China's Emergence as a Superpower (till 2014)

Quote:

---

Originally Posted by Bob's World

...China that completely ignores their own sphere of influence and clearly stated Red Lines.

---

At the risk of David moving this, I ask the following questions.:D Copied here by David

What is Red China's sphere of influence?

What does is encompass exactly, on land and at sea?

Does it have hard bounderies (sic) or does it exist in various zones of increasing or decreasing influence?

Who determines what their sphere of influence is?

Is the sphere of influence fixed forever or does it change?

If it changes, who determines what changes it?

Should changes be recognized?

What powers does Red China have within its sphere of influence?

Who determines what those powers are?

Do any people living within that sphere of influence have any say in that?

Do Red Chinese powers within the sphere change depending on what part of the sphere is in question or are they fixed everywhere?

Would any and all power Red China claimed within its sphere of influence be legitimate or would there be certain things that would be beyond the pale?

These are just the things I can think of off the top of my head. More will follow. And then on to the red lines.

Quote:

---

Originally Posted by carl

Sorry Dayuhan. The short exchange between me and the Cuyahoga Kid was pretty clear and plain. Nothing else I can do to clarify it.

---

Sorry, I'm not seeing it. Possibly I'm just dense. Why would the Chinese blockade Taiwan unless they were actually prepared for a full-scale war with the US, a war with enormous risk and not much potential gain for them? Why would they go into a war in which they know their antagonist can inflict enormous damage on them without ever coming within range of most of their weapons? A war that could potentially go nuclear? To gain what?

Do you assume the Chinese to be irrational, or unskilled at weighing profit and risk?

To enter into a blockade, the Chinese would have to be either absolutely 100% sure that there would be no response, or absolutely 100% sure that they could win a war. That kind of certainty is a tough thing to come by in this world, and Chinese behavior has not typically tended toward that kind of brinksmanship. The status quo is not going all that badly for them, and when that's the case you don't rock the boat unless you are very sure it will rock your way.

If you are not seeing it, it is because you choose not to.

Read what was written, all of it.

This is how China invents it Spheres of Influence

China's Invented History

http://online.wsj.com/article/SB1000...googlenews_wsj

Quote:

---

Originally Posted by carl

If you are not seeing it, it is because you choose not to.

Read what was written, all of it.

---

I read it several times, and it still seems too hypothetical to be relevant to any practical question. Why would the Chinese want to blockade Taiwan?

Spheres of influence are ephemeral and overlapping; the whole construct is not specific enough to be of much use. Accepting that China has some influence and some capacity to act withing certain areas does not mean nobody else has influence or the capacity for action within those areas, nor does it mean consigning those areas to a solely Chinese sphere of influence. It's simply accepting reality, always a good start for practical policy questions.

Ok. You wore me down. It was a hypothetical. It was a hypothetical. Often hypotheticals are not terribly relevant to much of anything at all. That is why they are called hypotheticals.

I realize you go into a hysterical panic anytime anybody anywhere anyhow mentions that somebody somewhere somehow might have to fight the Red Chinese, but rest easy if you can-it was a hypothetical. I also realize that you are desperate to head things off by bringing up spheres of influence and matters of high policy but that has nothing at all to do with what I commented upon to the Cuyahoga Kid because it was all hypothetical.

No hysteria or panic in it, just confusion... I can't see the point of assuming that there has to be a war and developing hypothetical scenarios for it, especially since the conclusion of the hypotheses always seems to be that the Red Horde will surely overrun the world if we don't confront, contain, man the ramparts and (most important) spend a few more trillions of dollars gearing up for war.

Personally, I think the most likely medium/long term scenario for China at war involves Russia, simply because the two countries' spheres of influence and activity overlap in an area bordering both that also has real (not hypothetical) resource wealth.

My comments above on spheres of influence were a response to a post above regarding spheres of influence. It's not something I brought up.

U.S. reopening World War II bases in Pacific

http://blog.foreignpolicy.com/posts/...ses_in_pacific

Setting up facilities in uninhabited or barely inhabited islands makes some sense, given the political baggage that has accompanied US bases in places like Okinawa and the Philippines.

