Does the Future Belong to China?

tehuti · May 1, 2005

Does the Future Belong to China?

A new power is emerging in the East. How America should handle unprecedented new challenges, threats—and opportunities.

By Fareed Zakaria
Editor, Newsweek International
Newsweek

May 9 issue - Americans admire beauty, but they are truly dazzled by bigness. Think of the Grand Canyon, the California redwoods, Grand Central Terminal, Disney World, SUVs, the American armed forces, General Electric, the Double Quarter Pounder (With Cheese) and the Venti Latte. Europeans prefer complexity and nuance, the Japanese revere minuteness and minimalism. But Americans like size, preferably supersize.

That's why China hits the American imagination so hard. It is a country whose scale dwarfs the United States—1.3 billion people, four times America's population. For more than a hundred years it was dreams of this magnitude that fascinated small groups of American missionaries and businessmen—1 billion souls to save; 2 billion armpits to deodorize—but it never amounted to anything. China was very big, but very poor. All that is changing. But now the very size and scale that seemed so alluring is beginning to look ominous. And Americans are wondering whether the "China threat" is nightmarishly real.

Every businessman these days has a dazzling statistic about China, meant to stun the listener into silence. And they are an impressive set of numbers. China is now the world's largest producer of coal, steel and cement, the second largest consumer of energy and the third largest importer of oil, which is why gas prices are soaring. China's exports to the United States have grown by 1,600 percent over the past 15 years, and U.S. exports to China have grown by 415 percent.

The most astonishing example of growth is surely Shanghai. Fifteen years ago, Pudong, in east Shanghai, was undeveloped countryside. Today it is Shanghai's financial district, eight times the size of London's new financial district, Canary Wharf, in fact only slightly smaller than the city of Chicago. And speaking of Venti Lattes, last week Starbucks CEO Howard Shultz noted on CNBC that in three years the company would probably have more cafes in China than in the United States.

At the height of the Industrial Revolution, Britain was called "the workshop of the world." That title surely belongs to China today. It manufactures two thirds of the world's copiers, microwave ovens, DVD players and shoes. (And toys, my 5-year-old son would surely want me to add. All the world's toys.)

To get a sense of how completely China dominates low-cost manufacturing, consider Wal-Mart. Wal-Mart is America's—and the world's—largest corporation. Its revenues are eight times those of Microsoft, and make up 2 percent of America's GDP. It employs 1.4 million people, more than GM, Ford, GE and IBM put together. It is legendary for its efficient—some would say ruthless—efforts to get the lowest price possible for its customers. In doing this, it has used technology, managerial innovation, but, perhaps most significantly, China. Last year Wal-Mart imported $18 billion worth of goods from China. Of Wal-Mart's 6,000 suppliers, 5,000—80 percent—are in one country, and it isn't the United States.

But the statistic that wins this contest, that conveys the depth and breadth of the challenge the United States faces, is surely the one about the Intel Fair. Intel sponsors a Science and Engineering Fair, which is the world's largest precollege science competition, open to high-school students from around the world. Last year was a good one for Americans: 65,000 participated in the local fairs that are used to select finalists. In China the number was 6 million.

Yes, Chinese fairs are not as good as American fairs, the standards are different, and you can't compare apples and oranges. But still, 6 million oranges!

China's rise is no longer a prediction. It is a fact. It is already the world's fastest-growing large economy, and the second largest holder of foreign-exchange reserves, mainly dollars. It has the world's largest army (2.5 million men) and the fourth largest defense budget, which is rising by more than 10 percent annually. Whether or not it overtakes the United States economically, which looks to me like a distant prospect, it is the powerful new force on the global scene.

China's growth has obvious and amazing benefits for the world, and in particular for America. A Morgan Stanley report shows that cheap imports from China have saved American consumers more than $600 billion in the past decade. They have saved manufacturers even more. The Economist magazine notes that "it was largely thanks to China's robust growth that the world as a whole escaped recession after America's stockmarket bubble burst in 2000-01." And by buying up U.S. Treasury bills, China—along with other Asian countries—have allowed Americans and their government to keep borrowing and spending, and thus to keep the world economy going.

There have been two great shifts in global power over the past 400 years. The first was the rise of Europe, which around the 17th century became the richest, most enterprising and ambitious part of the world. The second was the rise of the United States, in the late 19th and early 20th centuries, when it became the single most powerful country in the world, the globe's decisive player in economics and politics.

For centuries, the rest of the world was a stage for the ambitions and interests of the West's great powers. China's rise, along with that of India and the continuing weight of Japan, represents the third great shift in global power—the rise of Asia.

Great powers are not born every day. The list of current ones—the United States, Britain, France, Germany, Russia—has been mostly the same for two centuries. The arrival of a new one usually produces tension if not turmoil, as the newcomer tries to fit into the established order—or overturns it to suit its purposes. Think of the rise of Germany and Japan in the early 20th century, or the decline of the Ottoman Empire in that same period, which created the modern Middle East.

Great-power conflict is something the world has not seen since the cold war. But if it were to begin, all the troubles we worry about now—terrorism, Iran, North Korea—would pale in comparison. It would mean arms races, border troubles, and perhaps more. Even without those dire scenarios, China complicates international life. Take relations between the United States and Europe. Iraq was a temporary problem. But differing attitudes on the rise of China are likely to produce permanent strains in the Western Alliance.

Inevitably, the China challenge looms largest for the United States. Historically, when the world's leading power is challenged by a rising one, the two have had a difficult relationship. And while neither side will ever admit it publicly, both China and the United States worry and plan for trouble. To say this is not to assume war or even conflict, but merely to note that there is likely to be tension between the two countries. How both sides handle it will determine their future relations—and the peace of the world.

What Does China Want?
When people talk about China today they inevitably mention its unique culture. Confucianism is said to be at the heart of the nation's psyche, and it is this tradition—of discipline, learning and devotion to elders—that explains China's extraordinary success. But Confucianism has been around for centuries, during much of which China was poor, backward and stagnant. Indeed, in the early 20th century, when the German scholar Max Weber wanted to explain China's unsuitability to capitalism, he pointed to its Confucian culture. (Cultures are complex and you can usually find in them what you want.) China began growing in the early 1980s not because of its culture, which has been relatively unchanging, but because of its policies, which went through a dramatic transformation.

When historians look back at the last decades of the 20th century, they might well point to 1979 as a watershed. That year the Soviet Union invaded Afghanistan, digging its grave as a superpower. It was also the year that China began its economic reforms. They were launched at a most unlikely gathering, the Third Plenum of the 11th Central Committee of the Communist Party of China, held in December 1978. Before the formal meetings, at a working-group session, the newly empowered party boss, Deng Xiaoping, gave a speech that turned out to be the most important one in modern Chinese history. He urged that the regime focus on development and modernization, and let facts—not ideology—guide its path. "It doesn't matter if it is a black cat or a white cat," Deng often said. "As long as it can catch mice, it's a good cat." Since then, China has done just that, pursued a modernization path that is ruthlessly pragmatic and nonideological.

The results have been astonishing. China has grown around 9 percent a year for more than 25 years, the fastest growth rate for a major economy in recorded history. In that same period it has moved 300 million people out of poverty and quadrupled the average Chinese person's income. And all this has happened, so far, without catastrophic social upheavals. The Chinese leadership has to be given credit for this historic achievement.

There are many who criticize China's economic path. They argue that the numbers are fudged, that corruption is rampant, that its banks are teetering on the edge, that regional tensions will explode, that inequality is rising dangerously and that things are coming to a head. For a decade now they have been predicting, "This cannot last, China will crash, it cannot keep this up." So far at least, none of these prognoses has come true. And while China has many problems, it also has something any Third World country would kill for—consistently high growth.

Central planning was not supposed to work. And in some sense it doesn't, even in China. The government is careful to give enormous power to the regions, to issue directives that are market-friendly, to open its economy to foreign investment and trade. It has used its membership in the World Trade Organization to force through large free-market reforms in its economy and society.

And yet, it's clear that the Chinese government deserves much credit for its ability to plan and manage the country's development. Consider the often-made comparison with India. At a microlevel, many Indian firms are far more impressive than their Chinese counterparts. They are genuine private-sector enterprises, use capital efficiently and can compete with the best in the world. Chinese companies by contrast are often partially state-owned, funded or favored. They get easy access to foreign capital and thus use it inefficiently. And many sell only in the domestic market and could not compete at the highest global level. But on the macro side, China's government pushes development far more consistently and effectively than India's.

Indian officials always point out that their Chinese counterparts don't have to worry about voters. "We have to do many things that are foolish in the long term," said a senior member of the Indian government. "But politicians need votes in the short term. China can take the long view." Of course there are many nondemocratic governments that have made catastrophic economic decisions; think of Marcos of the Philippines and Mobutu of Zaire. But that—only makes the Chinese regime's performance more remarkable.

"I've dealt with governments all over the world," says a senior investment banker, "and the Chinese are probably the most impressive." Many of his colleagues in the American business community would agree with this characterization. But then what explains the recent actions of this brilliant government in the realm of politics and foreign policy?

In April, the Chinese government seemed to encourage anti-Japanese protests over history textbooks, only to find them mushroom into mob demonstrations, riots, stone-throwing at the Japanese Embassy and widespread calls to boycott Japanese goods. Last March it ushered through passage of an "anti-secession law" threatening Taiwan with military force if it dared to anger China in any way. The result, among others, was that the European Union postponed its plan to lift an arms embargo on China in June. Also in March, China warned Australia to rethink its alliance with the United States, which created a backlash among Australian officials. In July 2003, Beijing tried to effect passage of an "anti-subversion" law in Hong Kong, which produced the largest demonstrations in the city's history and created strong anti-Beijing political sentiment in a territory that was always apolitical. All these actions are making China's most powerful neighbors—Japan, Australia, India—pause. It is strengthening those in America who see China as a threat, not an opportunity. Is this so smart?

A New Kind Of Challenge
For the first decade of its development (the 1980s), China did not have a foreign policy. Or rather, its grand strategy was a growth strategy. China quietly supported (or did not oppose) U.S. policies, largely because it saw good relations with America as the cornerstone of its development push. And this nonconfrontational approach—"to hide its brightness"—still lingers. With the exception of anything related to Taiwan, even now its major foreign-policy moves are largely outgrowths of economic imperatives. These days that means a ceaseless search for continued supplies of oil and other commodities.

But things are changing. In a paper titled "The Beijing Consensus," drawing heavily on interviews with leading Chinese officials and academics, Joshua Cooper Ramo provides a fascinating picture of China's new foreign policy. "Rather than building a US-style power, bristling with arms and intolerant of others' world views," he writes, "China's emerging power is based on the example of their own model, the strength of their economic system, and their rigid defense of... national sovereignty" (http://fpc.org. uk/publications/123).

China has followed a very different development strategy than Japan. Rather than focusing only on export-led growth to a few markets and keeping its internal market closed, China opened itself to foreign investment and trade. The result is that much of the world now relies on the China market. From the United States to Germany to Japan, exports to China are among the crucial factors propelling growth. For developing markets, China is the indispensable trading partner.

In November 2004, President George W. Bush and China's President Hu Jintao traveled through Asia. I was in the region a few weeks afterward and was struck by how almost everyone I spoke with rated Hu's visits as far more successful than Bush's. Karim Raslan, a Malaysian writer, explained: "Bush talked obsessively about terror. He sees all of us through that one prism. Yes, we worry about terror, but frankly that's not the sum of our lives. We have many other problems. We're retooling our economies, we're wondering how to deal with the rise of China, we're trying to address health, social and environmental problems. Hu talked about all this; he talked about our agenda, not just his agenda." From Indonesia to Brazil, China is winning new friends.

There are a group of Americans—chiefly neoconservatives and Pentagon officials—who have been sounding the alarms about the Chinese threat. And they speak of it largely in military terms, usually wildly exaggerating China's capabilities. But the facts simply do not support their case. China is certainly expanding its military, with a budget that rises 10 percent or more a year. But it is still spending a fraction of what America does, at most 10 percent of the Pentagon's annual bill.

The Chinese threat or challenge will not present itself in the familiar guise of another Soviet Union, straining to keep pace with America in military terms. It is more likely to be what Ramo describes as an "asymmetrical superpower." It will use its economic dominance and its political skills to achieve its objectives. China does not want to invade and occupy Taiwan; it is more likely to keep undermining the Taiwan independence movement, so that Beijing slowly accumulates advantage and wears out the opponent. "The goal for China is not conflict but the avoidance of conflict," Ramo writes. "True success in strategic issues involves manipulating a situation so effectively that the outcome is inevitably in favor of Chinese interests. This emerges from the oldest Chinese strategic thinker, Sun Zi, who argued that 'every battle is won or lost before it is ever fought'."

At least that's the plan. The trouble is that while maintaining this long-term strategy, China often lapses into short-term behavior that seems aggressive and hostile. Perhaps this is because the rational decision-making that guides its economic policy is not so easily applied in the realm of politics, where honor, history, pride and anger all play a large role. So with Taiwan, last week Beijing was playing out its long-term plan, "normalizing" relations with the island's main opposition party, and smothering it with conciliation. But last month it passed the anti-secession law, which angered most Taiwanese and alarmed Americans and Europeans.

