US-China Relations - 143. page

Qiushi Journal, a flagship publication of the Chinese Communist Party’s Central Committee, republished an article from People’s Forum, which was originally published on the Caogen website. The article claimed that the only way to keep away from the pitfall of “the U.S. dollar hegemony” and the U.S. debt is to “create an alternative to replace the U.S. dollar and the U.S. debt.” “If China wants to get away from its over-reliance on the U.S. dollar and debt, the only right strategy is to internationalize the RMB (the Chinese yuan).”

The article explained in detail “the pitfall of the U.S. dollar hegemony and the U.S. debt”:

“The pitfall of the U.S. dollar hegemony and the U.S. debt is the core of the U.S. global strategy (‘the U.S. dollar + the U.S. army’ strategy). Due to the special status of the U.S. dollar, the world’s leading reserve currency, other countries have to accumulate large amounts of the U.S. dollar reserves. Since the U.S. bond market is the most liquid and most secure bond market in the world, other countries have no other choice but to buy large amounts of the U.S. debt. The deficit and debt help the U.S. to raise huge amounts of military expenditures, which lets the U.S. maintain its global military expansion and control the global strategic resources (mainly oil). The control of global strategic resources, in turn, strengthens the U.S. dollar’s reserve currency status. ‘The U.S. dollar hegemony – the U.S. debt pitfall – the military expansion – a control of strategic resources – strengthening the U.S. dollar hegemony’ is the basic logic of the United States as the global superpower.”

Source: Caogen, People’s Forum and Qiushi Journal, August 20 – 22, 2011
http://www.caogen.com/blog/Infor_detail/28899.html
http://www.rmlt.com.cn/News/201108/201108201032026335.html
http://www.qstheory.cn/jj/jjyj/201108/t20110822_104001.htm

Xinhua republished a commentary by Jinua Times, a daily newspaper in Beijing, arguing that the current international financial and debt crisis represent a failure of the Western system. The article states, “The financial crisis and the current ongoing European and U.S. debt crises represent … the failure of the current European and U.S. systems. These crises have shaken people’s faith in these nations’ sovereign credit and have also shaken people’s faith in the current system being able to ensure that the financial (system) can fully perform its function.”

The article laments, “World economic recovery is slow; old financial crises are not over, yet new debt problems have arisen. It makes one worry about the current system’s effectiveness.” The author listed three worries: (1) Europe and the U.S. may be trapped into paying old debts with new debts, creating a “Ponzi scheme”; (2) the U.S. may try to solve its debt problem by printing money, depreciating the dollar, and inducing inflation; (3) the downgrade of the U.S. credit rating will make the countries holding U.S. debt suffer losses in their foreign currency reserves.

The article concludes, “The current European and U.S. system won’t eliminate these worries. The crisis is with the current system and is not just a credit crisis. Since the current system cannot solve the problem, it is logical and inevitable to establish a new world order and a new national system.”

Source: Xinhua, August, 15, 2011
http://news.xinhuanet.com/fortune/2011-08/15/c_121859517.htm

A Guangming Daily commentary article, titled “Why the U.S. Government Is Not Reliable,” harshly criticizes the American capitalist system. The article ascribes blame for the U.S. debt and credit crisis to the crisis of the American capitalist system and states that the “American train” has been on the wrong track for a long ago. It says, “It is time for the U.S. government, the parties, and politicians in Congress to wake up. You political elites representing one percent of American rich people should have the courage to take the blame for the system’s failure and do some deep self-reflection and self-examination."

The article concludes by saying, “To the people of the U.S., the American dream is a myth — a myth in which one percent of the rich people cheat all the ordinary civilians. To the people of the world, the American political system and currency system are also a myth — one in which the White House cheats the whole world. The American people and the people of the whole world have been kidnapped by the American dream and the American capitalist system. American capitalism has not only lost its stature, but also its moral ground.”

Source: Guangming Daily, August, 11, 2011
http://news.xinhuanet.com/comments/2011-08/11/c_121843514.htm

Xinhua republished an article originally from Huaxi Metropolitan Daily, a Sichuan based newspaper, that discussed turning the U.S. debt crisis into China’s opportunity. The article stated, “At present, it appears (China) will be subject to loss no matter what currency it has. In this situation, when the American dollar, the euro, the British pound, and the Japanese yen all are depreciating, the most important thing for China is to promote internationalization of the Chinese renminbi. To decrease China’s loss, the active administration of foreign currency reserves is no longer the best solution. Only by pushing the renminbi out may (China) find a better solution.”

