China’s Command Innovation

Image: Visual Capitalist

 

Hardly a day passes without some sort of China news in the financial headlines. There’s a good reason, too. China is the global economy’s 600-pound gorilla, second in size only to the US. Yes, it was largely a copycat business economy up until the early 2000s, but Chinese entrepreneurs have really taken charge in the last 10 years. Fueled by the profits from huge consumer demand, they are expanding not only in China but globally. This story is largely ignored in the US and in much of Europe. We hear about a few projects here and there, but we don’t understand the extent.

China is on its way to becoming the largest economy in the world, which because of its population, it should be (possibly with the exception of India, if they ever get their act together). Short-term events and arguments sometimes obscure this longer-term reality. China’s transition from rural poverty to export powerhouse to consumer goliath may be the most consequential economic event in centuries. Possibly ever—I can’t think of a historical example to rival it. Historians might argue the British Empire or even the US from 1800–2000, but that took centuries. China has done it in a little over 30 years.

Duterte Seems Alarmingly Resigned to Beijing’s New Building in the South China Sea

Over the last couple of years it has been said several times that Asian nations can no longer consider the United States a reliable partner. Its military has been decimated by budget cuts, technical problems (think F-35) and politics. The Obama administration had thrown into doubt the protection of Taiwan and Japan should either or both go to war with China. Asian nations see this and they don’t want to take chances on dealing with a bi-polar United States that changes policy whenever and whichever direction the wind blows with every new administration.

So, simply put, President Duterte has confirmed and cemented the the continuous prediction:

You take a gamble on a shaky alliance with the United States, go to war and see what happens. Maybe you’ll be defended, maybe you won’t. Maybe you won’t be offered full protection of the U.S. forces.

or

You play it safe, abandon the old club and join the club, and guarantee yourself not to get crushed in 48 hours by the Asian juggernaut.

Because of this realization, the day is coming where an Asian bloc will form under a Chinese protectorate. The vacuum is already there and is starting to be filled.

For further information, see the following (handful of many) articles:

Japan needs to seek out regional allies, view U.S. as ‘second resort,’ says head of think tank

Duterte Aligns Philippines With China, Says U.S. ‘Has Lost’

Beijing strengthens police powers in South China Sea

New blocs emerging: China and Russia vs US and Japan

Is Vietnam tilting toward China?

 

Philippine President Rodrigo Duterte speaks during a joint press conference with Thailand’s Prime Minister Prayuth Chan-ocha at the government house in Bangkok, Thailand, Tuesday, March 21, 2017. [SAKCHAI LALIT/AP]

‘What will I do? Declare a war against China? I can, but we’ll all lose our military and policemen tomorrow,’ President Duterte said this week.

In the mid-1990s Beijing reassured Manila that structures it was building atop Mischief Reef, near the Philippines in the South China Sea, were merely fishermen’s shelters. Today China has a militarized island at that “shelter,” complete with a runway and large anti-aircraft guns.

A similar progression could begin this year at the currently undeveloped Scarborough Shoal, which China seized from the Philippines in 2012. For Beijing, an installation there would go a long way toward establishing effective control over the waterway, creating a strategic triangle in conjunction with other facilities it’s built in the sea in recent years.

The Chinese have put out billboard ads announcing the renminbi as the new world currency

 

When I arrived to Bangkok the other day, coming down the motorway from the airport I saw a huge billboard—and it floored me.

The billboard was from the Bank of China. It said: “RMB: New Choice; The World Currency”

Given that the Bank of China is more than 70% owned by the government of the People’s Republic of China, I find this very significant.

Is China Preparing for Currency War?

China has entered the global monetary-easing fray, along with more than a dozen other economies, after its central bank surprised investors by cutting reserve requirements 50 basis points to spur lending and combat deflation. But Beijing may be raring for an even bigger and more perilous fight — in the currency markets.

…

At the same time, something else is afoot in Beijing could have even greater global impact. The central bank is cooking up measures to widen the band in which its currency trades. People’s Bank of China officials say it’s about limiting volatility as capital zooms in and out of the economy. Let’s call it what it really is: the first step toward yuan depreciation and currency war.

Thailand Turns to China

…and now the U.S. loses another piece in Asia. After years and years of coups, Thailand looks to be finally going under the Chinese umbrella protectorate.

 

With a post-coup cooling of relations with the West, Bangkok is looking to its largest trading partner.

Thailand’s ruling junta is boosting ties with China as it seeks to reverse sluggish growth in Southeast Asia’s second largest economy following a coup earlier this year that complicated its ties with the West.

On Friday, Thailand welcomed Chinese Premier Li Keqiang, the most prominent foreign leader to visit the country since the military seized power on May 22. Li was to attend a two-day regional summit on the Mekong river being held in Bangkok.

As West falters, Asia Pacific region emerging as new global economic engine

UNITED NATIONS — Despite the persistent economic headwinds which are expected to slow economic expansion this year, “growth in the Asia and the Pacific area remains better than in any other region; continuing as an anchor of stability and a new growth pole for the world economy.”

That’s the guardedly optimistic prognosis from the 2012 Economic and Social Survey of Asia and the Pacific survey.

Produced by the UN’s Bangkok-based Economic and Social Commission for Asia and the Pacific (ESCAP), the annual survey concedes that the region continues to face a challenging external environment which will slow regional growth this year to 6.5 percent from last year’s average of 7 percent.

…

More than any one event, the devastating tsunami and aftermath created severe shocks to the already ailing Japanese economy through a dislocation of industrial production, the supply chain, and the enduring psychological trauma following the disaster. Equally but largely overlooked has been the serious floods in Thailand which have created havoc in large urban areas such as Bangkok the capital in both manufacturing as well as tourism sectors.

Yet the Survey states that despite the slowdown “the region will remain the world’s fastest growing with China forecast to grow at a robust 8.6 percent, decelerating from the 9.2 percent rate of 2011.” It adds, Growth in India is projected at 7.5 percent in 2012, up from 6.9 percent in the past year.

Full article: As West falters, Asia Pacific region emerging as new global economic engine (World Tribune)

Iran’s nuclear, terror offensives meet slow US-Israeli responses

Shrugging off Western sanctions and Israeli recriminations, Iranian President Mahmoud Ahmadinejad played a starring role in a widely televised spectacle by inserting his country’s first domestically-made fuel rod into the Tehran Research Reactor Wednesday, Feb. 15. The scene came after the announced cutoff of Iranian oil exports to six European countries – Netherlands, Spain, Italy, France, Greece and Portugal. Two hours later, the Iranian oil ministry challenged the announcement, spoiling the show by attesting to differences in high regime ranks.

By this show, Tehran thumbed its nose at Israeli Prime Minister Binyamin Netanyahu’s call on the world Wednesday to set red lines for Iran’s nuclear program and denounce its terrorist activity. “If Iran’s aggression is not halted, it will ultimately spread to other countries,” he told the Knesset.

Tehran paused only briefly in its multi-pronged offensive to deny Israeli charges of an Iranian hand behind the bombing attacks on its diplomats in New Delhi, Bangkok and the Georgian capital of Tbilisi this week, in which an Israeli woman was injured.

Full article: Iran’s nuclear, terror offensives meet slow US-Israeli responses (DEBKAfile)