Or take its relations with Japan. It makes little sense for Beijing to behave as aggressively as it does with Tokyo. It only ensures that China will have a hostile neighbor, one with an economy that is still four times its size. A wiser strategy might be to keep ensnaring Japan with economic ties and cooperation, achieving dominance over time.

There are grounds for reconciliation. Japanese have not behaved perfectly, but they have apologized several times for their wartime aggression. They have given China more than $34 billion in development aid (effectively reparations), something never mentioned by the Chinese. Even in this latest standoff, the Japanese moved first to break the impasse.

But for China, emotion seems to get in the way. Having abandoned communism, the Communist Party has been using nationalism as the glue that keeps China together. And modern Chinese nationalism is defined in large part by its hostility toward Japan. Mao is still a hero in China despite his many catastrophic policies because he unified the country and fought the Japanese. And as China advances economically, Chinese nationalism only gets more intense. Scratch a Shanghai Yuppie and you will find a virulent nationalist—on Taiwan, Japan and America.

Beijing assumes it can handle popular sentiments but it might well be wrong. After all, it does not have much experience in it, not being a democracy. It deals with public anger and emotions cagily, unsure whether to encourage them or clamp down for fear of where they might lead. So it does not know what to do with a group like the Patriots Alliance, an Internet-based hypernationalist group that has organized the biggest demonstrations in the country in six years.

Experts say that the Chinese Communist Party has been seriously discussing political reforms and studying dominant single parties from Sweden to Singapore, to understand how it might maintain its position in a more open political system. "The smartest people in the government are studying these issues," a well-placed Beijing resident told me. But politics is often about more than smarts. In any event, how Beijing's mandarins end up handling their own people might have much to do with how China ends up handling the world.

What America Needs to Do
How to handle China? The best guide is to listen to what French President Jacques Chirac says, and do the opposite. Chirac, the tired old dinosaur who seems increasingly uncomprehending of today's world, recently denounced China's "brutal and unacceptable invasion" of Europe. He was referring to the fact that China's textiles have swarmed into the European (and American) markets following the abolition of textile quotas. Unfortunately, Chirac's advice, to reimpose quotas in some way, may soon be taken by both Europeans and Americans. (The textile issue is putting a damper on what has been a growing love affair between Europe and China.)

It's an understandable impulse. Textile exports from China have soared since Jan. 1—a 534 percent increase in pullover-sweater sales in Europe for example—but this is largely the result of free trade, not unfair practices. More generally, tariffs and walls are not the way to prosper in the emerging global economy. It's not just China but India, Brazil, South Africa and Thailand, among others, that are all entering the global market with sophistication and skill. The answer for Western countries cannot be to shut themselves off from this new reality. After all, they benefit from the expansion of global commerce. The European Union's exports to China have risen 600 percent in the past 15 years. More broadly, countries that have tried to wall themselves off from the rest of the world in the past—to maintain their economy or culture—have stagnated. Those that have embraced change have flourished. China is simply the biggest part of a new world. You cannot switch it off.

What you can do is be better prepared. For Americans, this means a renewed focus on the core skills that have propelled the American economy so far: science and technology. The United States has been slipping badly in all global rankings of these fields. Its research facilities are dominated by foreign students and immigrants—but a growing number of them are staying home or going home. Without a massive new focus in these areas, America will find itself unable to produce the core of scientists, engineers and technicians who make up the base of an advanced industrial economy. China and India already produce many more engineers than does the United States. In five years, China will produce more Ph.D.s than the United States. They may not be as good as American Ph.D.s, but numbers do matter.

For the American government, the free ride may be coming to an end. It has run irresponsible fiscal policies, knowing that foreign governments and people would provide it with unlimited credit. But that credit comes at a price. When China holds huge reserves of dollars, it also holds the power to damage the American economy. To do so would certainly hurt China as much or more than it would America, but surely it would be better if U.S. policy were less vulnerable to such possibilities. Fiscal responsibility at home means greater freedom of action abroad.

In foreign policy, Washington will face two possibilities. The first is that China will push its weight around, anger its neighbors and frighten the world. In this case, there will be a natural balancing process by which Russia, Japan, India and the United States will come together to limit China's emerging power. But what if China is able to adhere to its asymmetrical strategy? What if it gradually expands its economic ties, acts calmly and moderately, and slowly enlarges its sphere of influence, hoping to wear out America's patience and endurance?

The United States will then have to respond in kind, also working quietly and carefully, also adopting a calibrated and nuanced policy for the long run. This is hardly beyond its capacity. America has been far more patient than most recognize. It pursued the containment of the Soviet Union for almost 50 years. American troops are still on the banks of the Rhine, along the DMZ in Korea and in Okinawa.

A world war is highly unlikely. Nuclear deterrence, economic interdependence, globalization all mitigate against it. But beneath this calm, there is probably going to be a soft war, a quiet competition for power and influence across the globe. America and China will be friends one day, rivals another, cooperate in one area, compete in another. Welcome to the 21st century.

With Melinda Liu in Beijing, Christian Caryl in Tokyo, Karen Lowry Miller in Brussels, Rukhmini Punoose in New York and John Barry in Washington, D.C.

http://www.msnbc.msn.com/id/7693580/site/newsweek/

hoodedgoon · May 1, 2005

i read this article on newsweek yesterday, interesting read. it kinda demonstrates how we've been out classed by the chinese. they've been planning this for the last 30 years. allowed ussr and us to go along fighting while they stay in the background biding their time. we've been too busy pissing off the rest of the world to notice. now it's too late. the ruling class in both the us and europe now depend on china for most of their business that they'll never allow a war to dry up their profits. warlmart is the classic example, i mean out of 6000 suppliers, 5000 is in china, holy fuck.

Greed · May 1, 2005

its understandable why an article like this would be popular with certain posters considering how it rips into american foreign policy. like saying bush goes around to other countries and focus too much on terrorism and not enough time addressing health, social and environmental problems. like they are mutually exclusive. and even outright quoting a source as fact that america is "intolerant of others' world views."

so yay, this article will live long in BGOL lore.

but another thing i didnt like was the numbers used, or numbers implied by the article. like japan's economy is 4x as large. i dont know what year this is from but the most recent numbers i've come across rate china at number 2 at around 5 trillion bucks. and in the thread i'm about to link it says china is the new largest consumer nation outside of oil consumption.

also, this article is pretty one dimensional regarding china's future. it really didnt go deep enough into china's political landscape and real threat it poses on it's projected growth.

however, there was a little redemption when the article pointed out how fucked up france is. "How to handle China? The best guide is to listen to what French President Jacques Chirac says, and do the opposite." i liked that.

here's a link to the thread about china being the new consumer king outside of energy. and in that same thread Que posted an article by Rodger Baker about how all that glitters aint gold in china due to the lingering commie bureaucracy.

http://64.255.174.200/board/showthread.php?t=18317

hoodedgoon · May 1, 2005

Greed said:
its understandable why an article like this would be popular with certain posters considering how it rips into american foreign policy. like saying bush goes around to other countries and focus too much on terrorism and not enough time addressing health, social and environmental problems. like they are mutually exclusive. and even outright quoting a source as fact that america is "intolerant of others' world views."

so yay, this article will live long in BGOL lore.

but another thing i didnt like was the numbers used, or numbers implied by the article. like japan's economy is 4x as large. i dont know what year this is from but the most recent numbers i've come across rate china at number 2 at around 5 trillion bucks. and in the thread i'm about to link it says china is the new largest consumer nation outside of oil consumption.

also, this article is pretty one dimensional regarding china's future. it really didnt go deep enough into china's political landscape and real threat it poses on it's projected growth.

however, there was a little redemption when the article pointed out how fucked up france is. "How to handle China? The best guide is to listen to what French President Jacques Chirac says, and do the opposite." i liked that.

here's a link to the thread about china being the new consumer king outside of energy. and in that same thread Que posted an article by Rodger Baker about how all that glitters aint gold in china due to the lingering commie bureaucracy.

http://64.255.174.200/board/showthread.php?t=18317

Both articles detail diametrically opposed points of view; one is for ra ra china one is China is overblown, so somewhere in between is the truth. Regardless of all the accurate numbers, you cannot deny that china is an economic and political superpower. It’s not a military superpower yet but it does not need to be at this point. Both articles say that china has decided to focus on economic growth for the time being that in term will foster political and military growth. There’s no rush. We are also dependent on china and other south Asian countries to fund our debt and military excursion in Iraq; they also provide a lot of our manufacturing capacity for textiles, cars, electronics and more. That alone gives them a lot of political influence in the America.

On the issue with bush and his complete focus on terrorism, that is indeed true. Most other countries are not that focused on terrorism, but are more focused on growing their economies. They pretend to be focused on terrorism because they want to keep us happy. Frankly my opinion is the extent of the terrorism issue in the US is a fabrication to keep us in a constant state of fear that will keep us quiet and not notice the erosion of our rights and freedoms at home using tools like the patriot act, the reduction of power of the judiciary by they deferring to the executive, civilian oversight and the slandering of anyone who go against the executive (democratic and republican). Somehow the American electorate been programmed to believe this terrorism threat is somehow linked with IRAQ now. If we had stuck with Afghanistan we most likely would have caught Osama (if indeed we do want to catch him) and his boys this would not have been an issue, instead we now have every wacko who wants to make some kind of religious jihad against the infidels flocking to Iraq. That was not the case before.

I would also like to point that it is the bush regime that is driving the mutual exclusivity of health, social and environmental problems, environment, justice, economic and terrorism, not the rest of the world. Bush has rejected the Kyoto accord and rejected and is trying to undermine the ICC and War crimes tribunal, constantly undermines the UN and attacked a sovereign nation against domestic and international law just to name a few. That';s one of the reasons that opinions of the US has so dramatically dropped lately.

Regarding foreign policy, most of the rest of the world reject bush’s foreign policy as well as a lot of Americans not because we just don’t like bush but because he’s demonstrated arrogance, short sightedness, hypocrisy and ignorance when dealing with anyone who doesn’t agree with him. Look at his Bolton issue, Bolton is clearly not the right man for the job, yet the president still supports this guy. Bolton shares bush’s vision and hates dissenting opinions, as illustrated in all the testimony so far, sounds like a man after bush’s own heart; you can have an opinion as long as it doesn’t clash with mine.

One last point, in the last 6 years opinion in this country has been very polarized into those who agree with bush and everyone else including France. Anyone who do not agree with bush is labeled un-american in an attempt to stifle good and needed discourse in this country, which we need this more than ever. I know, “goon, how can you make this post if discourse and opinions are being stifled?”. Well I think we all understand the context that statement is made and can make the logical connection but i'll try to explain, any type of grass roots discussion that might threaten the status quo of go against the established opinion is brutally put down using the various and very popular media assets of the small but powerful conservatives in this country. Our news papers rarely write opinions that are critical of the regime. How do most Americans get their news, our national media outlets? Look at the ruckus over the coffins of the soldiers from Iraq. Seeing these coffins should be a right and the pentagon and the administration should not be able prevent the media from reporting on this. The fact that news outlets buckled to political pressure shows who really controls the media in this country. I’m an American working in Canada; I get to watch cbc, bbc, fox, cnn, al jazerra etc. I get a nice opinion from everywhere. Most Americans do not watch this variety and there the impression that most of the world as that americans are ill-informed.

I’ve rambled enough for today, good discussion.

Greed · May 1, 2005

Both articles detail diametrically opposed points of view; one is for ra ra china one is China is overblown, so somewhere in between is the truth. Regardless of all the accurate numbers, you cannot deny that china is an economic and political superpower.

I think it is awe inspiring considering the rate of growth of such a large economy but I don’t really see the point of saying it’s even close to threatening the US in dominance.

The US has $11 trillion spread out over 300 million people. China has 6-7 trillion spread out over 1.4 billion people. They have a very long way to go before they generate the kind of disposable income needed to challenge the US. but it seems to be the popular idea to promote nowadays.

the same way you feel iraq is a made up threat designed to distract people, i feel china is a made up threat designed to keep people preoccupied. just like japan and germany was supposed to be a threat in the 80's, mexico was supposed to be the threat in the 90's, and india was supposed to be the big threat in bush's 1st term. it's all bull.

We are also dependent on china and other south Asian countries to fund our debt and military excursion in Iraq; they also provide a lot of our manufacturing capacity for textiles, cars, electronics and more. That alone gives them a lot of political influence in the America.

once again I don’t think it’s all that serious. China only buys(and sells) so much US debt because that is their method of pegging the yuan to the dollar at a specific exchange rate. But to raise the capitial to buy our dollar debt they have to sell yuan denominated debt. That hurts them a lot more than it hurts us.

my point in addressing this is if America was worried about financing its debt, then the executive and the legislative branches of our government wouldn’t be consistently threatening china to stop artificially manipulating exchange markets. Which would mean stop buying our debt at the rate they are currently doing so. We are not in such a bad position as the media portrays us to be.