Chuuk,

http://upload.wikimedia.org/wikipedi...97px-Chuuk.png

and Chuuk Lagoon,

http://upload.wikimedia.org/wikipedi...k_Islands1.png

home of the Japanese Ghost Fleet,

http://upload.wikimedia.org/wikipedi...ruk_Lagoon.png

and part of the larger Federated States of Micronesia.

http://upload.wikimedia.org/wikipedi...onesia_CIA.jpg

Regards

Mike

Keeping to the island theme and hat tip to FP Blog story on the evolution of UN peacekeeping contributors for this surprise, with my emphasis:

Quote:

---

Today, China has 1,911 peacekeepers in the Democratic Republic of the Congo, Lebanon, Sudan, and now Syria. The U.N. force commander in Cyprus is Chinese as well.

---

Link:http://www.foreignpolicy.com/article...elmets_gone#17

A different point if view by Raffaello Pantucci, highlighting:

Quote:

---

It is, however, increasingly clear that there is a high level of concern in China about Pakistan. In Xinjiang in particular they seem to have lost patience at Pakistani capacity to contain Uighur extremists travelling to train in Pakistan and then coming back.

---

It which ends with:

Quote:

---

Beijing may be Pakistan’s best friend, but even best friends can eventually lose their patience with each other.

---

Link:http://raffaellopantucci.com/2012/06...akistan-china/

Given the current state of Pakistan's relations with the USA primarily even a cooling of Sino-Pakistani relations could unsettle strategic thinking, after all as a nation Pakistan needs steady friends and money.

Related (East Asia)':

Korea as Number One
Posted By Clyde Prestowitz

http://prestowitz.foreignpolicy.com/..._as_number_one

http://blogs.ft.com/beyond-brics/201...#axzz1y5ZrDqyp

China’s capital flight: to US real estate

Excerpt:

Quote:

---

Pamela Liebman, chief executive of The Corcoran Group, a residential real estate brokerage company, says the group has seen a “huge” influx of wealthy mainland Chinese shopping for high-end properties in New York since the start of the year.

“It’s extraordinary,” she says. “Five years ago, we never talked about Chinese buyers. We started noticing them 18 months ago but they have only become much more prevalent in the past year.”

Liebman says she saw “hundreds of millions” of dollars in sales last year to Chinese buyers and the pace has intensified since the start of 2012. “The past quarter has been our best quarter ever in terms of sales to Chinese buyers.”

Properties that have been snapped up by China’s rich range from $1m apartments to $20m trophy properties. “Buying groups” – group tours of mainland buyers coming to New York to view properties – have become commonplace, says Liebman.

---

It's not just NY or the US, either. Chinese buyers are buying high-end real estate all over the world. That suggests that controls on capital movement are (predictably) ineffective, and that wealthy Chinese are not entirely confident about the domestic future... but we shall see.

I have certainly read explanations for this purchasing overseas activity; it was explained that official economic policy was to encourage the investment of foreign earnings abroad, as their return to China would cause problems, inflation primarily.

Overseas property purchasing was very noticeable before the Hong Kong handover, notably in Vancouver, Canada - which was more amenable to granting citizenship IIRC and there being an established Chinese community.

I don't think it is ineffective capital controls out of China, it is that foreign earnings are not fully declared.

Quote:

---

Originally Posted by davidbfpo

I have certainly read explanations for this purchasing overseas activity; it was explained that official economic policy was to encourage the investment of foreign earnings abroad, as their return to China would cause problems, inflation primarily.

---

Check the national accounts for net capital export and trade balance in goods and services.
They're pretty much the same, for they're two sides of the same coin.

A country with trade balance surplus has foreign currency or obligations, and it's only natural that this is a lot about buying or setting up productive means or companies.
Germany has a trade balance surplus and we don't buy many corporations. That's because our direct investments (= at least 10% of shares) are almost all about marketing (=subsidiaries that sell our products) and our other investments are usually done by individuals or institutions without any interest in control, but much interest in risk diversification and profit rate. This leads to many, many small buys of shares on financial markets.



The mentioned inflation thing is nonsense in my opinion. What could you do with U.S. Dollars in China? You certainly couldn't drive up inflation. What you could do is you could spend it on imports, both investment goods and consumption goods - even exportable services. this was apparently not desirable. Showing off riches was not desirable, buying foreign instead of domestic products was a mixed bag.

Quote:

---

Originally Posted by Dayuhan

http://blogs.ft.com/beyond-brics/201...#axzz1y5ZrDqyp

China’s capital flight: to US real estate

---

Different situations obviously, but I'm reminded of the Japanese real-estate buying spree before their great stagnation.

