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Showing posts with label National security. Show all posts
Showing posts with label National security. Show all posts

Saturday 17 June 2023

Decline and fall of empires

 

In the last decade, the US security elites seized power from Wall Street for greedily selling out American hegemonic interests. — Bloomberg

 

You can say that there is no clash of civilisations, but rather a clash of national praetorian guards who feel that their interests are being threatened, sometimes not just by foreign intrusion but also weak leaders who betray their interests.


EVERY empire has its grand historian to explain more its successes than failures. In 1776, when Adam Smith published his classic “Wealth of Nations”, British essayist Edward Gibbon (1737 to 1794) wrote an equally famous text, “History of the Decline and Fall of the Roman Empire”.

The year 1776 was a historical turning point, when Britain lost her American colonies, even as she focused on conquering India 19 years after the 1757 victorious Battle of Plassey against the Mogul empire and their French allies.

Gibbon attributed the Roman fall to “four principle causes of the ruin of Rome, which continued to operate in a period of more than a thousand years. (I) The injuries of time and nature. (II) The hostile attacks of the Barbarians and the Christians. (III) The use and abuse of the materials. And (IV) The domestic quarrels of the Romans.”

His warnings apply even today, even though he was reminding the rising British elites what to look out for in the bid for Empire.

Interestingly, Chinese historians attribute dynastic decline and fall to “external invasion and internal troubles” .

Rome was built on conquest. Her Roman legions were legendary, but the elite core that defended consuls, procurators and emperors were the Praetorian Guard, who exercised the intelligence, logistics and national security functions of the Roman empire.

The Roman empire rose as the effectiveness of Roman military discipline and organisation overwhelmed all enemies.

The Praetorian Guard was the core staff between the consul, like Julius Caesar, and his legions.

They also supervised the intelligence functions, initially undertaken by the Frumentarii, involved in strategy, logistics, information couriers and negotiations with allies and enemies alike.

Within Rome, as the elite defending the capital, the Guardians later became king-makers, since weak emperors needed the military on their side.

They helped in assassination of at least one emperor and putting several others on the throne.

Fast forward to the First World War.

Amidst Europe’ ruinous self-destruction, German polymath Oscar Spengler (1880 to 1936) wrote The Decline of the West, positing that empires or civilisations have the same human biological cycle of birth, life and death.

He famously speculated that the West would enter into a crisis after two centuries of Caesarinspired concentration of power into one leader would lead to collapse of Western civilisation.

Indeed, he warned that the spread of Western technology to the “coloured races” would be used against the West. Sounds familiar? Spengler was discredited after the Second World War for being an inspiration behind Nazi expansion.

Thereafter, British historian Arnold Toynbee (1889 to 1975) 12-volume Studies in History gave Spengler fatalism an optimistic twist.

His study of 26 civilisations showed that empires can rise to historical challenges when their elites respond creatively with innovation and technology.

In other words, those elites, including emperors, presidents or political leaders who are guardians of empire integrity, can succeed to grow empires.

But when that elite becomes predatory through corruption and infighting, the empire or civilisation weakens and falls to a combination of internal collapse and foreign invasion.

Every nation has their own praetorian guard or cohort of agencies in defence, national security, intelligence and think tanks that safeguard the national interest.

A modern parallel would be the Washington blob (national security elite) that comprises the Pentagon, State Department, intelligence community and foreign affairs think tanks.

Former US President Eisenhower called it the “military industrial complex”.

Moscow’s praetorian guard is labelled the Kremlin.

Countries like China, Russia, India, France and Japan have their own praetorian elite, who consider their mission to safeguard national integrity against all enemies, including threats to their national identity, creed and values.

You can say that there is no clash of civilisations, but rather a clash of national praetorian guards who feel that their interests are being threatened, sometimes not just by foreign intrusion but also weak leaders who betray their interests.

In the last decade, the US security elites seized power from Wall Street for greedily selling out American hegemonic interests.

As chairman Mao said, “political power comes from the barrel of a gun”, meaning that those who have the military behind them beat those who don’t.

Hence, stable governments are those that are able to keep the military in their barracks.

Those who do not keep the military happy are vulnerable to coup d’etat.

But what if the praetorian guards’ interests are not aligned with those of the masses, who only want peace and stability, including better jobs, health and less government intervention?