BGOL can be a great archive and one of the travesties of the switch to this new board is all was lost from the old.

http://64.255.174.200/board/showthread.php?t=19055

I would also like to point that it is the bush regime that is driving the mutual exclusivity of health, social and environmental problems, environment, justice, economic and terrorism, not the rest of the world.

how do you coincide this with bush’s second inaugural address where he stated in so many words that all these things are related. Achieving a higher quality of life in these countries is part of the war on terror.

Now be honest, did you listen to his inauguration, or are you one of these people that say they don’t want to listen to bush because you hate him although he’s the American president declaring the official foreign policy of your country?

Regarding foreign policy, most of the rest of the world reject bush’s foreign policy as well as a lot of Americans not because we just don’t like bush but because he’s demonstrated arrogance, short sightedness, hypocrisy and ignorance when dealing with anyone who doesn’t agree with him.

that’s all good that you feel this way, but don’t you think its gratuitous for the author to go into this in an article about china’s comeuppance? I’m guessing you don’t. I’m guessing you want that point of view to be pronounced at every opportunity.

and i'm not totally intolerant of it. the statement by asia leaders saying bush focused on terrorism is one thing. but the unnecessary statement about america's intolerance "of others' world views," should have been left out of a journalistic article.

One last point, in the last 6 years opinion in this country has been very polarized into those who agree with bush and everyone else including France. Anyone who do not agree with bush is labeled un-american in an attempt to stifle good and needed discourse in this country, which we need this more than ever

ultimately I don’t agree with this. If you want to do a search for the liberal media thread on this board and bump then its all good. But I wont get into it again in this thread.

hoodedgoon · May 1, 2005

how do you coincide this with bush’s second inaugural address where he stated in so many words that all these things are related. Achieving a higher quality of life in these countries is part of the war on terror.

I’m a big political bug and I did indeed watch the inaugural address. Bush’s first inaugural address also laid out broad ideas which were not supported by his subsequent actions. I’ll have to wait 3 years to see if the same is true of this second address but from his first term I conclude it won't. I guess we can say 9/11 changed things, but that itself didn’t’ increase the threat of terrorism from 9/10 to 9/11. We attacked Afghanistan and routed the Taliban and al-Qaeda. What changed the terrorism dynamics was our attacking Iraq.

The bush administration hasn't done anything to address the issue of the connection between disenfranchisement and poverty with terrorism. As a matter of fact when nelson Mandela, Jean Chrétien and Kofi Annan mentioned this, they were ridiculed as being apologist for the terrorist. So instead of supporting democratic changes in Saudi Arabia and Pakistan which are known breeding grounds for terrorist we support their authoritarian regimes. We are selling f-16's to Pakistan, we give Israel billions in military aid and always apologize for them while they subjugate the Palestine people, steal their land against domestic and international law. We can argue that if the palestians had their own homeladn with security they would not be producing suicide bombers. Does that go with his stated goals in this second address? IMO no.

that’s all good that you feel this way, but don’t you think its gratuitous for the author to go into this in an article about china’s comeuppance? I’m guessing you don’t. I’m guessing you want that point of view to be pronounced at every opportunity.

True the statement is out of place and opportunistic in this article, but that does negate it as fact though. When this point is approporiately placed I believe it should be shouted as loudly as possible. Intolerance of opinion and opposite views from a leader is dangerous. It's currently called being resolute by the bush team, IMHO is't failure to recognise mistakes.

ultimately I don’t agree with this. If you want to do a search for the liberal media thread on this board and bump then its all good. But I wont get into it again in this thread.

We'll have to agree to disagree on this one. I watch cnn, you probably do as well, i watch fox news, you probably do as well, rush limbaugh, ann couter a few well known ones. All of these in more cases that not, even in cases where the news is clarely bad, report a neutral story or do not report at all. If the story is adminisration good you get it with all the stars and bangles. I have to watch bbc to get the rest of the story. It's kinda tough to name liberal media assets that are nation wide and that are equally viewed as conservative ones.

Greed · May 2, 2005

The bush administration hasn't done anything to address the issue of the connection between disenfranchisement and poverty with terrorism.

what kind of results do you want to see in the 5 yrs this has been US policy. I think the kind of results you expect to see are unrealistic.

The kind of results I expected are realistic because I’m seeing them.

I’ll use your example of Saudi Arabia. They had their 1st election in 40 yrs last month or a couple of months ago. Yes, they were just municipal. Yes, they were just men only. But they were the 1st. the goal was to start the process. That’s why America took a softer stance with places like Saudi Arabia because at least they are open to change. Its slow change but what other kind of change is realistic in the Middle East. Some countries that are troublemakers are treated differently than others based on their acceptance of change. Do you only want an absolute standard? Treat Saudi Arabia like Iraq? The articles lauds great powers ability to be patient like the US was during the 50 yr Cold War. This is another example of that. Going slow is an asset not a drawback.

But don’t get it twisted Saudi Arabia knew we’ve surrounded them since 9-11, and the ruling group wasnt just being nice by having elections.

True the statement is out of place and opportunistic in this article, but that does negate it as fact though.

actually its only opinion without the benefit of historical analysis. We’re living through history now. Are we the proper people to judge it’s effect over the next few decades? I don’t think we are. I think we’re on the right path, but I concede I might be wrong. You think we’re on the wrong path, but you can’t be 100% positive you’ll be proven right 50 yrs from now. Can you?

It's kinda tough to name liberal media assets that are nation wide and that are equally viewed as conservative ones.

people can never name a liberal source because liberal people often consider themselves moderate, and view news outlet that think like them as moderate. Anybody that isn’t liberal can cite the NY Times and NPR as liberal just as easily as you can name fox news as conservative. Its just a name game.

QueEx · May 2, 2005

<font size="6"><center>China: The Communist Government's Crisis of Legitimacy</font size></center>
<font size="4"><center>Full membership in the WTO is the very thing
that could interrupt the life-giving flow of deadly loans. </font size></center>

May 2, 2006
STRATFOR
By Peter Zeihan

China has begun to tip its hand as to how it plans to unravel a Gordian knot of social, financial and political problems -- any one of which could be life-threatening to the communist government in Beijing. The revelation came April 27, when a China Banking Regulatory Commission (CBRC) official said leaders are examining ways to protect the country's banking sector against foreign competition, while -- at least for now -- still honoring its commitments under the World Trade Organization (WTO).

Though Shi Jiliang, the vice chairman of the CBRC, was careful to emphasize that China's WTO commitments are not in doubt, his discussion of achieving "an appropriate level of protection for Chinese banks" and taking efforts to "reduce excessive competition between foreign and Chinese banks" could hardly be lost on Beijing-watchers waiting for the government -- which faces a crisis of legitimacy on multiple levels -- to signal its next move.

As the situation stands now, any credibility the government gleaned from Marxism, Maoism or Communism has long since faded, and the Communist Party remains in power only by dint of its ability to deliver economic well-being to the masses. Its chosen delivery mechanisms are state-owned enterprises (SOEs) -- government-run companies that directly employ more than half the nation's urban dwellers. These vastly bloated and unprofitable companies are kept "viable" through subsidies and cheap loans, regularly injected by China's state-owned banks.

And therein lies the rub -- for China, its banks and the WTO as well.

By any unbiased definition -- and as recently as two years ago, even in the opinion of the government -- the state banks are all moribund. Their total portfolio of (intentionally given) bad loans amount to somewhere between one- and two-thirds of China's gross domestic product, the highest ratio of any major economy in human history. Should that flow of loans be interrupted, the banks would crumble, the SOEs would crash and China would burn in flames of economic catastrophe and social unrest.

The end of China's five year phase-in to full WTO membership -- scheduled to arrive in December 2006 -- is the very thing that could interrupt that life-giving flow of deadly loans.

At that point, all restrictions on foreign participation in the Chinese banking sector will fall away. And if Beijing allows this to occur as envisioned by the WTO, foreign banks would quickly attract the bulk of China's private savings, which now are forcibly funneled into the state banks and thence to the SOEs.

Currently, foreign access to China's financial world is thin, restricted as it is to local currency transactions in 18 cities. But even this limited access has led to the formation of some 220 foreign bank offices in China and totaled business worth 108.3 billion yuan ($13 billion) at the end of 2004. These foreign banks already hold 12 percent of all lending business in Shanghai, a rate of increase that Shi calls "unexpectedly [read: disturbingly] fast." Full competition would send Chinese money to the foreign banks in droves, and once foreign currency [read: U.S. dollar] operations are allowed, capital flight will reach mountainous proportions.

Hence, Shi has signaled that China will abrogate its commitments to permit banking competition, in order to assure the continued existence of the government. A choice between China's WTO commitments and the continued survival of the government is no choice at all.

There is certainly something to be said for preparation. Foreign bankers -- who have been singing China's praises for years -- have a vested interest in maintaining the Chinese hype, since they turn profits as money moves into or out of China. But for these bankers, access to China's hundreds of millions of savers is the Holy Grail. A sudden split between Beijing and those who thus far have been singing in the choir would signal not the beginning of the end, but the end itself -- for once the choir realizes it has been had, it is only a matter of moments before the entire congregation of investors speeds for the door.

.

tehuti · May 4, 2005

Will China dominate outsourcing's future?

File this one under the heading "what goes around, comes around."

After a run of stunning good fortune, India's tech community finds itself dealing with a looming challenge from a flourishing Chinese economy. Just as American companies saw jobs disappear to less-expensive venues in India, China has begun to figure as an alternative for the practice of shipping tech tasks offshore.

The shift has not gone unnoticed by leading technology outsourcers in India, who are dealing with creeping wage inflation. As a result, some are fast establishing a presence in China to remain competitive with their peers.

How big this trend will become remains unclear. Revenue from IT services is rising in China, but it is still barely half of India's $12.7 billion a year, according to a recent report from consulting firm McKinsey.

Part of the problem is a fragmented market, McKinsey said. And China faces other challenges, not the least of which is a lack of management talent.

CNET News.com recently spoke with Sudip Banerjee, president of enterprise solutions at Wipro Technologies, about the relative cost of software operations and other issues surrounding the future of outsourced tech work in China.

Q: What are the advantages and disadvantages of being in China right now?

Banerjee: The advantages are twofold. You have a large labor supply pool like you have in India. The other advantage is that if you're dealing with customers or companies who have an Asian headquarters, there is a language and cultural advantage. (That is brought by) some of the Chinese, particularly in cities like Shanghai, which has bilingual engineers who speak both Japanese and Chinese.

In terms of the areas where they still fall short, I think one is the intellectual-property protection issue. The second is their English language capability, and the third is their lack of project management expertise.

Is there is a particular example of things going well in China? Have you been surprised at something working out where you didn't expect it to?

Banerjee: I think they have very dedicated people. The programmers that you get there are very hardworking, very dedicated, and they produce content as good as anyone else. When we went there first, we were not sure what kind of output we would get, but we're very happy.

I think the challenge there is only in the project management area--project lead area or the specialized consultant area. But at the grassroots level, the attitude as well as the ability to do hard work and the quality of output--all that is very good.

When you're talking about this dedication and quality, are these Chinese programmers and other professionals developing in computer languages using Chinese characters? Or English alphanumeric characters? How does it work?

Banerjee: We only hire people who can do it in English, except where we have to do a local office implementation. So we do tend to get bilingual people. We have a requirement sometimes of people who know Chinese characters.

Can you give an example of a time when things didn't work out well? Or you ran up against an obstacle that you hadn't expected? Were there any intellectual-property scares you had there in China, for example?

Banerjee: We ourselves haven't had those, because of the nature of work that we have done. We have not exposed ourselves in any area where it could be in trouble with IP. But I've lived in Shanghai, and I've met people, and they certainly do have those concerns.

What kind of steps have you taken to ensure your customers that they aren't going to be losing their intellectual property in China?

Banerjee: We've made sure that wherever we've done work for our customers, only the local implementation and what was required was passed on. And we were doing that in a secure environment within our own development facility or in the customer's development facility.

We've treaded very carefully, I have to admit. We have just made sure that we have only the documentation which is required--not anything more.

Do you see the Chinese market as a place where you might expand given what seems to be pretty high wage inflation rates in India and high turnover? Can you speak about what those levels are right now that you're seeing at Wipro? And what is the corresponding information for the Chinese labor market?

Banerjee: I don't see much of a difference. The turnover for Wipro this quarter--I think it's just under 10 percent. Having talked to people in Shanghai in the Pudong Software Park, which is like their version of Bangalore, you (find) pretty much the same range. It keeps fluctuating from company to company.

This whole notion of 'it might be cheaper to do work in China'--I don't believe that's true. The programmer cost (difference) between India and China--China is about 10 to 15 percent lower. But (when it comes to) the supervisory staff, project lead, project managers, etc., China is about 25 percent higher.

When you take a project and you do it on a 10-member team (or a) 20-member team, the net cost is the same. The other thing which you have to remember is that the Yuan currency is likely to get revalued at some stage. It's currently in a very artificial stage, and I think the U.S. will be the government which will really put pressure on China to get that Yuan revalued, because the U.S. economy is hurting as a result of the current evaluation of the Yuan. When that happens and the Yuan gets firmer, the cost of the local Chinese talent is going to be even higher.

