sector to whitewash the actions of the Communist Party of China. It can be summed up as the following:
China's done nothing more but figured out how to selectively remove freedom, in order to maximize business efficiency. They have not changed their totalitarian ways, they merely have found the means to make them of use to foreign clients that seek supplicant labor. It is only time until someone over there (from another family) changes it, resulting in Deng's erasure from history.
If you're reading betweenthe lines you need to see the chinese are going to get rid of all the junior partners (foreigners) once they have all our technology. Couple that with educated population and we're going to have trouble catching them, ever.