In this age of confusion and distorted media, the masses are rightly worried whether their praetorian guards are looking after their interests or after their own?

This is reflected in recent serious loss of public trust in elites, which feeds the populist desire to have one of their own to oversee the elites.

Donald Trump has pitched himself in that populist category.

The more the blob tries to prevent him from returning as Presidential candidate, including his recent indictment, the more Trump’s supporters will hunker down in their belief that the praetorian elites are looking after their own skin.

Ancient history therefore tells us that empires decline if their elites are feeding at the trough at the expense of the masses.

They sometimes start wars to deflect anger against them towards anger against barbarians.

Are there parallels in the current age? 

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Monday 9 May 2022

Is education fit for the future?

 


EDUCATION is the most controversial of subjects.

 
 One thing is clear, whilst the quantity of educated manpower is critical to national strength, quality may matter more.

Parents quarrel about the quality of education for their kids, just as societies are deeply divided on education as it defines the future.

Is the current education system fit for purpose to cope with a more complex, fractious future, fraught with possible war?

According to Stanford University’s Guide to Reimagining Higher Education, 96% of university chief academic officers think that their students are ready for the workforce, where only 11% of business leaders feel the same.

As the population and work force grow, the gap between skills demanded by employers and the education received by school leavers is widening, so much so that many are finding it hard to get the jobs that they want.

As technology accelerates in speed and complexity, the quality of education becomes more important than ever. Is it for the elites or the masses?

The Greek philosopher Aristotle recognised that the aim of education is for knowledge, but there was always a different view as to have knowledge for the individual or whether education must prepare the individual to fulfil the needs of society.

Feudal systems hardly paid attention to the masses, whereas most ancient institutes of higher learning were for elites, either for religious orders or in Chinese history, to prepare for civil or military service, but blended with self-cultivation.

Conservative think tank American Enterprise Institute (AEI) has just produced a fascinating study on the implications of higher education for national security.

Covering the period 1950-2040, the study acknowledged that the United States attained uncontested power status, because it had the highest levels of educational attainment and manpower.

In 1950, the United States, with less than 5% of the world’s population, had 45% share of world population aged 25 to 64 with completed tertiary education.

In comparison, India had 5% and China about half of that.

By 2020, the United States’ share had dropped to roughly 16%, whereas China was catching up, whilst India had just under 10%.

By 2040, depending on different estimates, China may double its share to between 15% and 20%, whereas India would have overtaken the United States with 12%, leaving the United States third with 10%.

It is a truism that education matters for economic growth and power.

Every additional year of schooling for children is estimated to add 9% to 10% increase in per capita output.

If you add in “business climate” with improvements in education, health and urbanisation, these factors explain five-sixths of differences in output per capita across countries.

Under the liberal world order, America encouraged the spread of global education, so much so that the global adult illiteracy (those without any schooling) fell from 45% in 1950 to only 13% by 2020.

This worldwide expansion in education was good for the world, but it also reduced the comparative advantage of the education and technology front-runners, particularly the United States.

The AEI study reported that the share of global adult population with at least some tertiary education increased from under 2% in 1950 to 16% today and would approach 22% by 2040.

In 1950, eight of the top 10 largest national highly educated working age labour pool was in advanced countries. By 2020, their share was half.

By 2040, this is likely to be only three out of 10.

In essence, India and China would take the lead in total highly trained manpower, especially in science and technology, with the United States “an increasingly distant third place contestant.”

The AEI study illustrates why increasingly American universities will be more selective in their future foreign student intake, especially in science and technology which may have impact on national security matters.

As late as 2017, MIT manifested global ambitions in its strategic plan, “Learning about the world, helping to solve the world’s greatest problems, and working with international collaborators who share our curiosity and commitment to rigorous scientific inquiry.”

That global vision may be cut back in light of the growing geopolitical split into military blocs. Western universities may no longer be encouraged to train foreign students into areas where they can return to compete in key technologies.

In short, geopolitical rivalry will determine the future of resources allocated to education, research and development and technology.

No country can afford liberal education in which every student is encouraged to do what he or she wants to do.

Students today want to be more engaged in the big social issues, such as climate change and social inequality.

But at the same time, they expect more experiential immersion into careers that are more self-fulfilling.

