China is single-handedly building post-American world economy.

With its three trillion dollars and rising foreign exchange reserves, China has become a lender of last resort for many a companies and many a countries in the world, thanks to WTO liberalization.

Sooner or later, the debtors and especially U. S. have to say enough is enough and NO more to this ever-increasing Chinese accumulation of forex reserves.

Afterall China is NOT going to voluntarily give up this enormous trade advantage that it enjoys with so many countries in the world.

It is thanks to WTO that China is rearranging the distribution of world’s wealth.

A day of reckoning has to dawn on debtor countries what a havoc WTO has wrecked on world’s finances although it is too late for them to be able to do anything about it.

By wearing a capitalist mask, Chinese Communists have beaten capitalists at their own game. Lenin used to say that ‘capitalists will sell us the ropes with which we will hang them’. China’s Communists with capitalist mask have proved that Lenin saying quite prophetic.

Let us thank the genius of Nixon-Kissinger for embracing China’s Communist dragon to counter Russia’s Soviet bear in 1972 that provided China with such ‘proverbial ropes‘.

Afterall China was a pariah country in the world just like today’s North Korea until Nixon’s 1972 visit. All the West European and East Asian countries stayed away from China following the US lead until 1972 and embraced China after Nixon’s visit. While US would not give MFN status to Soviet Union (remember Jackson-Vanik amendment?) unless Russia shed Communism, it had no problem giving it to China’s Communist dictators with a capitalist mask. Trade with China expanded by leaps and bounds during 12 years of Republican rule beginning in 1981. After campaigning against butchers of Beijing in 1992 elections, even Bill Clinton became enthusiastic supporter of trade with China once he took lessons in foreign policy from Nixon in early 1993 during a special Whitehouse-arranged meeting.

Had it not been for that Nixon embrace in 1972, China’s rise as an economic powerhouse would have been far more slower with all the US, West European and East Asian markets closed to cheap Chinese products. Had it not been for that Nixon embrace, China’s technological progress would have been far slower in the absence of West’s technology transfers. Had it not been for that Nixon embrace, China’s military progress would have been far slower in the absence of huge forex reserves that China accumulated from the massive exports of cheap Chinese products and China used those forex reserves to acquire latest military technology.

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...and Mr. Prestowitz even wrote a best-selling book about it called "Trading Places:
How We Are Giving Our Future to Japan and How to Reclaim It."

Some scary threat that turned out to be. Yet the grumblings of the Statist Beltway Intelligencia, including Mr. Prestowitz (and his crystal clear track record) are supposed to get Americans scared again? Umm, thanks, but no thanks.

Google "China Ghost Cities" sometime, and then tell me just how "scary" the big red monster really is. Industrial planning never works, no matter how many "smart people" in Washington, Beijing, Tokyo or Moscow just swear up and down that this time - this time! - it'll be different.

But it does sell books.

A country which keeps the mummified remains of Mao in its capital city is cynical in its adoption of Capitalism ... not that it is some socialist utopia either ... it has some of the worst aspects of both old-style soviet ideology and modern neoliberal exploitation in its drive to "develop" its economy.

A couple of editorial comments from a collection of economic research papers: Rebalancing the Global economy: A Primer for Policymaking

"Even if imbalances do not represent a threat to the operation of an open global economy, they risk undermining public support for such openness."

"While there has been much mention of coordinated action to address global imbalances, to date the substantive basis of any inter-governmental deal, its political viability in each leading jurisdiction, and the trigger needed to bring such deliberations to a close remain elusive. Nor have reforms of the international financial system proceeded far enough . . ."

The original Bretton Woods represented a major breakthrough for the world economy, as it substantially lessened the risk of depression worldwide. It did so by establishing a world economic order that worked. The momentum towards free trade by the United States has, as Mr. Prestowitz pointed out, gone a long way towards providing ourselves with the rope to hang us with.

