China Mocks G7 As "Gathering Of Debtors", Warns "Confrontation Will Be A Disaster For Europe"

Tyler Durden's picture

Vladimir Putin didn’t get an invite to the Angela Merkel-hosted G7 Summit in Bavaria last week, which means the Russian President not only missed out on two days at the scenic Castle Elmau, but also on lederhosen shopping with US President Barack Obama who, judging from eyewitness accounts and a variety of amusing photo ops, channeled his inner Clark Griswold upon touching down in the Bavarian town of Krun. The G7 isn’t pleased with Russia’s ‘behavior’ in Eastern Europe and so, Moscow has been expelled from the cool kids club until such a time as the Kremlin agrees to uphold Western democratic values. 

(Obama in Krun)

But the G7 is an equal opportunity exclusionist which means it’s not just former superpowers that aren’t welcome, but rising superpowers as well, which means you won’t be seeing Xi Jinping at the table either.

But “Big Uncle Xi” (as he is affectionately known in China) likely isn’t losing any sleep because in the eyes of Beijing, the G7 — much like the IMF and the ADB — is a relic of a global economic and political order that is well on its way to obsolescence if it isn’t there already.

(Xi Jinping; illustration: The New Yorker)

The Global Times (which, it should be noted, is owned by the ruling Communist Party’s official newspaper, the People’s Daily) has more on why the G7 is largely irrelevant in the modern world.

Via The Global Times:

The G7 summit concluded in Germany last week. Chinese scholars and media barely showed any interest to this outdated informal institution, except for a Declaration on Maritime Security issued by G7 foreign ministers. The declaration expressed their concerns on "unilateral actions" in the South China Sea, with China as the obvious target.

 

Judging from the agenda and outcomes of this year's G7 summit, it has run counter to the global trend of peace, development and cooperation and become mere of a geopolitical tool.

 

Since the very beginning of the establishment of the G7, it has been a rich-man's club that consists of Western major powers and aims to maintain the collective hegemony of the US-led West. It used to focus on the world's economic issues, and then extended to political and security affairs. After the Cold War, Russia was included in this grouping, which almost became the core of global governance and looked as though it might replace the UN Security Council. 

 

However, the other G7 members never treated Russia as an equal partner. Russia was only entitled to discuss politics and security but not financial and economic issues.

 

As the world entered the 21st century, new economies started to emerge and the world's political and economic center has gradually shifted to the Asia-Pacific. The 2008 global financial crisis forced G7 members into a stalemate, and these nations started to realize that they could only get rid of the crisis with the help of emerging economies. Therefore, the US proposed defining the G20 as the main platform to discuss international economic problems. Within the G20, although the G7, as a sub group, intends to dominate the agenda-setting, the G7 cannot play its role without cooperation from new economies whose voices can be heard more nowadays.

 

Yet countries such as the US and Japan can hardly accept the rising international status of emerging economies and are reluctant to give up their hegemony. When the financial crisis eased slightly, Western media vigorously propagated the "revival" of the G7. But the economic performance of G7 members meant the summit was a gathering of debtors.

 

To some extent, the role of the G7 in global economic governance is negative. The IMF and the World Bank are under the control of G7 members. This is one of the reasons for the low implementation capacity of the G20.

 

In the field of politics and security, Western powers relentlessly promoted the role of the G7. But the G7 has proved to be unable to maintain regional stability, and has led to chaos in the Middle East instead. After the Ukrainian crisis, the West excluded Russia from the original G8, making the current G7 grouping on the way to becoming a Cold War relic.

 

Russia and China are main targets of the discussion at this G7 summit. They decided to continue to impose pressure on Russia amid the ongoing Ukrainian crisis. As for China, they focused on issues around the Asian Infrastructure Investment Bank and the East and South China Sea. But it is worth noting that European members have shown a different stance from the US and Japan on both matters.

