Don’t mean to sound like a broken record – I know we’ve talked about this many times. But the situation is worsening in the US and making it even more obvious than before that we’re on the verge of a new world order as America becomes, in the words of a friend I had dinner with last night, “a banana republic with nuclear weapons.” Based on the rapidly deteriorating situation in America, this merits a healthy clip:
While the rest of the world is grappling with the global slowdown, China is figuring out ways to exploit it.
Over the past few months, China has capitalized on the financial turmoil that has paralyzed the world’s “developed” economies by stocking up on cheap commodities, weeding out competition to its largest state-run companies, and acquiring even more foreign assets.
Indeed, with China’s economic growth projected at an enviable 8% for this year, that country’s government has been able to spend less time promoting immediate growth and liquidity, and more time preparing for the economic renaissance that almost certainly seems to be the Asian giant’s destiny.
By exposing Western free-market capitalism, undermining the United States economic clout, and eviscerating commodities prices, China is using the financial crisis as the perfect opportunity to advance its domestic agenda.
That agenda begins with the recently unveiled $586 billion stimulus plan – a plan primarily focused on infrastructure.
China’s financial institutions have little or no exposure to the toxic subprime assets that spawned this current global crisis. Thus, instead of having to spend hundreds of billions of dollars to bail out its banks, China can choose to develop the stage on which it will display its future economic might.
And the first phase of that plan is key: Before its plans for a massive infrastructure overhaul can be realized, China must first load up on the raw materials crucial to its execution.
We all know the impossible problems China is facing, and that 8 percent growth (which some call a rosy prediction) is a big drop that will have painful impact. We all know it’s killing its environment and repressing those citizens who can’t fight back. And we all know that the US economy is entwined with China’s, meaning more pain is inevitable. But there are differences and there are reasons why China holds an advantage for the future. The engineers at the top of the party know what they want to do and don’t have to deal with messy thing like pluralism or individual rights, so whoever gets in their way can be quickly and (relatively) easily silenced. What they want to do now is seal deals for the future, giving China more global leverage and creating a new balance of power.
We’ve been hearing about the imminent collapse of China for ten years. I was on that bandwagon in 2003. But as all the bad news keeps accumulating and everyone finds links that guarantee China has to collapse, somehow it keeps going and in some ways even gets stronger. Like in cementing its relations with Africa and exploiting the depression to make bargain-basement acquisitions that will ensure badly needed natural resources in the future. I know, I know – China’s totally fucked. But they’re less fucked than the US and Europe. And that is what will leave them in a cozy spot after the carnage is over, perhaps years from now.
Meanwhile, I hope everyone’s watching where gold has gone since I first recommended it, when it was under $650 an ounce. Think about where’d you’d be today if your 401K money had been invested differently. The dollar simply has to fall, and as the dollar falls, gold…. Please take a look at this if you still doubt. This issue is relevant to China, which is already quietly looking for other places to invest its money.
Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.