Below The Beltway

I believe in the free speech that liberals used to believe in, the economic freedom that conservatives used to believe in, and the personal freedom that America used to believe in.

March 22, 2010

China Warns U.S. On Trade War Threats

by @ 5:37 pm. Filed under China, Economics, Foreign Affairs

The Chinese are telling America that a tariff battle with Beijing will be very unpleasant:

BEIJING – China’s commerce minister warned the United States on Sunday that if it launches a “trade war” against China by levying punitive tariffs on Chinese imports, the United States will suffer the most.

Chen Deming also said the U.S. government’s “obsession” with China’s exchange rate could not be seriously addressed until it stopped blocking the export of high-tech products, such as supercomputers and satellites, to China. “If some congressmen insist on labeling China as a currency manipulator and slap punitive tariffs on Chinese products, then the [Chinese] government will find it impossible not to react,” Chen said in an interview with The Washington Post. “If the United States uses the exchange rate to start a new trade war, China will be hurt. But the American people and U.S. companies will be hurt even more.”

Chen’s comments, made during an interview Sunday, reflect the exasperation within the Chinese leadership regarding the United States’ attempt to push China to allow its currency, the yuan, to rise against the dollar. In addition, Chen’s remarks also underscore how China is seeking to use the current trade dispute with the United States to push its own agenda in Washington — to eliminate, or at least ease, the 20-year-old sanctions that limit American exports to China.

No word on whether or not the Chinese were motivated to make these comments by The Donald.

March 12, 2010

Donald Trump Calls For A Trade War Against China

During an appearance this morning on Morning Joe meant primarily to hype the upcoming season of The Celebrity Apprentice, Donald Trump called for an end to half a century of free trade policy:

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Think about this for the moment. A 50% tariff on all Chinese-made goods means that everything you buy at Wal-Mart, Target, and wherever else, that is made in China, or contains components that were made in China would increase in price by at least 50%.

How, exactly, would that be good for the American economy ?

And if you think it would stop there, you’re kidding yourself. China would retaliate, and India and Japan wouldn’t be far behind. Soon, we’d find ourselves in the middle of a trade war and, as history shows us, trade wars, often lead to shooting wars.

We tried this once before, Donald, it was called Smoot-Hawley, and it was an utter failure.

Go back to your beauty pageant and leveraged to the hilt real estate deals and leave politics to the professionals.

And Joe, I expect better of you.

October 8, 2009

Next Target For al Qaeda: China ?

A new message from al Qaeda seems to indicate it’s turning it’s attention to the Middle Kingdom:

(CNN) — A high-ranking al Qaeda leader has called on China’s minority Uyghurs to prepare for a holy war against the Chinese government.

“There is no way for salvation and to lift this oppression and tyranny unless you … seriously prepare for jihad in the name of God and carry your weapons against the ruthless brutal invader thugs,” Abu Yahia Al-Libi said Wednesday in a video on an Islamist Web site. He delivered his message in Arabic.

The Uyghurs are Muslims in western China’s Xinjiang province. Some Islamists refer to the region as East Turkistan.

Al-Libi’s proclamation was in reaction to the violence that has recently shaken Urumqi, Xinjiang’s capital. There, long-simmering resentment between minority Uyghurs and majority Han Chinese erupted into riots and left more than 200 people dead in July.

The following month, a series of stabbings — with syringes used as weapons — added to the unrest.

“What we saw and heard in the recent events in Turkistan was not accidental and didn’t happen overnight. This is an intifada (an uprising) and a usual response to the decades of oppression, the organized cleansing and the systematic repression until the people had enough,” Al-Libi said.

“This was not the first uprising that the oppressed Muslim people carried out, because they keep grieving and struggling to preserve their identity against the aggressors.”.

Something tells me the People’s Republic won’t like this.

China, Rising

As the world struggles out of the Great Recession, it’s finding a new nation is entering the class of the powerful:

For decades, China followed the dictum of its late supreme leader, Deng Xiaoping, to keep its head down abroad and focus on development at home. But earlier this decade, emboldened by success and mindful that their globalized economy needs stability, communist leaders started pressing for a place among the nations that manage world affairs.

These days, Beijing is claiming a bigger voice in global economic forums such as the Group of 20 and is getting more deference in the United Nations, which could mean protection for friends such as Iran and Myanmar. Its military spending is the world’s second-highest, behind that of the United States.

“China is very likely to be the second-most-powerful country — if it isn’t now, then within a decade,” says Kenneth Lieberthal, director of the Brookings Institution’s John L. Thornton China Center in Washington.

For the United States, it’s a mixed blessing. The American and Chinese economies are intertwined, and the success of one depends on the health of the other.

The United States is China’s biggest trade partner. China sent $338 billion in goods here last year. Beijing is Washington’s biggest creditor, with more than $800 billion invested in government debt. American automakers look to China’s growing market to propel future sales.

The financial crisis set back U.S. growth by years and will add trillions to the federal debt over the next decade. But China avoided the worst of the crisis. Its banks are healthy and, with the help of a 4 trillion yuan ($586 billion) stimulus, this year’s economic growth is on track to top 8 percent.