 

Whether the G7 will become a geopolitical tool or a Cold War relic largely depends on European countries. Unlike the US, Europe shares a closer geopolitical and economic links with Russia. If the G7 becomes a platform for the confrontation between the West and Russia, it will undoubtedly be a disaster for Europe. Seeking a peaceful solution to the Ukrainian crisis with Russia fits European interests. As for the East and South China Sea disputes thousands of kilometers away from the European continent, these countries needn't necessarily get involved.

 

During the G7 summit, Japanese Prime Minister Shinzo Abe tried to pull European countries to Japan's anti-China bandwagon. China should continue to stay wary of the Japanese government.

Obviously this is to be taken with a grain of salt considering it comes directly from the politburo, but nevertheless, there are some important observations here that deserve attention.

For instance, China equates the G7 with the IMF and the World Bank, two institutions which Beijing is well on its way to challenging via the AIIB and The Silk Road Fund. In public, China has been careful to adopt a conciliatory stance towards existing multilateral lenders. This partly reflects the fact that China isn’t eager to ruffle any feathers among the Western countries who took a rather palpable political risk by throwing their support behind the AIIB in the face of fierce opposition from Washington. Beyond that though, adopting an overly critical stance towards institutions whose goals are ostensibly similar to those of the AIIB risks sending the wrong message to countries who depend on supranational institutions for aid. That said, equating the IMF, The World Bank, and the ADB with the G7 before subsequently calling the latter a “Cold War relic” is a kind of backdoor way of suggesting that the G7-dominated multilateral institutions are, by virtue of their leadership, hurtling towards irrelevancy.

Further, the assertion that “the economic performance of G7 members [means] the summit [is] a gathering of debtors” is on the one hand hypocritical (China, after all, is sitting on $28 trillion in debt) but on the other hand speaks to the fact that, even as China’s economic growth slows as Beijing marks a difficult transition from an investment-led economy to a consumption driven model, economic growth in the West has simply stalled out altogether and as for Japan, well, Tokyo has been grappling with a deflationary nightmare for decades, something Abenomics has so far failed to correct. In other words, China’s economic miracle may be “landing hard” so to speak, but there’s certainly an argument to be made that even in its crippled state, the Chinese economic machine is still capable of outperforming the West.

Finally, and perhaps most importantly, China suggests Washington’s dominance has led the G7 to pursue myopic foreign policies that have conspired to stoke sectarian chaos in the Middle East (it’s now almost impossible for the US to keep track of where it supports Shiite militias and where it backs Sunni militants) and create the conditions for a second Cold War in Eastern Europe. The deliberate exclusion of Russia, Beijing says, risks transforming the G7 into what is effectively the political arm of NATO, which undercuts the institution's ability the foster peace and cooperation. 

Again, some of this is propaganda served hot and fresh straight from the Communist Party kitchen. That said, the underlying geopolitical analysis is spot-on even if it's presented with a hyperbolic veneer. 

The G7, like the IMF and the World Bank, is quickly falling victim to the arrogance of its most powerful members. If an overriding sense of Western exceptionalism is allowed to create the same type of complacency and rigidity that has paralyzed the IMF, it may not be long before the world's emerging powers supplant entrenched political bodies much as they have moved to supersede ineffectual economic institutions.

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ZippyBananaPants's picture

"you can blindfold them with dental floss"

USisCorrupt's picture

Can someone say BORROWED TIME !

 

End this SHAM already !

 

And to think that they are only mere puppets.

pods's picture

Isn't there a Chinese proverb about pissing in your own bath?

I mean, yes, playing around with debt money (aka joobucks) is not really a smart thing and the math will never work out.  

BUT, is that anywhere near as dangerous as destroying the very land you live on?

I mean, once a debt money system blows up you can always fall back on small farms, gardens, etc. Basically rebuild from the ground up.

Not really sure that is going to help the Chinese.

And to top it off, the Chinese are just as dependent on that debt money system, otherwise there would be no credit to buy any of their worthless trinkets.

pods

LawsofPhysics's picture

Please, they own the Pacific Northwest already...

that is plenty of ground to build up on.