So I don't believe that there's going to be any advantage or disadvantage from a salary perspective in operating in China.

What is the wage inflation, wage increase rate, that you're seeing in India for programmers?

Banerjee: In India, the total wages have risen up between 10 percent and 12 percent.

Ten percent and 12 percent annually?

Banerjee: A 10 percent to 12 percent offshore wage increase. And I believe that that's going to be rising at the same level or a little higher in the next 24 months.

People have a lot of misconceptions about China. I think China is associated with low cost, at least in the software industry. I haven't found any evidence of that with any customer or anybody who has done any business there.

What is Wipro's presence in China?

Banerjee: We have a small development center out of Shanghai...The plans are to have a beachhead from where we're able to implement software development activities for people who have a China (presence).

So it's not so much the India model of taking work from, say, a U.S. customer or European customer and doing that application development or integration work in India?

Banerjee: No, we don't do that.

Do you have specific head count growth plans in China?

Banerjee: Yes, we have an internal head count plan. But it's not really public. It's not in the thousands; it's in the hundreds.

This is the stuff that's being done for the China market predominantly, it sounds like.

Banerjee: It's stuff not even for the local Chinese companies. It's for global companies who have a strong China presence, and plenty of large companies around the world now have very significant operations in China.

Do you see yourself as playing a role in consolidating the software outsourcing industry in China?

Banerjee: We and some of the other top-tier Indian players are all in China. Everyone is kind of waiting and watching, looking at what's happening. The Chinese software companies are typically 200 to 300-person operations. They are not very large in size. I think (consolidation is) possible, but I think it will really depend on the nature of engagements that people have.

Can you give an example?

Banerjee: If people's engagements lend themselves to getting large numbers of programmers, yes. If the nature of engagement is of the type that you have multisite implementations, then you may not be able to consolidate. Because what you don't have in China are companies in one location being very big. Let's say if we had a requirement of an implementation job which required 100 people, but in four different cities. It is very unlikely that we would get a company which has branches in four cities.

So they tend to be located in one region and pretty small?

Banerjee: They are very fragmented, yes.

Is there also concern that it might be hard to move in and acquire a number of those companies because you run the risk of irritating or setting off alarms on the government's part?

Banerjee: No. The government has come to India, they've met with large companies, and they want us to set up a large presence in China. We're actually there as a "wholly owned foreign enterprise." The advantage is that we're like a 100 percent-owned subsidiary, so we don't have to have a partnership with a local Chinese company. This is really an exemption granted to the IT services industry, and it's not very common

http://news.com.com/Will+China+dominate+outsourcings+future/2008-1022_3-5668199.html?tag=nl

tehuti · May 5, 2005

Embrace of Capitalism Draws Backlash

China's Market-Driven Surge in Textile Exports Prompts Calls for Tariffs

By Peter S. Goodman
Washington Post Foreign Service
Thursday, May 5, 2005; A01

WUHAN, China -- Over the past decade, Li Suiming has steadily improved the garment factory in which he once operated a manual loom. He brought in Japanese sewing machines. He scrapped the old product -- ill-fitting long underwear -- for fresh designs. He turned what had been a loss-making state-owned factory into his own profitable enterprise, Dolucky Knitwear.

This year came an enormous opportunity: An old system that for three decades limited China's textile exports to the United States and Europe finally expired. Li geared up to put his clothes on store shelves from Fairfax to Frankfurt. In March, he shipped his first direct order to the United States, 18,000 polo shirts for New York-based Omega Apparel. It was part of a deluge of Chinese-made textiles reaching the American market. Imports of cotton shirts and pants alone increased tenfold over the first three months of the year, according to U.S. government data.

That surge has provoked a fierce backlash, intensifying calls for protective tariffs on Capitol Hill, where some lawmakers now describe China as a rogue trade regime. Industry groups argue that China is still governed by a Communist Party that subsidizes industry, manipulates its currency and tolerates the exploitation of its workers. They warn that the Chinese juggernaut is poised to wipe out some 650,000 textile and apparel jobs in the United States. In Europe, industry pressure groups make similar claims.

But as the Bush administration and counterparts in Europe now consider whether to impose limits on Chinese textiles, Li feels angry and cheated. In his view, China has cast its lot with globalization, allowing multinational giants such as Citibank and Dell Computer to expand here, applying their deep pockets and superior technology toward extracting profit. In exchange, China is supposed to be able to harness its own strengths -- its abundant cheap labor and raw materials -- to sell goods in foreign markets. Yet now that he has done precisely that, making low-priced goods that people want to buy, the same world that has for years encouraged his communist country to embrace capitalism has decided that he is the enemy.

"The United States and European countries can make their march into China with their advantages," Li said. "China's advantage lies with labor-intensive industries like textiles. By having all these disputes, this trade war, they are limiting our strength. We're not getting what we're supposed to get."

Chinese officials argue that their country is the scapegoat for the inevitable demise of American manufacturing: If American closets were not full of Chinese-made clothes, they would instead be occupied by goods from some other developing country.

Despite a two-thirds jump in overall shipments of textiles and clothes from China since quotas were lifted at the beginning of the year, imports from all countries have climbed by only 15 percent, and those from Mexico, South Korea and the Philippines have dropped, according to the foreign trade division of the U.S. Census Bureau. In other words, much of the increased Chinese production is coming not at the expense of American producers, but from those in other countries.

The head of global procurement for Wal-Mart, which last year bought more than $1.5 billion worth of apparel in China, scoffed at the notion that American jobs are at risk because of increased Chinese clothing imports. "The only apparel that's left in the U.S. is sweatshops in Chinatown," the procurement chief, Andrew Tsuei, said during an interview last year.

Li's factory lends some credence to claims that China's textile boom is driven in part by labor exploitation. He said seamstresses earn about $125 per month and work nine hours per day, with overtime very rare and always paid. But four seamstresses, all of whom spoke on the condition that they not be identified, said they were paid about $75 per month and must routinely work 12 hours per day without overtime compensation. No air conditioners cut the furnace-like summer heat.

Still, the very existence of Li's venture and thousands of other private factories together undercut one of the key arguments for protectionism -- that the textile trade in China remains in the clutches of a Communist Party-run state. Party officials still play significant roles in determining who gets what in China, but the textile industry has been dramatically refashioned, with market forces now largely holding sway.

Among large factories, state-owned firms produce less than one-fifth of all textiles and less than one-tenth of garments, according to UBS Investment Research in Hong Kong.

Among the 32,000 Chinese garment and textile companies in the export trade, roughly half are private and two-fifths have foreign investors, said Cao Xinyu, vice chairman of the China Chamber of Commerce for Import and Export of Textiles.

Chinese apparel and textile factories shed more than 1 million jobs between 1997 and 1999 as the government cut credit to money-losing factories, according to a national trade group. The remaining players have since geared up for the end of the old global quota system, pouring $25 billion into improving their plants over the past two years alone, according to Cao.

This retooling and streamlining has increased the efficiency of China's textile producers, a trend accelerated with the lifting of quotas. Previously, China's factories had to buy rights to export from state trading companies, increasing the price of Chinese goods. The end of the quotas eliminated such payments. In the months since, wholesale prices for Chinese-made blue jeans reaching the United States have dropped by nearly a third, according to Pietra Rivoli, a trade expert at Georgetown University's McDonough School of Business. The wholesale price of cotton underwear from China has dropped by nearly half, and cotton knit shirts have fallen by 60 percent, as volumes of imports have surged. Retail prices have fallen only marginally over the past year, meaning the bulk of the savings is being enjoyed by retailers and wholesalers, Rivoli said.

"This rapid rise in imports reflects Chinese competitiveness, not illegal trade practices," said Scott Kennedy, a China expert at Indiana University.

Wuhan, capital of Hubei province, bears testament to the refashioning of China's textile industry. Sometimes known as China's Chicago, this city of 5 million in central China is a crucial transport junction, its pell-mell assemblage of skyscrapers and warehouses occupying the muddy banks of the Yangtze River.

Li began working in the early 1980s at what was then the Wuhan Number One Knit Mill, one of many state-owned plants. It made one-size-fits-all underwear, navy blue only. He took home about $3.50 per month.

In those days, the factory made what central planners dictated. Profit was not in the lexicon. But that changed in the early 1990s as price controls were lifted and managers became more accountable for their balance sheets.

The factory was then losing about $120,000 a year, subsisting on fresh loans from the state-owned Industrial and Commercial Bank of China. In 1993, Li approached the managers with a plan to lease an idled production line and hire 40 workers who had been laid off. He would hand over 30 percent of the profits to the state managers. They agreed. Over subsequent years, he took over more of the factory.

The first year, he made underwear for the domestic market, relying on scraps for fabric. Often he could not get enough. The next year, he borrowed $6,000 -- most of it from the Agricultural Bank of China, where his wife's sister worked -- and bought woven cotton from a local producer. By 1995, he was earning nearly $4,000 a year.

That same year, a Chinese trading company approached him about making goods for export. He sent a shipment of pajamas to Germany, then another to Belgium. By 1997, nearly three-fourths of Li's business was in exports. Last year, he exported his entire production, racking up about $3 million in sales.

Along the way, Li has added a Peugeot sedan, a new apartment. He has spent about $60,000 improving the factory's machinery. His office remains a monument to thrift: the walls bare save for a calendar, the furniture mostly bench seats scavenged from a passenger van.

Last fall, as the new quota-free era approached, Li and his staff set up a booth at a manufacturing fair in the southern city of Guangzhou to try to attract American buyers. There, they met Albert Chami, president of Omega Apparel. He ran his hands over the polo shirts on display and asked for a price -- about $2.60 each. In December, he placed his first order, but now he is holding back on new purchases, worried they will get caught up in a trade war.

"China is very important, not only for us, but for everyone in America," Chami said by telephone. "I don't know why they want to make a fuss out of it. The Chinese are the best. The price. The quality. Everything is there."

As Li sat beneath a whirring ceiling fan, he wondered why anyone would want to put a stop to it.

"We're not taking jobs from America," he said. "The competition is good."

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/04/AR2005050402120.html

tehuti · May 14, 2005

China Opposes New U.S. Textile Quotas

China said Saturday it opposed a U.S. decision to impose new quotas on some Chinese clothing imports, calling the move a violation of international standards of free trade.

The Bush administration announced Friday it would reinstate quotas on three categories of clothing imports from China, responding to pleas from domestic producers that a surge of Chinese imports was threatening thousands of American jobs.

The move "violates the spirit of free trade and the basic principles of the World Trade Organization," Chinese Commerce Ministry spokesman Chong Quan said in a statement on the ministry's Web site.

China is a dominant competitor in the $350 billion-a-year world textile trade, and its shipments into the United States spiked sharply after Jan. 1, when global quotas in effect for three decades were eliminated.

The latest U.S. action will impose limits on the amount of cotton trousers, cotton knit shirts and underwear that China can export to the United States — which American retailers argue will drive up prices for U.S. consumers.

"The Chinese side urges the United States to correct its error in order to prevent the implementation of trade protectionism measures from casting a shadow on the trade relations between the two sides," Chong said.

He also said China retains the right to take "further measures under the framework of the WTO," but he did not specify what those measures might be.

http://news.yahoo.com/s/ap/china_us_textiles

QueEx · May 26, 2005

tehuti said:
China Opposes New U.S. Textile Quotas

<font size="4"><center>
... But What About Africa ???</font size></center>

.

<font size="6"><center>African Garment Makers Form Regional Body</font size></center>

<font size="4"><center>
"Sub Saharan African textile and garment manufacturers
will form a regional body to counter the
effects of competition from China" </font size></center>

The East African (Nairobi)
May 23, 2005
Posted to the web May 25, 2005
Philip Ngunjiri
Nairobi

Sub Saharan African textile and garment manufacturers will form a regional body to counter the effects of competition from China and the imminent expiry of the Africa Growth and Opportunity Act (Agoa). The plan to create an industry body was endorsed by Comesa and the East African Community (EAC) at a cotton and textile executive summit in Nairobi last week.

The event was organised by the Regional Agricultural Trade Expansion Support Programme (RATES), a US Agency for International Development (USAid) funded project in collaboration and with Comesa, EAC, the International Cotton Advisory Committee (ICAC) and the East and Central Africa Competitiveness Hub. It was hosted by the textile sector and apparel manufacturers in Kenya.

Working at Kenya's Export Processing Zone. Six EPZ investors closed down last year

African producers have also been hard hit by the termination of the Multi-Fibre Agreement (MFA), which came to an end in January. The MFA was introduced 30 years ago to protect the textile industries of developed countries by imposing quotas on high-volume producers such as China, Korea and India.

Kenya, which has preferential access to the US market through Agoa has already been affected by the expiry of quotas under the MFA.

Since October last year, six investors operating in the Export Promotion Zones have closed shop and in the process, about 6,000 jobs have been lost. It is feared that most of the 39,000 jobs created during the four years Agoa has been in effect could also be lost.

