Saturday, December 21, 2013

chinese bluffs

china may be aggressively asserting itself on the international political stage, but there’s no reason to believe a global take over by china is militarily or politically imminent.  in this article from the telegraph, writer james delingpole entertains assertions that china is about to call an end to the game and the world as we know it is about to change.

in terms of economic change in china, dalingpole quotes economist michael snyder who notes that economic governors in china have discussed limiting the country’s foreign currency investments, particularly the american dollar.  snyder quotes a chinese official as saying, “The monetary authority will ‘basically’ end normal intervention in the currency market and broaden the yuan’s daily trading range.”  though such a move would be detrimental to american investment, particularly in the short run, but the move is a sound financial decision that i think any economist would offer as advice to china.  america and western europe’s currently shaky markets do make investment in their monies particularly attractive.  in the long run, if china does shake its peg of the yuan to the dollar and its trading range is broadened, the effects could be good for american exports in the future.  american economists have been trying to convince china to make a similar move for decades.

delingpole also quotes a scholar who believes a military strike against the west is inevitable and will probably occur soon.  china has definitely ramped up its aggressive stance in the past few months, but its behavior should not be compared to pre-war japan.  china has claimed sovereignty over certain islands in the sea of china and recently claimed an extended air space, but it has committed to aggressive actions beyond this posturing.  “Ego would also play a large part in the decision for a pre-emptive attack.  China wants to be recognised as the most powerful country on the planet.  Successfully driving the United States from the western Pacific would put that beyond doubt.”  with the second largest economy on the planet, china is already an economic powerhouse and may soon be the most economically powerful country in the world before too much longer.  even with the largest standing army on the planet, china does not have the naval, air, or technological prowess that other countries have.  the limitations of its military are widely known.  though it may be attempting to assert itself now militarily or territorially, as it grows economically, and grows economically secure, it will more and more be able to secure what external resources it requires economically.

these military threats are indicative of economic growing pains.  these should be seen as bluffs.  these should be seen as actions to secure power, intimidate.  but i cannot see any evidence that china would follow through on its threats and that it would especially make a strike against more powerful western nations.

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