LawsofPhysics's picture

No one has a problem with China "re-investing" domestically, America should simply follow suit, period.

NoDecaf's picture

WilliamBanzai7....put a Hitler mustache on Obama, and then he's all set! ))

COSMOS's picture

Damn those African illegal immigrants coming in through Italy are everywhere.  Just look at that one in the first pic photo bombing those white bavarian kids. 

weburke's picture

june 22, next few months are the time of the great changes.

Crisismode's picture

 

 

China is a Paper Tiger,

Full of Wanking Chinamen.

Fuck them,

And the Trojan Horses they rode in on.

Kiss my ass Chou En Lai.

 

 

Max Steel's picture

lol yeah and your mom is also a paper tiger isnt it ?

Eirik Magnus Larssen's picture

You are a disgusting human being. On many levels.

BigJim's picture

Awww, did the nasty man hurt your feelings?

Tall Tom's picture

No. It was that little girl, COSMOS, who hurt his feeeeewings.

 

He is such a fag to allow a little girl to impact him in that way.

IRC162's picture

Does he hate the crackers in the above photo as much as the American domestic variety,  or do they get a pass?  It takes a Nobel Laureate's superior intellect to discern the beasts

 

IronForge's picture

Photobombed?  He Ground Zero'd that one.

NihilistZero's picture

@LawsOfPhysics

In 1942 Japanese American Citizens owned property and business, until they didn't. One of Obama's early executive orders was that any foreign nationals assets could he seized without due process during war time. Considering it's now forever war time, those Chinese Oligarchs night be in for a rude awakening. A revolution at home and asset forfeiture abroad. Pick your poison.

HungryPorkChop's picture

Does that also include rolling back NAFTA? 

LawsofPhysics's picture

This is not the 1940s, not by a long shot.

ThirteenthFloor's picture

NZero-> your comparison to 1942 Japan does not fly. China owns $1T +
UST which if they dumped would not be pretty. China extends credit to US everyday. China has effectively partnered with Middle East, Russia, Brazil and others. Additionally, China owns outright 4 US shipping ports in the west US. All said if Obama signed such an Executive Order, his credit card would lock up.

Little Obobo's been effectively been neutered in case you haven't noticed.

You will see China continue to buy and colonize in the US.

palmereldritch's picture

The FED has been dumping for years.  Hello QE ?

The Chinese just have to decouple long enough with the BRICS to effect an already bought (USD dump) deal and preserve their ability to trade for commodities.

When it happens it will be overnight but years in the works. But the registered Chinese assets (read: in trust Globalist) will still be in place for surgical strategic political leverage. And the over-leveraged counterfeit of the USD will dissolve upon the foundation of its own fraud/delusion.

The end result will be internal (US) domestic chaos that will warrant a sea change politically to preserve stability...? martial law Obama hand-off to martial law Repub stooge? (ermm I'm thinking maybe a Bush...if there's one available?)...inverse/mirror warrant/reflection of 9/11 Bush -> Obama

Call it Fiat Famous...or perhaps just the tried and true Stockholm Syndrome 

Whatever the Chinese do...it will probably be by design...but not their own.

 

JuliaS's picture

"In 1942, there were 110,000 Japanese American citizens in good standing, law-abiding people who were thrown into internment camps simply because their parents were born in the wrong country. That's all they did wrong. They had no right to a lawyer, no right to a fair trial, no right to a jury of their peers no right to due process of any kind. The only right they had: "Right this way" into the internment camps!"

- George Carlin

Charming Anarchist's picture

Anything can happen. 

I can imagine Obamo just as easily packing up his suitcase, bugging out leaving North Americans stranded.  Imagine that. 

<<Pick your poison.>> 

Imagine a bankrupt nation with NOBODY at the helm.  Imagine Obamo turning out the lights before he scrams. 

 

After the dust settles, imagine boatloads of Chinese soldiers at the shores. Imagine not a single person in the world giving a shit what those soldiers do. 

There is a reason why many metropoles are hastily pushing through rapid public transit without any regard for cost. 