A study whose findings were released by the World Trade Organisation last September, showed that China and India are likely to dominate about 80 per cent of the global textile industry in the post-MFA era, leaving a mere 20 per cent to be shared by the rest of the world. The study predicts that 27 million workers around the world will lose their jobs with the end of the MFA.

In the first three months of this year, China increased production of men's cotton trousers for export by 1,000 per cent. China is expected to become "the supplier of choice" for most US importers because of its ability to make almost any type of textile or apparel product, at any quality level, and at a competitive price, says the WTO.

An interim steering committee will be set up to immediately start building co-operation, interaction and linkages within the region and to start addressing the key issues that arose from the summit. To date, there has been no representation for this region in the global marketplace and individual countries have tended to act in isolation," says Barry Fisher, a cotton and textile specialist at the RATES programme.

"For the first time, East Africa has the opportunity to become a unified and recognised voice in both regional and global trade affairs," .

The West Africans organised themselves at the Cancun ministerial conference in 2003 and they were listened to by the international community.

However, according to Andy Sisson, USAid's director of regional economic development service, the mere formation of the regional organisation may not be sufficient to address all the key issues and the constraints affecting the immediate future of the industry.

"You will need to form a regional network that is not a "stand-alone" entity but one that incorporates all the lead players so that they may play a key role in revitalising the sector and carrying it forward," he said.

http://allafrica.com/stories/200505250442.html
.

Dolemite · May 26, 2005

In the first three months of this year, China increased production of men's cotton trousers for export by 1,000 per cent

man they make mexicans and Indians look like they're on vacation

wonder what will happen when everyone stops having them make everything - they make too much for their own society to consume - we will eventually make too little to meet our needs and probably already do
dangerous shit in a world that is not guaranteed peace

QueEx · May 30, 2005

QueEx · Jun 2, 2005

gassit · Jun 3, 2005

its unrealistic for usa west europe etc to remain the sole powers in the world forever, the superpower role usually rotates as we can see americas time as the sole superpower is coming to a close, the same thing happend to britain before and the same thing shall happen in the future !

QueEx · Jun 3, 2005

gassit said:
its unrealistic for usa west europe etc to remain the sole powers in the world forever ... as we can see americas time as the sole superpower is coming to a close ..

How is that ???

QueEx

tehuti · Jun 8, 2005

Appetite for Stocks Slackening in China

By KEITH BRADSHER

HONG KONG, Wednesday, June 8 - Investors are showing signs of losing interest in Chinese stocks just as investment banks are preparing a long list of Chinese initial public offerings. That combination could make it hard to sell all the shares coming to market and could slow China's efforts to privatize its state-owned industries.

Delays in Chinese initial public offerings could also set back big banks like Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Merrill Lynch, Morgan Stanley and UBS. China has become the world's second-largest generator of investment banking fees for such offerings, ahead of Europe but behind the United States. All of these banks have been successful lately in winning the right to sponsor such offerings, most of them done in Hong Kong.

The world's largest initial public offering so far this year, the China Shenhua Energy Company, a big coal mining concern seeking to raise $3.6 billion, attracted lukewarm demand as bidding closed Tuesday, with lower oversubscription rates than seen on big China issues last year. It was expected to be priced toward the low end of expectations at a meeting in New York.

Earlier Tuesday, the China Minsheng Banking Corporation, the largest bank in China organized by private investors, unexpectedly canceled meetings here to promote its $800 million offering to investors. The stock sale was previously planned for early July. And on Monday, the Bank of Communications, China's fifth-largest state-owned bank, disclosed a lower price range than expected for its $1.9 billion initial public offering on June 23.

Even money managers at funds specializing in China stocks are expressing worry about a glut of offerings. "I really think it's too much, particularly given that the market is not performing that well," said Romeo Dator, the portfolio manager of the U.S. Global China Region Opportunity Fund in San Antonio. "We're not planning to participate in any of these."

Some money managers see a broad decline in enthusiasm for China. Wary of trade disputes with the United States and possible Chinese interest rate increases, and weary of stagnant prices here and eight-year lows on the Shanghai stock market, investors are steering more money toward other emerging markets.

"By and large, the fascination with China has waned" in the last several months, said Choo Yoon-lai, the portfolio manager of the Comgest Growth Greater China Fund here.

Leaders of the biggest investment banks in Asia, all based here, said in interviews over the last week that they knew the risks of bringing big initial public offerings to market now, but still thought they could find buyers.

"Investors love China. These offerings are the growth of China, and when priced appropriately, can be" completed, said Robert Morse, the chief executive of Citigroup's corporate and investment banking operations in Asia. But Mr. Morse also acknowledged that some investors, large and small, were looking at the China stakes they had accumulated after years of large initial public offerings by Chinese companies.

"Investors want to make sure they don't put too many eggs in one basket," he said. "Individual investors have to define what aggregate exposure they want for China relative to other Asian opportunities."

Gokul Laroia, the head of Asian capital markets for Morgan Stanley, said investors were cautious about some companies but still interested in Chinese stocks.

"It's entirely deal-specific," he said. "We don't sense China fatigue."

Some investment bankers say it is not new for Chinese companies to be selling a lot of shares, as the country's gradual transition from central planning to capitalism has inevitably meant putting many shares into private hands.

"There is a lot of Chinese paper, but historically there has been a lot of Chinese paper coming to the market," said Matthew Koder, UBS's head of Asian equity capital markets. "Is there too much paper coming? Not really."

The Shenhua Energy deal was oversubscribed by at least four times by institutional investors and by at least 15 times by retail investors, bankers said. That was easily enough to get the deal done and quite adequate by international standards, especially for a large deal for a stock in an unglamorous industry.

But it was a far cry from the 60 or more times oversubscriptions by institutional investors on Chinese initial public offerings early last year, and even higher oversubscription ratios for retail investors. And with money managers leery of Chinese stocks, the fairly modest subscription rate for Shenhua means bidders for shares will have to pay for large allotments, so they will have less cash for future Chinese stock deals.

Deutsche Bank, Merrill Lynch and the China International Capital Corporation were the lead advisers to Shenhua. Goldman Sachs, Citigroup and Deutsche are handling the Minsheng deal, while Goldman Sachs and HSBC are sponsoring the Bank of Communications offering.

More big deals are ahead. The China Cosco Holdings Company, the country's biggest container line, is planning an initial public offering of up to $2 billion in the next month, but a recent plunge in shipping rates could make its shares harder to sell.

The biggest offering of all, a $5 billion transaction by the China Construction Bank, is supposed to happen later this year, sponsored by Citigroup and Morgan Stanley. But the deal has had difficulties as China Construction has struggled to curb corruption and find a big foreign bank willing to take a strategic stake as part of the initial offering.

This has prompted some investment bankers to predict that China Construction will have to reduce the number of shares sold; accept a fairly low price for the shares; delay the deal until next year; or all three.

Raising money is often not the top priority of Chinese companies that hold initial public offerings. Chinese banks are famously generous with loans to large state-owned enterprises, one reason the banks have so many nonperforming loans.

The biggest reason Beijing officials encourage many companies to sell stock is to improve corporate governance in China, said Rodney G. Ward, the chairman of UBS's Asian investment banking operations.

"It's only once you're in the public eye you're subject to public pressure, to analyst pressure and to investor pressure," he said.

While some investors seem to be losing their enthusiasm for placing bets on stocks in Hong Kong, others remain intrigued by the potential to buy stocks on Chinese exchanges, which may rise in dollar terms if the yuan is revalued as the Bush administration demands.

This interest has persisted even though the Chinese government has strictly limited such investments; even though Chinese exchanges have reputations for listing troubled companies and tolerating irregular trading practices; and even though Chinese investors have pushed prices to eight-year lows.

UBS has gathered $800 million from investors to buy stocks on the mainland, and Mr. Ward said, "If we were given the chance to open the spigots, we could double that in as little as 24 hours."

http://www.nytimes.com/2005/06/08/b...&en=1e12d7d4e9d73350&ei=5094&partner=homepage

QueEx · Jun 18, 2005

mttocs · Jun 18, 2005

We have an advantage over these guys that I believe will enable us to continue world dominance, by way of superior military technology and superior ability to develop computers and software. It is the same reason these guys didn't take over the world centuries ago, despite their superior numbers and generally higher intelligence.

Their alphabet is so fucked up that they can't easily write using typewriters. It inhibits their ability to write software and to perform engineering tasks of all types.

If they could ever collectively manage to use an alphabet consisting of less than thousands of characters, say 26 or so, they'd probably kick our ass in due course. But I don't think they could pull that off. Our government couldn't get us to use the metric system, or write 9-digit ZIP Codes on mail pieces.

Just as those in the Middle East should wake up every day and thank their lord they were born on top of oil, we should thank the stars that our ancestors settled on alphabets with only a few characters in it rather than getting all artsy as the Asians tended to do.

CAPTAIN · Jun 18, 2005

I have been posting this crap for the last four (4) years on here; finally a few of the Bushmites (even the ones that changed their psuedonyms here) have taken notice since a lot of Repugnants are unemployed as a result of Bush's "ship it abroad strategy". Yes I said Bush's, because job exportation has increased 450% under his administration while they were claiming to create new jobs they were not counting the people that were unemployed and no longer recieving compensation. According to the Bush administration, if an unemployed person is not in the system then they are not technically/validly unemployed. Therefore the "ERON MATH" that is coming out of DC is false. WTF! :confused:

Can one of you "Bushmites" here justify that type of counting system? The ones I speak to seem to stick their tales between their legs and start talking about Clinton. WTF! :mad:

Bush's masters have always had a plan to drive down the wages in Amerikkka aka Globalization, yeah right: :confused:

1. Flood the country with immigrants: (devalue labor market)
2. Undermine the educational system (not funding)
3. Increase the wealth of the wealthy (ultimate power)
4. Make people more dependant upon petroleum (not funding alternative fuels, many of them really work)

QueEx · Jun 23, 2005

<font size="6"><center>Chinese Firm Launches $18.5
Billion Bid for Unocal</font size></center>

Los Angeles Times
By James F. Peltz and Elizabeth Douglass, Times Staff Writers
June 22, 2005

A Chinese oil company today offered to buy California-based Unocal Corp. for $18.5 billion, topping a rival bid by Chevron Corp. and setting the stage for a political debate over the future of U.S. energy, security and trade policies.

The offer by CNOOC Ltd., an arm of state-owned China National Offshore Oil Corp., also represents China's largest potential overseas investment by far. But it's one the Chinese believe their fast-growing economy needs to help satisfy its surging demand for oil, refined products and natural gas.

CNOOC offered $67 cash for each share of El Segundo-based Unocal and stressed that its bid was "friendly" and that it hoped to reach a "consensual" deal.

Chevron, based in San Ramon, Calif., and the second-largest U.S. oil company behind Exxon Mobil Corp., is offering about $62 a share in cash and Chevron stock — or about $17 billion — under its agreement with Unocal, which already has received U.S. antitrust clearance from the Federal Trade Commission.

Despite the lower price, Chevron said its offer was still "superior" because it "combines compelling value, regulatory certainty and accelerated timing" for Unocal's stockholders, while the "CNOOC proposal must undergo an extensive regulatory process in the United States and elsewhere."

Chevron declined comment on whether it might sweeten its proposal. Some analysts have suggested that Chevron would raise its purchase price if CNOOC weighed in with an offer.

Unocal also said its board continued to recommend that its stockholders approve the deal with Chevron, but that it would "evaluate the CNOOC proposal" because of its fiduciary duty to investors.

Unocal spokesman Barry Lane declined to elaborate or speculate on when Unocal might respond further.

Before CNOOC's announcement, Unocal's stock rose a penny today, to $64.86 a share, on the New York Stock Exchange. Chevron's stock fell 51 cents to $58.27 a share.

CNOOC and Chevron both prize Unocal because of its oil and natural-gas exploration projects in the Asia Pacific region, including Thailand, Indonesia, Bangladesh and Myanmar.

Unocal, a 115-year-old company that was founded in California, once was known for its Union 76 gasoline. But it sold its retail and refining operations in 1997 to focus on exploration and production.

Unocal also operates in the Gulf of Mexico and the Caspian Sea area, and about 66% of its sales come from foreign sites. Bolstered by high oil and gas prices, Unocal last year earned a company record $1.2 billion on sales of $8.2 billion.

The company's fields are strategically attractive to CNOOC because the Chinese company is aggressively looking for additional reserves.

Chevron, too, sees Unocal as a good fit because Chevron operates in many of the same Asian regions, and Chevron believes it can wring efficiencies and boost profits from combining their operations.

But the CNOOC bid raises sensitive political and economic questions for the United States, especially at a time of near-record oil and gasoline prices that are threatening the U.S. economy's growth.

Rep. Richard W. Pombo (R-Tracy) and Rep. Duncan Hunter (R-El Cajon) sent a letter Friday to President Bush urging him to look closely at any Chinese bid to acquire U.S. energy assets.

Such an attempt "raises many concerns about U.S. jobs, energy production and energy security," their letter said.