“There is no doubt that the problem of the U.S. sovereign debt is a crisis, but it may also be transformed into an opportunity. The sub-prime loan crisis that happened on American soil has shaken the financial system that has the U.S. dollar as its core. The current downgrade of the credit rating of the U.S. debt has further loosened the dollar’s credit. With expected future depreciation, many international enterprises that export goods to the U.S. will inevitably turn to other alternative currencies for settlement. Investors are also gradually investing in other currencies for better gains. Due to the U.S. debt crisis, the Japanese debt crisis, and the soft euro, more and more countries have also expressed the desire to reform the international currency system and have the right to more freedom in choosing the international reserve currency. All these have provided opportunities and conditions for the internationalization of renminbi.”

Source: Xinhua, August 8, 2011
http://news.xinhuanet.com/comments/2011-08/08/c_121826284.htm

Money Weekly published a piece stating that China must increase domestic demand by reducing taxes and fostering competition. He Wannan, a financial analyst on publicly traded companies, wrote an article titled, “Why does China feel the pain whenever the United States hurts?” The article states that, as the largest holder of U.S. debt, each of the 1.3 billion people in China has loaned $900 to the United States, the wealthiest country in the world. China has $US3 trillion in foreign exchange reserves in U.S. dollars and has nowhere to invest it. A small move would cause a market slide. “Why does China feel the pain whenever the United States hurts? Fundamentally, it is because in China’s rise, it has followed the path of an export oriented economy, with over one-third of GDP generated by demand from outside of China. … In a word, China must focus on domestic demand. Two critical factors are involved in reaching the goal: one is to reduce taxes and the other is to oppose (state) monopolies and foster competition."

Source: Money Weekly reprinted at jrj.com August 9, 2011
http://finance.jrj.com.cn/people/2011/08/09160610687375.shtml

Huanqiu published an article on August 9, 2011, about Standard & Poor’s downgrade of the US credit rating, titled “China Cannot Be As Incompetent As the United States.” The article states that the downgrade is due not only to the serious U.S. deficits and debt, but also to its “political crisis.” "The protracted quarrel between the two parties could do nothing to help reach an agreement on the debt ceiling. This system of checks and balances, combined with political self-interest, actually led to the partial dysfunction of the U.S. government." The article pointed out, “The United States does not have any authority who can make a final decision while ignoring all other opinions.”

The article admits that China will certainly suffer losses due to the depreciation of the U.S. dollar and suggests China develop a domestic market in order to reduce China’s holdings of U.S. debt.  “For a long time, China has wanted to reduce its holdings of U.S. debt. However, an important reason why the reduction has not occurred is that China’s export-based economy tenaciously resists any reduction.”

Source: Huanqiu, August 9, 2011
http://world.huanqiu.com/roll/2011-08/1887738.html

Qiushi, a journal of the Central Committee of the Chinese Communist Party, published an article on August 8, 2011, titled “Be Alert to Possible U.S. Pressure to Depreciate the Chinese Yuan.” The article is based on the words of Hong Kong’s famous economist, Prof. Lang Xianping. “According to Lang’s friend who is in a U.S. economic decision-making group, the U.S. is developing a major strategy to suppress and devalue the Chinese yuan.”

Recalling how the U.S. forced Japan and the “Four Little Dragons” (Taiwan, South Korea, Hong Kong, and Singapore) to appreciate their currencies first and then devalue their currencies by selling their real estate and stock, the author accused the U.S. of “looting the fruits of economic development” of these countries. The article states, “China’s local governments have over 10 trillion (yuan) in debt. China’s real estate market bubble and high inflation result in the yuan appreciating outside of China and the yuan depreciating inside China, which is obviously contrary to the laws of the market. The laws of the market are irresistible. This is precisely the reason why the United States may devalue the Chinese yuan.” At the end of the article, the writer expressed the belief that China will have the wisdom to deal with the possible pressure from the U.S. and Western countries to depreciate the yuan.

Sorce: Qiushi Journal, August 9, 2011
http://www.qstheory.cn/lg/rpzm/jj/201108/t20110808_100458.htm

Xinhua reprinted a commentary from Jiefang Daily that Wang Yusheng, the Executive Director of the Centre for Strategic Studies at the China Foundation for International Studies, wrote about U.S. Secretary Clinton’s speech made during the U.S. – India Dialogue. According to Wang, Clinton “encouraged and urged India” to play a role in the east. The title of the commentary was “Hilary: You Cannot Hurt China; You Only Exposed Yourself." Wang stated that the objective of Secretary Clinton’s remarks was to instigate fights and contain China. “Although the U.S. neo-conservative idealists expected tension between China and its neighboring countries, it did not occur. This was not because of the U.S. ‘hard power’ and ‘soft power’ or its much relished ‘smart power’; rather, it was the result of China’s ‘affinity power.’” The negative behavior of the U.S. toward China “cannot hurt China and merely brings to light the dark side and the vulnerability of its international behavior.”

Source: Jiefang Daily reprinted by Xinhua, August 1, 2011
http://news.xinhuanet.com/world/2011-08/01/c_121750738.htm