Now imagine a Chinese banker willing to buy and sell your metals or put you to work digging it. 

 

The Chinese need only stand back and watch a foreign implosion.  Time is on their side. 

NihilistZero's picture

Uhhh, no.  you guys who think Obama is somehow omnipotent make me laugh.  I don't think he'll be "turning out the lights" on the country.  In you scenario you'd still have a state governments with National Guards at the ready.  Let the Chinese try and land in California.  I don't think the Camp Pendelton Marines will go quietly.

In a war of imperial statists versus decentralized local freemen, who would still be in posession of advanced weaponry and air support, I'll take the locals.  Your Scenario of the Federal government just abdicating and letting us run our own lives and nation is far to good a dream to come true.

 

Calmyourself's picture

And "How many divisions does the Pope command?"  You "OWN" what you can hold.

SmokinMonkey's picture

China is never a country that rushes to do anything.  They understand just biding their time will cause the US to collapse in on itself.  The constant divisions and ever growing debt ensures a total collapse of America.  Meanwhile China has plans all drawn up for a gold backed currency.  In fact they plan to print the gold threads within the currency istself, giving it immediate value not some promise to redeem into gold at a later date.  Meanwhile the US heads towards a cashless society which is easily hackable by the Chinese who can take every penny out of the banks and throw the country into chaos.  

Crisismode's picture

 

So great to know that you know

EXACTLY

what the Chinese Government is thinking.

 

Wow, how brilliant are you?

 

new game's picture

aside from relic news info, the chinese are mostly a chinese nation whilst we here in smerica we are smelting pot of raysism because raysism will always be with man and woman kind, ha-on the kind shit. we do not like peoples of other look and culture(for the most part). this experiment will fracute as it is. and i'm not being raycist, but merely stating what i see and observe.

NihilistZero's picture

China is never a country that rushes to do anything.

Mao sure didn't mind rushing through the great Leap Foward and Cultural Revolution that killed millions and set back intellectualism in that country generations.  Just sayin'...

LawsofPhysics's picture

Yes, China has far more active duty soldiers. Demographics are a real motherfucker.

EllaDara's picture
Stiglitz: Proposes an international framework for restructuring debt

The question of how a country is supposed to restructure its debt is now more acute than ever, says Nobel laureate economist Joseph Stiglitz in an article co-signed by Martin Guzman at Project Syndicate.

Commenting on the restructuring of the Greek debt in 2012, Stiglitz notes that the country played according to the rules of the financial markets and managed to finalize the restructuring in a very short time.

However, the agreement was poor and did not help the economy recover. Three years later, Greece is in a desperate position and needs further restructuring, he says.

The authors emphasize that the troubled debtor nations need a fresh start. Excessive sanctions lead to negative sum games. The debtor can not recover and creditors can not benefit from the greater ability to repay the loans.

In this context, Stiglitz proposes a global legislative framework – although recognizing the great difficulties to do so - that will help countries to make a fresh start.

“It may not be possible to provide a global bankruptcy code”, but he stresses there might be points of agreement on many issues.

For example, a new framework should include clauses providing for the suspension of legal proceedings for the duration of the restructuring [of debt] the economist says.

It should also include provisions for new borrowing. Creditors willing to provide credit to an economy that is under a restructuring process, will have a priority. They will thus have an incentive to allocate new resources to countries, when they need it the most.

There should also be a consensus that no country will be able to sign contracts that would violate their basic rights. It should not be possible to voluntary waiver the immunity of a sovereign state, just as a person can not sell himself as a slave. There should also be limits to how far a democratic government can bind the following governments.

A loose legislative framework with these features will act as a facilitator and supervisor of the restructuring process and could solve some of today's weaknesses and inequalityes.

He warns, however, that such a framework should not be based on institutions associated with the markets.

This means that the Regulation on the restructuring of sovereign debt can not be based on the International Monetary Fund, which is very closely connected to the creditors (and is itself a creditor).

To minimize the possibility of conflicts of interest, the framework should be implemented by the United Nations or by a new global institution, Stiglitz advocates.