There’s a new player on the block folks.

October 1, 2009

China Celebrates 60 Years Of Dictatorship

by @ 12:14 pm. Filed under China, Foreign Affairs


Sixty years ago today, the People’s Republic of China was established:

BEIJING — China’s leaders marked their nation’s 60th anniversary on Thursday with a precision display of military bravado, a fleet of floats representing everything from a giant fish to Mount Everest and, improbably, a female militia unit toting submachine guns and attired in red miniskirts and white jackboots.

The celebration of the founding of the People’s Republic of China was immense, powerful and flawless, down to the crystal skies which, just a day earlier, had been laden with smog.

In all that, it was a fitting analogy for how China’s Communist Party leaders wanted their citizens and the world to regard them — and, perhaps, how they may be feeling themselves these days. The last such parade, in 1999, was of interest mainly to foreign military analysts and China hands. This time, the world’s news outlets reported raptly on the significance of every detail, and China’s state-run television network streamed video coverage over the Internet, in English and other languages, to viewers worldwide.

Beyond that, however, the Chinese made few concessions to their global audience. The 60th celebration was slightly kitschy and indisputably retro, a carbon copy of the prior once-a-decade celebrations. “On one level, they are naturally aware of the international audience, but in the end this is a parade and show for Chinese leaders and the people of China,” Geremie R. Barmé, professor of Chinese history at the Australian National University, said in an interview. “It has always been such a show. It is a display of China’s might and power. When it comes to this kind of parade, international perceptions are just not that important.”

A confident President Hu Jintao, clad in a high-collared Mao-style jacket, told the invited guests — the general public was not allowed to attend the parade — that “infinitely bright prospects” lay ahead for the world’s most populous nation.

“Today, a socialist China geared to modernization, the world and the future has stood rock-firm in the east of the world,” Mr. Hu said in a brief speech speckled with boilerplate references to Chinese-style socialism. The Chinese people, he said, “cannot be prouder of the development and progress of our great motherland.”

And if we had to do it on the backs of a few hundred million people, who’s gonna complain, right ?

September 29, 2009

Why China Will Never Agree To Real Sanctions Against Iran

by @ 12:32 pm. Filed under China, Foreign Affairs, Iran

It all comes down to a three letter word:

Figures from January to May 2009 indicate that China, the remaining major adversary to sanctions, relies on Iran for more than a half a million barrels of oil per day – about 15 percent of their portfolio.

China has a diversified portfolio, with sources that range from central Asia, east and west Africa, and traditional OPEC sources in the Middle East. However, both volatile Iran and stable Saudi Arabia represent significant portions of the imports. With demand rapidly growing in China, Iran’s portion is 15 percent they cannot afford to lose.

And, it’s not just China that relies on Iran for oil:


As long as this is the case, there will be no international consensus for the kind of economic sanctions that would truly bring down the Islamic Republic. More importantly, it also suggests that some nations, and most specifically China, would be likely to side with Iran in a dispute with the international community simply because of their dependence on Iran as a source of oil.

This isn’t an easy problem to solve, folks.

H/T: Sully

September 7, 2009

China Sends Another Warning To The United States

And the message is clear; turn off the printing press:

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.

“We hope there will be a change in monetary policy as soon as they have positive growth again,” he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.

China’s reserves are more than – $2 trillion, the world’s largest.

“Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets,” he added.

The comments suggest that China has become the driving force in the gold market and can be counted on to
buy whenever there is a price dip, putting a floor under any correction.

What’s amusing is that the Chinese seem to have more economic sense than we do right now:

Mr Cheng said China had learned from the West that it is a mistake for central banks to target retail price inflation and take their eye off assets.

“This is where Greenspan went wrong from 2000 to 2004,” he said. “He thought everything was alright because inflation was low, but assets absorbed the liquidity.”


Mr Cheng said the root cause of global imbalances is spending patterns in US (and UK) and China.

“The US spends tomorrow’s money today,” he said. “We Chinese spend today’s money tomorrow. That’s why we have this financial crisis.”

They’re sending us a warning, the question is whether we’ll listen.

July 28, 2009

China Warns U.S. On Deficit Spending

by @ 10:59 pm. Filed under China, Economics, Foreign Affairs, Politics

Yet further confirmation of just how screwed up the world is these days comes in the news that Communists are giving the United States Government financial advice:

WASHINGTON (AP) – The United States and China are striking a conciliatory tone in their public comments during economic talks, although that hasn’t stopped China from posing some pointed questions behind closed doors about such issues as America’s soaring budget deficit.


U.S. officials told reporters that the U.S. side stressed to the Chinese that the United States has a plan to bring the deficit down once the economic crisis has been resolved. They said Bernanke discussed the Fed’s exit strategy from the central bank’s current period of extraordinary monetary easing, emphasizing that the Fed was being careful to guard against future inflation.

The Chinese, who have the largest foreign holdings of U.S. Treasury debt at $801.5 billion, have been expressing worries that soaring deficits could spark inflation or a sudden drop in the value of the dollar, thus jeopardizing their investments. Chinese officials said those concerns were raised during Monday’s talks.