White House spokesman Trent Duffy declined comment today on CNOOC's formal offer.

Under U.S. law, the Committee on Foreign Investment in the United States — part of the Treasury Department — is responsible for reviewing any foreign purchases that could threaten U.S. security.

Some analysts gave CNOOC's offer a decidedly lukewarm reception.

"That's not much of a premium over what Chevron's offering," said Gene Gillespie, an analyst with the investment firm Howard Weil. "If I'm Unocal shareholder, I'm not moving.

"I don' think this is attractive to the Unocal shareholders," he said. "They can either get $62 tax free in August, or hang on and hope that either Chevron comes up with a better deal, or that the government approves it, after a review of six months or a year, if they approve it at all. It makes no sense."

Fadel Gheit, senior energy analyst at Oppenheimer & Co., echoed that view.

"I don't that's going to fly," said Gheit, who personally owns shares in both Unocal and Chevron. "They should at least have upped it to $72. This is a waste of everyone's time."

Still, he said, "I would not be surprised if Chevron sweetened the offer one way or another. They want this company for strategic reasons. I think Chevron is committed and interested in Unocal, and it's not going to let the deal collapse."

http://www.latimes.com/business/la-fi-unocal23jun23,0,3315892.story?coll=la-home-headlines

pitbull · Jun 30, 2005

U.S. struggles on China-war planning - top officer

Wed Jun 29, 3:18 PM ET

<a href="http://news.yahoo.com/photo/050629/photos_wl/china_usdefense_graphic;_ylt=AgLKc_ngmQl6u25CbWIu0g1n.3QA;_ylu=X3oDMTA3bGk2OHYzBHNlYwN0bXA-"><img src="http://us.news3.yimg.com/us.i2.yimg.com/p/nm/20050629/china_usdefense_graphic.gif?x=180&y=175&sig=axN2GB_WqaQ5LEpUuoS.7Q--" Align=left></a>WASHINGTON (Reuters) - The Defense Department is struggling to determine the right mix of bombers and other warplanes to fight China if it ever became necessary, President Bush's choice to become the next Air Force chief of staff said on Wednesday.

Lining up such firepower would top his list of priorities if confirmed as the Air Force's top military officer, Gen. Michael Moseley said at his confirmation hearing before the Senate Armed Services Committee.

Moseley said the right mix of long-range strike capabilities was "certainly one of the things that we are struggling with" as part of a sweeping U.S. defense review carried out once every four years and currently under way.

"The enhancements that we see in the Chinese military (do) cause concern," he added in reply to a question from Sen. John Thune, a South Dakota Republican.

Moseley who ran the air war over Iraq that led to the ouster of President
Saddam Hussein in 2003.

"That is at the top of my list ... long-range strike and the ability to do that for this country," said Moseley, the vice chief of staff up to replace the retiring Gen. John Jumper.

Retired Air Force Col. Walter Boyne, a former director of the
Smithsonian Institution's Air and Space Museum, said Moseley likely was referring to the warplanes -- manned and unmanned -- needed to take out command posts, radar installations, surface-to-air missile sites, air fields and military headquarters. Many such targets are deep in China's interior.

Moseley's comments reflected U.S. concern about mounting Chinese investments in ballistic and cruise missiles that could hold forward U.S. bases at risk of attack in places like
South Korea and Japan, said Andrew Krepenivich of the Center for Strategic and Budgetary Assessments, a nonpartisan group specializing in military strategy issues.

"This is not the Air Force saying we want to go to war with China, he said. "This is the Air Force saying if we want to avoid war with China, we've got to be able to hold their critical capabilities at risk lest Beijing be tempted to use force to resolve disputes it has with other countries in the region."

http://news.yahoo.com/s/nm/security...QNvaA8F;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl

Sounds like amateur hour but it's still news.

tian · Jul 1, 2005

This is something that I am currently dealing with in my business life. I had lunch with this Chinese executive who is trying to forge a relationship with me in order for us to bid on joint projects. We talked about the offshore outsourcing of IT projects and the affect on global business. We also talked about the American loss of manufacturing jobs.

She said something to me that was extremely profound. She said: "I cannot understand why Americans are so upset about the loss of manufacturing positions because if you look at it objectively, Americans can't compete with us in the area of manufacturing. The American labor force is too expensive. We can outbid the Americans because we have cheap labor and no labor unions."

She goes on to say "The great thing about America is that Americans are so creative. They (we) should concentrate on creating things. Then, send them to us (them) to manufacture them. (Hee, hee.)"

I remember back in 1995, I read an article in Wired magazine that Americans will have the ability to live anywhere, due to technology. Fewer companies will have workers actually working in the office and that factory jobs will be hit hard. The writer goes on the say that black workers would be adversely affected due to our persistence in earlier times of finding and keeping "good jobs," which, until recently, was jobs in manufacturing. They offered unions, benefits, etc. and used to provide a strong sense of stability. He said something else, like, Black America's financial stability was built on manufacturing positions. So, with the advent of outsourcing manufacturing positions overseas, it will be us blacks that would get hit the hardest.

Like a prophet, I say.

tian

BookerTee · Jul 4, 2005

QueEx said:
How is that ???

QueEx

If History has taught us anything, it's that no one or nothing stays on top forever.

tian · Jul 6, 2005

Who Owns the Dollar?

Our currency and our economy are held hostage by Asia.

by Paul Craig Roberts

China is the leading scapegoat for America’s economic ills. On May 20, New York Times columnist Paul Krugman blamed China for the U.S. housing bubble. If only China were not lending us so much money, mortgage rates would be higher, forestalling a housing bubble. Krugman says China is a poor country and should be investing its capital at home, not lending it to the U.S.

Krugman could just as well have said, “If only U.S. manufacturers produced in America instead of outsourcing to China, the Chinese would not have any money to lend us. Thus, no housing bubble.”

Krugman is correct that if foreign lending to the U.S. slows, interest rates will rise, putting a speculative housing market in trouble. But the interest of the U.S.-China relationship goes far beyond the effect on the U.S. housing market. Economists set in traditional ways of thinking miss the really important aspects of the relationship.
For example, Krugman notes that China is a poor country and is slowing its own development by lending to the U.S. We do think of China as a Third World country with large supplies of underemployed labor. China’s trade relationship with the U.S., however, suggests the opposite. The U.S. trade deficit with China is larger than with any other country, including highly industrialized ones such as Japan and Germany. Think of all those Toyotas, Hondas, Nissans, office machines, and video games that Americans buy from Japan. Yet in the first quarter of this year, the U.S. trade deficit with China is running 50 percent larger than the deficit with Japan. Indeed, the U.S. trade deficit with China is larger than the deficit with all of Europe. It is larger than with Canada and Mexico combined, two countries in which U.S. corporations manufacture cars, appliances, and a variety of big-ticket items for American markets.

What are Americans buying from China? With China a poor country and the U.S. a First World superpower, you would think China would have a trade deficit as a result of selling us cheap goods and importing high value-added manufactured goods. Instead, it is the other way around. The U.S. is dependent on China for manufactured goods, including advanced technology products. In the first quarter of 2005, U.S. imports from China are 5.7 times higher than U.S. exports to China. Last year, U.S. exports to China were $34.7 billion. Imports were $196.7 billion for a U.S. trade deficit with China of $162 billion.

It was not always this way. In 1985, U.S. trade with China was in balance at $3.8 billion. Ten years later, U.S. imports from China were four times U.S. exports to China.

The U.S.-China economic relationship is a highly unusual one between a First World and a Third World country. Moreover, the U.S. trade deficit with China in manufactured goods and advanced technology products is growing rapidly. What explains the U.S. dependence on a poor country for First World products?

The answer, and the key to China’s rapid development, is that corporations in First World countries—American businesses chief among them—use China as an offshore location where they produce for their home markets. More than half of U.S. imports from China, and as much as 70 percent from some of China’s coastal regions, represent offshore production by American firms for U.S. markets.

What economists overlook is that when we speak of the Chinese economy, we are speaking in large part of the relocation of American manufacturing to China. Those millions of lost domestic manufacturing jobs were not lost. They were moved. The jobs still exist, only they are not filled by Americans.

In a world where capital and technology are highly mobile internationally, these critical factors of production flow to countries with the lowest cost of labor. China has attracted manufacturing, and India has attracted professional services. This has left the American work force with job growth only in lower-paid domestic services, which provide no export earnings.

The rapid transformations that have occurred in some Indian cities, which have become high-tech centers, and along the coast of China are unprecedented in economic history. The changes are so rapid because they are driven by the relocation of First World businesses seeking the lowest labor cost.

Economics relies on automatic adjustments to rectify trade imbalances. The trade deficit with China should cause the Chinese currency to appreciate relative to the dollar, raising the dollar cost of Chinese labor. In the long run—in which, J.M. Keynes said, “we are all dead”—adjustments would occur until U.S. and Chinese wage rates and living standards equalized.

Considering the disparity between American and Chinese wage rates and living standards, the adjustment would be extremely painful for Americans. But the adjustment is forestalled by two factors.

China keeps its currency pegged to the dollar, so when the dollar falls, the Chinese currency falls with it and there is no adjustment. China does not permit its currency to be traded, and there is not enough of it in international markets for currency speculators to be able to force the Chinese off the peg.

The other factor is the dollar’s role as world reserve currency. The reserve-currency role means that every country has a demand for dollars in order to pay its oil bills and settle its international accounts. The world demand means that the U.S. can run large deficits for many years before the chickens come home to roost.

In the meantime, Asian countries are accumulating hundreds of billions in dollar assets, making them America’s bankers. Industrially developed countries such as Japan, Taiwan, and South Korea have little need to use the dollars that they earn from their trade surpluses with the U.S. to import American capital goods to fuel their further development. They use the dollars that we pay them for their goods to purchase U.S. government bonds and American companies, real estate, and corporate bonds.

China, which has been growing at about 10 percent annually for a number of years, could conceivably use its export surplus with the U.S. to expand its infrastructure more rapidly in order to develop even more quickly. But a 10 percent annual growth rate is probably the highest rate of change with which China wants to contend. As First World firms are flooding China with their capital and technology, China doesn’t need to use its trade surplus with the U.S. to purchase capital goods.

As a result of many years of persistent trade surpluses with the United States, the Japanese government holds dollar reserves of approximately $1 trillion. China’s accumulation of dollars is approximately $600 billion. South Korea holds about $200 billion.

These sums give these countries enormous leverage over the United States. By dumping some portion of their reserves, these countries could put the dollar under intense pressure and send U.S. interest rates skyrocketing. Washington would really have to anger Japan and Korea to provoke such action, but in a showdown with China—over Taiwan, for example—China holds the cards. China and Japan, and the world at large, have more dollar reserves than they require. They would have no problem teaching a hegemonic superpower a lesson if the need arose.

Last year the U.S. trade deficit with the rest of the world was $617 billion. In the first quarter of this year, our trade deficit is $174 billion—$35 billion higher than in the first quarter of last year. If this figure holds for the remaining three quarters and does not increase, the U.S. trade deficit in 2005 will be $700 billion.

Offshore outsourcing makes it impossible for the U.S. to rectify its trade imbalance through exports. As more and more of the production of goods and services for U.S. markets moves offshore, we have less capability to boost our exports, and the trade deficit automatically widens. Economic catastrophe at some point in the future seems assured.

In the meantime, even a small country could pop the U.S. housing bubble by dumping dollar reserves—which is some fix for a superpower to be in, especially one that is disdainful of the opinion of the rest of the world. Comeuppance can’t be far away.

The hardest blow on Americans will fall when China does revalue its currency. When China’s currency ceases to be undervalued, American shoppers in Wal-Mart, where 70 percent of the goods on the shelves are made in China, will think they are in Neiman Marcus. Price increases will cause a dramatic reduction in American real incomes. If this coincides with rising interest rates and a setback in the housing market, American consumers will experience the hardest times since the Great Depression.

tian

nittie · Jul 6, 2005

The biggest threat China poses is their consumption or potential consumption, if the median income in the country reaches just $15,000 they would probably use up most of the world's resource, you can see the potential devastation by looking at the spike in oil prices. If they continue taking jobs from the rest of the world and their consumption grows steadily a world war is inevitable.

QueEx · Jul 12, 2005

<font size="5"><center>Exxon, Saudi's Aramco,
China's Sinopec in joint oil venture</font size></center>

AFP, NEW YORK

July 11: Exxon Mobil and Saudi Arabia's state-owned Aramco are joining with China Petroleum and Chemical Corp (Sinopec) on a 3.5 billion dollar oil and chemicals venture in China, the Wall Street Journal said today.

The project encompasses a refinery expansion, a petrochemical plant and a joint marketing venture to operate 600 service stations, making it the first fully integrated Sino-foreign oil and chemicals project, according to Exxon.

It shows major players intent on building assets in the world's fastest-growing oil market, at a time when a Chinese move to buy US producer Unocal has some US politicians worried about energy independence, the journal said.

Exxon clinched the deal Friday with a unit of Aramco and Fujian Petrochemical Co, which is equally owned by Sinopec and Fujian Province, the daily said.