Quote:

---

Originally Posted by Dayuhan

http://blogs.ft.com/beyond-brics/201...#axzz1y5ZrDqyp

China’s capital flight: to US real estate

Excerpt:



It's not just NY or the US, either. Chinese buyers are buying high-end real estate all over the world. That suggests that controls on capital movement are (predictably) ineffective, and that wealthy Chinese are not entirely confident about the domestic future... but we shall see.

---

There is a pretty good piece about this here in the Economist. The Chinese are still pretty good about the control of capital within the country but the rich and/or well connected are able to find ways around the capital controls. Under the current system, the government needs to severely limit the places that Chinese citizens can put their money, i.e. Chinese banks. The interest rate that these banks pay to their account holders is controlled directly by the state and is below the rate of inflation which means that it is actually negative in real terms. This is, of course, bad for depositors, who have no choice in the matter, but it is great for banks because it gives them a large buffer of cheap capital. This gives them plenty of cheap money to lend to state champions and local governments. It also allows them to weather the storm when the gross inefficiencies of a centrally planned economy come home to roost.

Quote:

---

Originally Posted by Uboat509

it is great for banks because it gives them a large buffer of cheap capital. This gives them plenty of cheap money to lend to state champions and local governments.

---

They also lend it, increasingly and in massive quantities, to the well-connected and extraordinarily wealthy elite that straddles government and "private" enterprise. Crony lending is a huge issue, and nobody has a clue what the banks actually have on their books in terms of bad loans.

Of course the Chinese government can bail out the banks, but whether or not they can bail out the companies that incurred those loans is another question. If a company borrows, builds a dozen skyscrapers that end up empty, and goes bust... ok, the bank cam be bailed out, but the company isn't going to keep building skyscrapers (though the people behind that company, closely connected to those running the banks and those staging the bailouts, will have salted their share away). That means a whole lot of unemployed workers, and a whole lot less demand for steel, concrete, etc.

It will be interesting to see where it all goes and there's absolutely no certainty about outcomes, but anyone who thinks the Chinese have created a superior economic model that's bound to swallow the world is barking at the moon.

The author of this book is on tour, with several speaking engagements in London next week and from emailed invite:

Quote:

---

In her new book ‘Winner Take All: China’s Race for Resources and What It Means For The World’, Dambisa Moyo analyses the commodity dynamics facing the world over the forthcoming decades and highlights the central role of China in the global competition for finite resources. Commodity scarcity is being brought to the fore at a time when twenty-five military conflicts around the world are the result of competition over raw materials. Contrary to mainstream political discourse, Moyo shows how this phenomenon does not simply concern oil, but hard commodities such as metals and minerals, as well as soft commodities including timber and food. These resources all permeate our everyday lives – without access to them we cannot power our electricity grids, access potable water, or manufacture the technologies on which we all depend.

Holding cash reserves of over $3 trillion, China is doing what other states cannot afford to do, and undertaking a worldwide commodity shopping spree. This venture is backed by an innovative and symbiotic multilateral economic development approach to resource-rich countries, many in Africa and Latin America, to lock up resources for the future development of Chinese industry and infrastructure. Dambisa Moyo has demonstrates where this is happening, who is trading away their commodities, and the geopolitical effects these actions are likely to have in the future, prompting the overarching question: Is large-scale resource conflict inevitable or avoidable?

---

Her bio is different, although some here will see the hand of US capitalism:

Quote:

---

Dr. Dambisa Moyo is an international economist...Born and raised in Lusaka, Zambia, Dr. Moyo holds a PhD in Economics from St Antony’s College, Oxford University; an MPA from Harvard University’s Kennedy School of Government and an MBA in Finance and BS in Chemistry from American University in Washington DC. She has worked as a Consultant at the World Bank and as an Economist at Goldman Sachs where she worked in debt capital markets and as part of the global macroeconomics team. In 2009, Dr. Moyo was named one of the world’s 100 most influential people by TIME Magazine, and a Young Global Leader by the World Economic Forum.

Additionally, Dr. Moyo serves on the boards of Barclays Bank, SABMiller and Barrick Gold. She has also spoken at organisations including the OECD, World Bank, IMF, Council on Foreign Relations and the American Enterprise Institute. Dr. Moyo contributes regularly to The Economist and Financial Times and has appeared as a guest on CNN, CNBC, Bloomberg, BBC and Fox Business.

---

Link to Amazon, with one review:http://www.amazon.com/Winner-Take-Al...s=Dambisa+Moyo