“We sincerely hope the U.S. fiscal deficit will be reduced, year after year,” Assistant Finance Minister Zhu Guangyao told reporters after the Monday talks had ended.

You’re not the only one, Minister.

Of course, the Chinese also continued with their not-so-veiled threats:

“The Chinese government is a responsible government and first and foremost our responsibility is the Chinese people, so of course we are concerned about the security of the Chinese assets,” Zhu said, speaking through an interpreter.

Translation — if we think you’re dollar is about to become worthless thanks to the reckless spending you’ve engaged in for decades, we’re pulling our money out.

The sad thing ? The Commies are right.

March 23, 2009

Is China About To Torpedo The Dollar ?

by @ 11:47 pm. Filed under Credit Crisis, Economics, Politics

The Financial Times reports some rather alarming news out of Beijing:

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.

Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China.

“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.

It’s hard to tell if this is just a Chinese propoganda plant or something serious, but let’s not forget what the consequences would be if the Dollar lost its status as the world’s reserve currency:

(1) The dollar’s value will plunge as investors see the writing on the wall and jump ship.

(2) US credit markets will collapse. As the dollar fall, a mass exodus from credit market will begin. Investors sitting on toxic securities will sell at firesale prices to escape the currency depreciation.

(3) The fed’s balance sheet will explode beyond all reason. In response to the mass exodus from credit markets, the fed will buy trillions worth debt in a desperate attempt to hold interest rates down. Unfortunately, the more debt the fed buys, the more quickly the dollar will fall, and the more panicked the credit selloff will become.

(4) US interest rates will soar, despite (or because of) the fed’s efforts.

(5) Countries around the world will be hurt badly by the dollar’s decline.


(6) Some nations will see benefits from the dollar’s decline.


(7) World politics will be greatly altered. There will be considerable anger at the US from nations hurt by dollar’s fall. The US will lose influence to Asia (mainly China).

(8) US retailers will get crushed. As the dollar falls, the cost of imports for retailers will increase, but the American consumer will be unable to afford to these higher prices. Competition between desperate retailers will force them the sell inventory at below cost, creating massive losses. Retailers most heavily dependent on imports (ie: Wal-Mart) will be the first to go under. Eventually as more and more retailers go bankrupt, the few survivors will be able to raise prices enough to cover costs, and the sector will stabilize at a fraction of its current size.

(9) American lifestyles will change radically. The end of cheap oil, low interest rates, and deficit spending will mean a lower quality of life and higher taxes.

(10) The price of gold and other precious metals will explode.

(11) US will experience hyperinflation.

So, you know, we’d better hope that this is just another Beijing head fake.

March 10, 2009

The Dalai Lama Unloads On China

by @ 4:57 pm. Filed under China, Foreign Affairs, Tibet

On the 50th anniversary of the invasion that forced him into exile, the Dalai Lama issued a harsh condemnation of China’s treatment of his people:

tibetan_flagBEIJING — The Dalai Lama delivered one of his harshest attacks on the Chinese government in recent times on Tuesday, saying that the Chinese Communist Party had transformed Tibet into a “hell on earth” and that the Chinese authorities regarded Tibetans as “criminals deserving to be put to death.”

“Today, the religion, culture, language and identity, which successive generations of Tibetans have considered more precious than their lives, are nearing extinction,” said the Dalai Lama, 73, the spiritual leader of the Tibetans.

The Dalai Lama spoke in Dharamsala, India, the Himalayan hill town that is the seat of the Tibetan government in exile. Tibetans outside of China and their supporters held rallies around the world on Tuesday to mark the 50th anniversary of a failed Tibetan uprising against Chinese rule. The Chinese military crushed the rebellion, forcing the Dalai Lama to flee across the Himalayas to India.

The furious tone of the speech may have been in reaction to a new clampdown by China on the Tibetan regions. The Dalai Lama may also have adopted an angry approach to placate younger Tibetans who have accused him of being too conciliatory toward China. The Dalai Lama advocates genuine autonomy for Tibet and not secession, while more radical Tibetans are urging him to support outright independence.

In the rugged Tibetan regions of China, where there is widespread resentment at Chinese rule, no reports emerged Tuesday of any large-scale protests. The Chinese government, fearing civil unrest among six million Tibetans, has locked down the vast area, which makes up a quarter of Chinese territory, by sending in thousands of troops in the past few weeks and cutting off cellphone and Internet services in some locations. An unofficial state of martial law now exists, with soldiers and police officers operating checkpoints, marching through streets and checking people for identification cards.

President Hu Jintao called this week for the building of a “Great Wall” of stability in Tibet.

“We must reinforce the solid Great Wall for combating separatism and safeguarding national unity, so that Tibet, now basically stable, will enjoy lasting peace and stability,” Mr. Hu said while meeting with Tibetan officials in Beijing on Monday, according to Xinhua, the state news agency.

Tibet is a tragedy, but I doubt the rest of the world cares.

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