Under it, Exxon and Aramco will each hold 25 per cent interest in the Fujian Refining and Ethylene Joint Venture Project, while Fujian Petrochemical will own the rest. The project will add about 160,000 barrels a day of crude-processing capability to an 80,000 barrel-a-day refinery in Quongang, in Fujian province, the journal said.

The refinery will be designed to handle high-sulfur or sour Arabian crude, which Aramco will supply under a separate deal signed Friday, it said. Exxon Mobil gave no timetable for completion of the project, expected to take years.

http://independent-bangladesh.com/news/jul/12/12072005bs.htm#A26#A26

QueEx · Aug 23, 2005

<font size="6"><center>Wealth gap threatens stability in China</font size></center>

The TElegraph - London
By Richard Spencer in Beijing
(Filed: 23/08/2005)

China risks social meltdown within five years because of the stresses provoked by its economic boom, government officials were warned yesterday.

The country was now in a "yellow-light" zone, the second most serious indicator of "social instability", according to an official report focusing on the growing gap between rich and poor.

<center>

The wealth gap between rich and poor is still widening </center>

"We are going to hit the red-light scenario after 2010 if there are no effective solutions in the next few years," said the report, commissioned by the labour and social security ministry.

As if to bear out its warnings, police admitted that rioting had broken out in a town in the eastern province of Zhejiang, the latest in a wave of violent protests in the region. Buildings and police cars were set alight in clashes led by parents who accused a battery factory of giving their children lead poisoning.

Such unrest is now common in many Chinese towns, often triggered by protests against the mixture of corruption and environmental degradation that the dash for development has brought.

The increased publicity given to them - the labour ministry's findings were reported in the state-owned China Daily - is a sign of growing government anxiety.

The national leadership, under President Hu Jintao, which came to power two years ago made the plight of the poor its rallying cry and announced the abolition of rural taxes.

But it has proved unable to prevent the exploitation of China's manufacturing boom by local officials eager to bolster both their standing and their bank balances.

Han Dong-fang, a Chinese labour rights activist in Hong Kong, said Beijing's prophecies of doom appeared to be exacerbating local corruption. "For the moment, the officials have positions and economic power," he said. "They feel they have to hurry up, because otherwise they will lose their last chance to grab what they can."

Ever since market-oriented economic reforms were launched more than 25 years ago, the old Maoist notions of equality have disappeared. Ironically, standard measures of wealth disparity now rank "communist" China as far more unequal than its old adversary, capitalist Taiwan.

The National Bureau of Statistics says that rural incomes last year averaged £200 a head, less than a third of average urban incomes. And the wealth gap appears to be widening. Figures released yesterday showed that while China's gross domestic product grew by more than nine per cent last year, rural incomes rose by only four to five per cent.

In the latest local protest, up to 70 people in Mei-shan, Zhejiang, were reported injured after police waded into protesters with batons and tear gas. When police later returned to arrest ringleaders, some locals went on a rampage, setting light to the battery factory, breaking into government offices and burning police cars.

The public security ministry recently admitted that there were 74,000 protests of this sort last year, up from 30,000 the year before. Ominously, Chinese authorities announced last week the setting up of special riot squad units to counter local protests, which officials bracketed with terrorism as an enemy of stability.

Prof David Zweig, a political scientist at Hong Kong University of Science and Technology who has studied labour unrest in China, said the latest government warning was "aimed at the cadres, saying if you don't smarten up we are in big trouble.

"The slogan, 'Lighten the burden on peasants', was first put forward in 1978. So how effective have their policies been?"

http://www.telegraph.co.uk/news/mai...na23.xml&sSheet=/news/2005/08/23/ixworld.html

Greed · Aug 26, 2005

China's Africa plan

China's Africa plan

China's trade with Africa has doubled over the past five years. But the country's increasing influence in Africa has some observers worried. The World's Amy Costello reports from Cape Town, South Africa. 5 min

http://www.theworld.org/latesteditions/08/20050825.shtml

Greed · Sep 22, 2005

US tells China to use power responsibly

US tells China to use power responsibly
By Carol Giacomo, Diplomatic Correspondent
Wed Sep 21, 7:43 PM ET

NEW YORK (Reuters) - U.S. Deputy Secretary of State Robert Zoellick told China on Wednesday it should take concrete steps to assure the world it will use its power responsibly and said Beijing's approach to Iran would prove its seriousness on combating nuclear proliferation.

The "essential question" for the United States and the world was "how will China use its influence" because the answer would have a profound effect on international development for years to come, he said.

In a speech for delivery to the National Committee on U.S.-China Relations, which promotes ties between the two countries, Zoellick acknowledged that "many Americans worry that the Chinese dragon will be a firebreather. There is a cauldron of anxiety about China."

China must become a "responsible stakeholder" in the international system that has enabled its success because "uncertainties about how China will use its power will lead the United States, and others as well, to hedge relations with China," he said.

Noting rising protectionist pressures in America fueled by a huge trade deficit with China, Zoellick said Beijing "cannot take access to the U.S. market for granted."

"The United States will not be able to sustain an open international economic system --or domestic U.S. support for such a system -- without greater cooperation from China," the former U.S. trade representative said.

He also urged China to open its political system, saying those who believe they can secure the Communist Party's power monopoly through economic growth and heightened nationalism were following a "risky and mistaken" course.

Zoellick, in charge of what Washington calls a new U.S. strategic dialogue with Beijing, discussed key issues facing the two powers a week after President George W. Bush met Chinese President Hu Jintao during the U.N. General Assembly.

Amid rising U.S. concern over China's growing military, economic and political clout, Zoellick made a strong argument for fostering greater cooperation.

"You hear the voices that perceive China solely through the lens of fear. But America succeeds when we look to the future as an opportunity, not when we fear what the future might bring," he said.

In an apparent reference to suggestions that the United States seeks closer ties with India as a counterweight to China, Zoellick said: "We are too interconnected to try to hold China at arm's length, hoping to promote other powers in Asia at its expense."

"Nor would the other powers hold China at bay," he added.

Zoelick said China has a strong interest in working with Washington on halting the spread of weapons of mass destruction and its "actions on Iran's nuclear program will reveal the seriousness of China's commitment to non-proliferation."

China has received high marks for hosting six-country negotiations which this week produced an initial accord on North Korea's nuclear programs.

But it has joined Russia in helping to block the U.N. nuclear watchdog agency from referring concerns about Iran's nuclear activities to the U.N. Security Council for possible sanctions.

Zoellick said China needs to realize how its actions are perceived. "China's involvement with troublesome states indicates at best a blindness to consequences and at worst something more ominous, he said.

In addition to Iran, the United States is anxious about China's ties, mostly spurred by energy needs, with Sudan, Venezuela, Myanmar and Zimbabwe.

http://news.yahoo.com/s/nm/20050921...Z5Z.3QA;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl

Dannyblueyes · Sep 22, 2005

The best way to handle China is to buy them out Bill Gates style. If China has a large number of engineers and doctors all the US has to do is relax the immigration quotas and encourage them to come here. When the biggest Chinese community in the country is less than an hour's drive from Silicon Valley it's a no brainer.

Also, all the money that the Chinese make from manufacturing steel and toys has to be going somewhere and it damn sure isn't to the workers. If America were to start a disinformation campain they could sway many of these workers into a full scale revolt. Once this happens the Americans step in and offer to set up there factories with slightly higher wages they way that Regan helped work McDonalds into Russia in the 80's. They can also work as a co-operative to set up a better shipping and transport infrastructure for the country. (One of the biggest problems with Chinese goods is that they take a long time to import).

futureshock · Sep 25, 2005

gog and magog = china and russia

they will send troops to the middle east....

march on israel.....

and be destroyed.....

"Son of man, set your face toward Gog of the land of Magog, the prince of Rosh, Meshech, and Tubal, and prophecy against him, and say, 'Thus says the Lord God, "Behold, I am against you, O Gog, prince of Rosh, Meshech, and Tubal. And I will turn you about, and put hooks into your jaws, and I will bring you out, and all your army, horses and horsemen, all of them splendidly attired, a great company with buckler and shield, all of them wielding swords; Persia, Ethiopia, and Put with them, all of them with shield and helmet; Gomer with all its troops; Beth-togarmah from the remote parts of the north with all its troops, many peoples with you." Ezekiel 38:2-6

"And I saw the beast and the kings of the earth and their armies, assembled to, make war against Him who sat upon the horse, and against His army." Revelation 19:19
http://www.prophecyupdate.com/russia,_gog_and_magog,_armageddon___.htm

Gog and the Kings of the East
China & Russia: The Best of Friends?
by Chuck Missler

The ultimate invasion of the Middle East by "Gog and Magog" is well known to most Biblically informed observers.1 The invading forces of Magog - recognized as referring to Russia by most authorities - are wiped out by "hailstones of fire" from the heavens, which also cause an earthquake felt around the world.2 A disturbing aspect of this encounter is that similar "hailstones of fire" also appear to fall on those "who dwell securely in the isles" or coastlands. 3 Some suspect that this could be a hint of an intercontinental nuclear exchange as part of the confrontation with Magog and its allies.4

The climactic intervention by the "Kings of the East" is also a major aspect of the final Biblical scenario.5 The rise of China as a major world power is one of the dominant factors of the forthcoming century.

Two years ago, when we invaded Kosovo and NATO redefined itself as a global police force, we sent chills to both our allies and our adversaries. China and Russia - themselves traditional adversaries - were driven into each others' arms. And now it seems that world events have taken a serious strategic turn. Russia and China are now conducting joint practice operations that deserve careful scrutiny.

The Russians have been practicing nuclear intervention against the U.S. troops on Taiwan in a mock nuclear conflict between China and the United States over Taiwan. During these strategic exercises they included Russian preparations to use nuclear weapons on U.S. forces in Asia.6

These strategic exercises included practice bombing runs with Russian TU-22 Backfire bombers that flew close to Japanese airspace, according to defense officials familiar with a National Security Agency analysis of the Russian war games. An intelligence report based on communications among the Russian forces during the maneuvers indicated that the Russians practiced fighting in Europe and Asia in one of the largest exercises in the past decade.

The Asian scenario began with a Chinese military attack on Taiwan that was followed by the use of U.S. ground troops. Next, China escalated the conflict by firing tactical nuclear missiles on U.S. troops in Taiwan, prompting U.S. nuclear strikes on Chinese forces. Russian forces then threatened to use nuclear missile strikes on U.S. forces in the region, including strikes on troops in South Korea and Japan. Japan's military sent jet interceptors to confront two Russian TU-22 bombers and two SU-27 fighter-bombers that Tokyo said had violated Japanese airspace. Russian denied any invasion of Japanese airspace.

According to the NSA analysis, the TU-22s were equipped with long-range nuclear-tipped cruise missiles as part of the Russian intervention on behalf of China during the simulated conflict over Taiwan. During the exercise, Russia also test-fired three strategic nuclear missiles from land-based mobile launchers and from a submarine. Russian President Putin and Defense Minister Igor Sergeyev activated the Russian nuclear command and control suitcase known as "cheget." Marshall Sergeyev announced that "all the designated targets were hit by the strategic missiles, which were launched as a training exercise, during the recent live firings."7

Two days later, Russian Prime Minister Mikhail Kasyanov and Chinese Central Military Commission Vice Chairman Zhang Wannian met in Moscow. Official Russian press reports indicate that military sales from Russia to China would increase 25% annually. These will include Oscar-class nuclear cruise missile submarines, Akula-class nuclear attack subs, and the TU-22M Backfire bombers.

The Asian exercise was the first time Russian forces had practiced fighting the United States in the Pacific region. The European portion of the exercise, pitting Russian forces against NATO, was similar to those practiced in past exercises.

Strategic Realignments

Russia and China have been moving closer together in what many analysts see as an anti-U.S. alliance. Moscow feels threatened by NATO's inclusion two years ago of Hungary, Poland and the Czech Republic, and China has begun turning against what it calls "U.S. hegemonism" since the 1999 war against Yugoslavia. The Balkan conflict also angered Beijing because of the accidental bombing of the Chinese Embassy in Belgrade, which China's government regards as an intentional U.S. attack.

In Moscow, Russian President Vladimir Putin met Chinese Foreign Minister Tang Jiaxuan in preparation for the signing of a treaty of friendship and cooperation between the countries scheduled for next month.

President Bush has shifted away from the previous position of the Clinton administration, declaring that the United States would do "whatever it takes" to defend the island nation of Taiwan. In a major strategy review presently being conducted for Defense Secretary Donald H. Rumsfeld, Pentagon officials familiar with the early drafts indicate that it will recommend a major strategic shift from Europe to Asia to deal with the emerging threat of China.

The People's Republic of China presently targets some 300 ballistic missiles against Taiwan, and its CSS-4 long-range missiles are targeted against the U.S.8 Beijing's steadily increasing military budget - a 17% increase in 2001 - includes medium- and long-range ballistic missile forces capable of hitting American bases anywhere in the Pacific and all regions of the continental United States.