Today’s crisis in Europe is only the latest example of the high cost - for both creditors and debtors - which is due to the absence of a global regulation for resolving sovereign debt crises.

Such crises will continue to occur. For globalization to work for all countries, the rules of public lending should be changed.

http://www.looneymarkets.com/opinions/stiglitz-proposes-an-international...

philosophers bone's picture

The legislation is well in process in US, UK, Australia, Canada.

2016 "Launch Date".  Govern yourself accordingly. 

Freddie's picture

says Nobel laureate economist Joseph Stiglitz in an article co-signed by Martin Guzman at Project Syndicate.

Stiglitz is a dirtbag.  Stiglitz and Guzman?  Dual Shit-i-Zens?

Hugh Hendry bitch slapping Stiglitz and Jeremy Sachs the Keyesians.

https://www.youtube.com/watch?v=-DN_eZHxa8Q

OceanX's picture

"Isn't there a Chinese proverb about pissing in your own bath?"

 

Special Wan Ton...

https://www.youtube.com/watch?v=DiqmRHPYffM

Perimetr's picture

The Chinese, with the help of the banksters, have all the industry that was offshored to them, via the de-industrialization of the US.

When they stop taking US toilet-paper backed currency, take a trip to Walmart and see what is still left on the shelves to purchase.

Then go home and start your own garden

r0mulus's picture

China isn't trying to destroy existing fiat regimes, it's trying to supplant them.

ISEEIT's picture

Is it just me...Or does barry soetoro seem to be a sociopath version of Forrest Gump?

Freddie's picture

Europeans putting their trust in Trayvon.  The only thing dumber are Americans - liberals who voted for Trayvon and conservatives who think we have real elections and who think tthe US military/soldiers are American serfs freind.

JustObserving's picture
China Mocks G7 As "Gathering Of Debtors"

The G7 are bankrupt led by the US with debt and unfunded liabilities of only $1,400,000 per taxpayer.

Greece has debt of $65,000 per taxpayer.

Forward

Arnold's picture

China mocks G7?

Little slow on the uptake there Sum Ting Wong.

JustObserving's picture
Financial System Will Collapse Just a Matter of When-Laurence Kotlikoff

Renowned economist Laurence Kotlikoff recently testified at the U.S. Senate about the runaway U.S. budget.  How bad is it?  Kotlikoff says, “I told them the real (2014) deficit was $5 trillion, not the $500 billion or $300 billion or whatever it was announced to be this year. Almost all the liabilities of the government are being kept off the books by bogus accounting. . . . The government is 58% underfinanced . . . . Social Security is 33% underfinanced . . . . So, the entire government enterprise is in worse fiscal shape than Social Security is, but they are both in terrible shape.”  So, how much is America on the hook for in the future?  Kotlikoff contends, “If you take all the expenditures that the government is expected to make, as projected by the Congressional Budget Office (CBO), all the spending on defense, repairing the roads, paying for the Supreme Court Justices’ salaries, Social Security, Medicare, Medicaid, welfare, everything and take all those expenditures into the future . . . and compare that to all the taxes that are projected to come in, and the difference is $210 trillion.  That’s the fiscal gap.  That’s our true debt.”

http://usawatchdog.com/financial-system-will-collapse-just-a-matter-of-w...

Sudden Debt's picture

CHina’s biggest fear is the US army.

At best it will break down when it goes bankrup.

Buuuuttt... most probably it will invade the countries that have the assets and weak armies.

 

Space Animatoltipap's picture

The US can't handle bigger wars. They're far too complex and risky. Besides, China and Russia teaming up is a formidable force. A very motivated force also. And motivaton and morale are huge problems in the Western countries. For very good reasons, as many readily understand.

Arnold's picture

Switzerland? Curacao? Monaco? New York? London?

LawsofPhysics's picture

put the chinese army in South Central Los Angeles, no really, I am curious to see how they'd do.

Let them eat iPads's picture

They'd be taken out by 12 year old black kids in no time.