With this revelation of fear of China among the ruling classes of this world, there is a clear indication that there is some awareness that a major adjustment needs to be made in the rules of the global economy in order to prevent a cataclysmic failure in the next five years. The WTO superstructure appears to be badly designed for this task.

And this means that a greater responsibility falls on the G-20 and the Basel accords to come up with some new rules that can be accommodated to the realities and demands of the 21st Century. The urgency of the situation requires that some collective head banging takes place.

While any talk of a true global governance structure is premature and out of the question at this time, surely there is the need for more collective regulation and structure than what's currently available.

Having been involved with the ECommerce side of global enterprise since 1993, it is interesting that so many online ventures view China as the 'Holy Grail' of potential business. but have been unable to tap into this rapidly expanding niche of potential customers due to the country's ever-changing payment processing policies.

Although the country is primarily debit oriented, and the bank-issued debit cards CAN be used for online purchases, it is virtually impossible to for the average ecommerce merchant to get their funds out of China. Payment processors find their processing ability live one day - and shut off the next - with no reason given.

A recent example was when PayPal and Chinese commerce giant Ali Baba announced a processing partnership - and within days, thousands of merchants and payment processors found their payment processing ability shut off without any explanation.

Until trade in and with China becomes a two way street - with China allowing their consumers to become customers of non-China based ecom enterprises - the much sought after Chinese ecommerce market will never materialize.

Melody W.
http://www.secondwindentrepreneurs.org

I can understand the difficulty of forward thinking, more so where key thinkers are concerned. Slow thinking about evident facts, however, is a different matter. So is "Ad utrumque paratus".
"But until last night I had not heard such direct admissions of concern. Indeed, another key thinker emphasized deep fear of China's vacuuming up of intellectual property around the world without regard to patent and copyright protections."
Communist China had been known to steel intellectual property right from its inception. The copying of any products they laid their hands on, without regard to patent rights, was the hallmark of their early "industrialization".

Took them, key thinkers, a long time to figure that out. No wonder the forward thinking was lacking. What do they smoke at these think tank dinner parties?

In a train wreck, there comes the moment when it's no longer possible to avert disaster. Pull the brakes as hard as you can, the momentum of the train is so great that disaster is unavoidable.

I fear that China's economy passed that point of no return in the second quarter of 2006.

Today, I'm going to tell you why I think China's economy is headed for a train wreck. Not tomorrow, but in the reasonably near future. I'd say 2009.

And in my next column, I'll sketch out the likely effects of that train wreck on the rest of the global economy and the folks, like you and me, who invest in it.

If you've been following the debate in the U.S. about the likelihood that cheap money here has produced a bubble in housing prices, you're already familiar with the basic scenario for a train wreck in China. Cheap money makes it easy to borrow to buy assets. That produces an asset bubble -- in the United States, first in stocks and then in real estate. adult videos As the asset bubble grows, borrowers get in over their heads as their judgment is overwhelmed by the excitement of rising prices. And lenders under the influence of similar emotions make loans to unqualified borrowers.

When the asset bubble starts to deflate, overextended borrowers default on their loans, putting pressure on lenders, who respond by tightening their lending standards, reducing the amount of money available to all borrowers. That sends the economy into a slowdown or worse.
They're borrowing to grow even more China does add a few wrinkles of its own to that scenario. Since the Chinese economy is still very bad at allocating capital, corporate borrowing to build new plants itself becomes part of the asset bubble. I'll start my sketch of China's coming train wreck with the problems in that sector.

In the second quarter, China's gross domestic product grew by an extraordinary 11.3%. That's a significant speed-up from 9.9% growth in 2005, 10.1% growth in 2004 and 10% growth in 2003

to the expansion of capital - if you follow the logic of the image of the monkey's anatomy given in the Grundrisse by Marx (it has organs we would consider obsolete, such as the appendix, and it may have prehensile features too), capital is a name given to that which encapsulates our current an prior forms of exchange..

Confucius saying works..... "Two steps forward; one step backward."