Our Strategic Horizon

It is, indeed, a critical time to "do our homework." We do believe that you and I are being plunged into a period of time about which the Bible says more than it does about any other period of time in human history - including the time that Jesus walked the shores of Galilee and climbed the mountains of Judea. We strongly invite you to challenge this preposterous statement: we need to thoroughly study what the Bible says about the "end times," and then investigate carefully what is really going on throughout the world.

We live in the most exciting times, but we need to be prepared spiritually! It is a very appropriate time to reexamine all of our personal and family priorities.

QueEx · Nov 9, 2005

<font size="5"><center>China's Obsession with the Zoellick Speech</font size></center>

STRATFOR
Global Intelligence Brief
November 7, 2005

Summary

As China's leadership prepares to implement a new five-year plan calling for the harmonization of society -- the equalization of economic benefits and prosperity derived from nationwide growth -- it is hoping for a stable international environment that would allow Beijing more securely to focus its attentions inward. The United States will play a role critical to the provision of this stability, and Beijing's top minds are pondering what they believe represents a key insight into U.S. strategic thinking vis-a-vis China: the text of a Sept. 21 speech by U.S. Deputy Secretary of State Robert Zoellick.

Analysis

China's National People's Congress (NPC) will meet in March 2006 when, among other things, it will probably approve China's 11th five-year plan for economic growth. The plan, the first overseen by President Hu Jintao, enshrines Hu's so-called "harmonious society" as a key goal. In essence, it promotes a massive redistribution of wealth in China in order to narrow the gaps between rich and poor, urban and rural, and between various regions of China.

Such a plan is ambitious to say the least, and fraught with difficulties. Nevertheless, in order to address the growing problems caused by widening wealth gaps, population migration and rising unemployment, Beijing feels it imperative to take extreme measures to avoid social meltdown. This "Robin Hood" economic plan, however, will take money, resources and opportunities from the more well-off segments of society and transfer them to those heretofore left behind.

As an Oct. 27 commentary in the official People's Daily bluntly stated, "New reforms will affect the vested interests of certain social strata and certain regions, which means the redistribution of social wealth. Some prices must be paid for lasting peace and stability and for real harmony of society." Given the likelihood that those "vested interests" are unlikely to sacrifice their privileges quietly, Beijing faces a showdown with local and regional governments, Communist Party officials, businessmen, and even the emergent Chinese middle class.

Thus, as China prepares for changes that could spark massive internal upheaval, it is seeking a peaceful international environment -- one allowing it effectively to focus its attention inward, without too much risk of exploitation or external pressure. With this in mind, Beijing is looking first toward the United States. Relations between China and the United States shifted quickly after the Sept. 11 attacks -- from a diplomatic and military showdown, as a U.S. reconnaissance plane sat on a runway on China's island of Hainan, to the relative benign neglect of Chinese issues by Washington.

This peaceful pause allowed China's leaders to carry out a transition of leadership from Jiang Zemin and the so-called third-generation leaders to Hu Jintao and the fourth-generation leaders. This marked more than a simple generational shift, however; it also marked the evolution of Chinese economic, security and international policies.

On the economic front, Jiang and many of his comrades supported the continuation of the "growth for the sake of growth" policies of the past, characterized by the acceptance that economic growth was not equal and the belief that high levels of growth were necessary to keep China from slipping into social chaos. This view held that anything shy of around 8.5 percent to 9.5 percent growth would not even maintain China's employment levels, and that any real shift in Chinese economic policies would undermine the state's advance.

The newly evolved policies -- as embodied in the draft five-year plan -- espouse sustainable economic growth, rather than unrestricted growth. This shift in priorities derives from the current leadership's subscription, by and large, to the theory that the social repercussions of China's uneven economic growth are now becoming a threat equal to or greater than the threat posed by a decline of the economic growth rate. And it is the study of the failures of other Asian economic systems -- from the Japanese to the Southeast Asian economic crisis -- that prompted this redefinition of the best path for China.

On the security front, the Jiang-era leadership viewed it as China's right to be a big power, to exert its influence and to counter the U.S. encirclement of China in the post-Cold War period. China's economic growth was expected to translate into increased political and military leverage, and confronting the "unipolarity" of the United States in the international system constituted a necessity. In this world view, issues like Taiwan, for example, were best dealt with by a clear show of force and repeated threats.

The Hu-era leadership has taken a more subtle approach; it views a more cooperative approach as the surest path to greater Chinese influence. This "Peaceful Rise" concept, which burst on the scene in 2003 after a series of very public debates, promoted the concept of a cooperative China, one that would inevitably play a larger regional and global role, and that would do so with as little overt threat as possible. In other words, China's "rise" would occur more smoothly if its neighbors were not calling on foreign powers for defense assistance against this rising China.

Peaceful Rise offered a way for China to try to demonstrate the economic and security benefits of cooperation -- as opposed to the frictions, resulting from confrontation, that would leave neighboring states behind the curve and under the influence of foreign powers (i.e. the United States). China's new "pineapple diplomacy" with Taiwan has been a case in point, as have Beijing's emerging energy ties with the Philippines and Vietnam.

While the generational debate continues over the concepts of economic policy and China's global role, during the most intense period of discussion China was largely unmolested by a United States preoccupied with its wars in Afghanistan, Iraq and against militant Islam in general. This reduction of foreign pressure contributed to the victory of the fourth-generation leaders' overall vision of China's path over that of their third-generation counterparts. (While this debate was not entirely conducted along generational lines, the generational shift has seen the more refined and subtle views of economic and strategic policies become pre-eminent.)

As Beijing now prepares to tackle the very real problem of internal inequity, it again seeks a respite from U.S. pressure. China's leadership has suggested it can only proceed with economic, social and even political reforms if the United States keeps pressure on China to a minimum. The idea is that "conservative" or "hard-line" forces are waiting in the wings, seeking an opportunity to undermine Beijing's new "progressive" policies. Thus, if U.S. threats and pressures -- be they economic, political or military in nature -- give these reactionary forces the opportunity, these forces will curtail the new economic and strategic policies of China's current leadership, and perhaps even restore a policy of confrontation instead of cooperation.

Beijing has used various governmental and semigovernmental officials and academics to relay this message to Washington. It has also allowed a significant increase in public Chinese discussions of China's economic and social problems, filling state media with many more signs of potential problems in China than any U.S. business publications carry. Beijing has treated as imperative the need to demonstrate the precariousness of the situation. It would appear -- to some degree at least -- this voice is being heard.

In recent months, Washington has taken a much less aggressive tone with China, handling contentious issues like yuan reform and trade imbalances in a measured manner. The U.S. administration has even run interference in Congress to give Beijing more time to demonstrate positive actions. But thus far, these actions have not sufficed to assure the Chinese leadership that continued reforms can be carried out without substantial distraction from abroad. And this is where U.S. Deputy Secretary of State Robert Zoellick's Sept. 21 speech comes into play.

Speaking in New York at The National Committee on United States-China Relations, Zoellick began his speech by commenting on a meeting with Zheng Bijian, the author of a recent article in Foreign Affairs. Zheng chairs the China Reform Forum, which serves in part as an advisory body to the Chinese government. The forum also serves Beijing as a conduit of ideas, both incoming and outgoing, and a way to float trial balloons to better gauge the potential response by the United States and others to Chinese policy pronouncements.

Zoellick took, as the Chinese characterize it, a frank approach to future U.S.-Chinese relations. And even six weeks after Zoellick's speech was delivered, the text continues to be debated amongst Chinese officials, academics and semigovernmental think tanks. Beijing is carefully picking apart the text, sending questions and comments throughout China and abroad for other interpretations and assessments. The obsession centers on a key question, namely, whether Zoellick's speech truly reflects the view of the U.S. government.

The core of Zoellick's speech is as follows: China is an emerging power, and if it would like to be recognized and accepted as such, it must demonstrate that it is a "responsible stakeholder." In short, this means China, which has relations with several countries Washington views as less than cooperative or desirable -- such as Iran, North Korea and Sudan -- should use its relations to effect change in these states and to draw these countries of concern into the international system.

It is an interesting proposition for Beijing. For the longest time, China has claimed a policy of noninterference with its international associates, instead promoting the joint recognition of each others' systems and policies while finding common ground for cooperation and mutual benefit. In practice, Beijing has not been quite so egalitarian. But it has structured its foreign relations to reflect a rejection of international -- or more particularly U.S. -- pressure, and instead has emphasized building economic, political and security links based on strategic need and the spread of Chinese influence, or more precisely, the protection of Chinese interests.

But with the exception perhaps of North Korea, China has not taken an overt role in claiming it can change the political stand of other nations. The North Korean situation, as reflected in the six-party talks, was actually part of China's earlier attempts to keep the United States from focusing too much attention on China. Beijing had offered Washington influence in North Korea in return for the United States leaving China some breathing room. Washington turned the tables on Beijing, however, holding China's leadership responsible for North Korean cooperation -- something that exacerbated frictions between Pyongyang and Beijing. Ultimately, however, China used its leverage to bring North Korea not only back to the table, but also into (relatively) productive negotiations.

What Beijing is debating internally, however, is just how serious Zoellick's comments on a broader exertion of Chinese influence are, and what are the relative benefits and risks of compliance. Beijing does not doubt that it can influence the actions of other nations to some extent, particularly "pariah" states like Cuba, Zimbabwe, Myanmar, North Korea, Sudan and Iran. Beijing is concerned about whether it is really effective to try to shift these states' policies (or leadership) -- both because it would reduce China's image as an alternative assistant for less-than-desirable states and because once "cleaned up" these states would have many more options, reducing China's leverage and access to resources, markets or strategic locations.

Sudan makes a good case study.

While Washington has been somewhat successful in modifying the behavior of the government of Sudanese President Omar al Bashir since Khartoum's mid-1990s decision to harbor al Qaeda leader Osama bin Laden and other militants, the Sudanese government has not yet attained a "cooperative" status, as evidenced by the U.S. extension of economic sanctions. As a result, while Washington has not forbidden all U.S. businesses from operating inside the country, it has not encouraged the practice, calling the environment too volatile for normal business operations (as it often is).

Sudan has 1.6 billion barrels of proven oil reserves, and it is suspected that much more lies undiscovered in areas too volatile for exploration. At this point, the China National Petroleum Corp. (CNPC) controls slightly more than 40 percent of Sudan's production, making China Sudan's largest oil producer, importer and exporter. China also represents Sudan's largest trading partner, receiving about 63 percent of Sudanese exports in 2004, while China was Sudan's second-largest export partner the same year. While Beijing may gain some political points with Washington by encouraging policy shifts in Khartoum, in the process, Beijing would stand to lose some of its economic and political superiority in the country.

Beijing now faces a strategic choice, and so the debate prompted by Zoellick's speech continues. As Zoellick said in his talk, "China clearly needs a benign international environment for its work at home." Washington appears to be offering one, but the price is not small. Ultimately, Washington's offer calls for a sea change in China's international policies. But the decision not to accept Zoellick's suggestions could lead to increased U.S. pressure on China, ranging from economic pressure to calls for social and political change. How soon Zoellick's offer will expire remains unclear.

Meanwhile, the U.S. administration continues to struggle with domestic scandals and concerns, and U.S. President George W. Bush's approval ratings are far from empowering. For its part, Congress is preparing for elections, and many of the "China" issues -- from trade balances to the movement of money and jobs overseas -- are also key issues in local and state politics. That a weakened Bush administration can indefinitely run interference for China in Congress seems unlikely, unless China can show real -- rather than token -- progress.

Inside China, the debate over Zoellick's speech continues, as does the debate over the best economic and political strategies. But the debate cannot last indefinitely. Social pressures are mounting, economic realities are dawning, and 9.5 percent growth rates are unsustainable. A decision will need to be made, at least as to the general path Beijing will pursue. In the meantime, China will continue to obsess over Zoellick's speech, and Hu probably will raise the issue during Bush's visit to China later in November. A Chinese acceptance could mark a major shift in international relations. On the other hand, should Beijing decline, it will be business as usual -- except that Beijing will find it even more difficult to cope with its growing internal pressures.

Send questions or comments on this article to analysis@stratfor.com.

Greed · Dec 9, 2005

How is the West influencing China's future?

i'm going to apologize beforehand for posting something that doesnt contribute to the "america is the devil" mentality on the board.

China and the U.S.
How is the West influencing China's future?

As China's status as one of the world's great economic and military powers is reinforced by the recent President Bush visit and the Asia Pacific regional summit in South Korea, our reporter Jill McGivering travelled to Wuhan in the central Chinese province of Hubei. Jill investigates China's relationship with the US, culture, business and more...

Part 2: The Youth Perspective
US concern about China's military spending and the multi-billion dollar trade deficit has contributed to a marked change of rhetoric, from describing China as an ally to seeing it as a potential threat. Jill McGivering has been to Wuhan in the central Chinese province of Hubei to talk to young people there about America's concerns.6 min 8 sec

http://www.bbc.co.uk/worldservice/programmes/newshour/news/story/2005/11/051118_china.shtml

Does the Future Belong to China?

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Aka Illegal Danny

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