Instead, institutes of higher learning are forced by economics to provide more shorter term courses to upgrade worker skills, using new teaching methods and tools, especially artificial intelligence, virtual reality etc.

At the national level, governments will push universities into more research and development and innovation to gain national competitiveness, including R&D on defence and national security sectors.

This means that the education pipeline or supply chain will also be bifurcated like global supply chains that are being disrupted and split by geopolitics.

The conversation on what should go into the curriculum for education is only just beginning. Much of this is to do with funding.

As higher levels of education are more expensive, especially in the high technology area, whilst governments budgets are constrained, universities will turn to private sources of funding.

The more society polarises, the more likely that such funding would turn towards entrenchment of vested interests, rather than solutions to structural problems.

Education is controversial precisely because it is either a unifying social force or a divisive one.

One thing is clear, whilst the quantity of educated manpower is critical to national strength, quality may matter more.

The Soviet Union had the second largest share of educated manpower during the Cold War, but it did not save it from collapse.

Will our future education system provide leaders who are able to cope with the complexities of tomorrow?

As the poet T S Eliot asked in his poem “The Rock” in 1934, “where is the wisdom we have lost in knowledge?”

That question is being asked not just in universities, but by society as a whole.

Andrew Sheng writes on global issues from an Asian perspective. The views expressed here are the writer’s own. 

Source link.

 

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Friday 16 April 2021

West-backed color revolution a ‘top threat’ to China's national, political security


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The sixth National Security Education Day falls on Thursday, with the Chinese national security agency releasing a series of cases related to the threat against China's political security. Experts on international intelligence and security said under the intensifying China-US competition, foreign hostile forces have increased efforts to target the political security of China rather than merely conducting regular espionage activities.

The law enforcement cases released by relevant national security agencies this year are different from the past, which specifically focus on the political security issue, including suspects who have colluded with foreign anti-China forces that try to subvert the state power. Some of them are related to the Hong Kong turmoil in 2019, which try to expand the Western-backed color revolution from the special administrative region to the mainland.

"When we talk about national security, people will normally think of foreign espionage activities that target China's military and economic intelligence. But now many recent cases show that the internal and external anti-China forces are colluding with each other," Li Wei, an expert on national security and anti-terrorism at the China Institute of Contemporary International Relations, told the Global Times.

"This shows that the foreign hostile forces are strengthening their efforts to promote 'color revolution', to damage the political security of our country," Li said, stressing that this has become the primary national security challenge that China is facing at the moment.

Regular espionage activities targeting military and economic intelligence aim to help relevant countries in their negotiations or competition with China, "but the color revolution that directly targets our political security is trying to harm the stability and public order in our country, so it's much more serious and destructive," said a Chinese expert on international intelligence who asked for anonymity.

Technically, a color revolution is a "smarter measure" to help Western countries, especially the US, destabilize or overthrow a country, the expert said. "After the Iraq War, the US and its allies have been more reluctant to dispatch ground troops because direct military operation will cause casualties to their soldiers and other unpredictable costs. But using social media networks, NGOs, and 'diplomats' to mobilize, train, fund and organize local people against the government will cost less and is easier to create chaos."


Humanitarian disaster: the truth of US-initiated wars 


"We can see many similar cases in Syria, Libya, Venezuela, Ukraine and Belarus. The main actors in those countries are local people guided by Western proxies, and Western military forces normally serve as a supporting role, and sometimes they don't even show up," he said.

Chinese analysts said the US and its allies dare not directly launch military operations against nuclear-armed major powers, like China and Russia, or their neighboring countries. So after a series of ineffective approaches like the trade war, military pressure and propaganda stigmatization, the color revolution is being used a major tactic to disrupt China's development, and it seems like is the last card that the US can play to stop China from realizing great rejuvenation of the Chinese nation.

More aggression

In one case among the recently released law enforcement cases that aim to promote national security education, a student surnamed Tian who studied journalism at a university in North China's Hebei Province has become a "cub reporter" in China working for a mainstream Western media. Tian established an anti-China website in 2018 and cooked up and spread a huge amount of disinformation and political rumors.

In April 2019, Tian was invited to visit a Western country, and has engaged with more than 20 hostile foreign groups and more than a dozen officials of the host country to receive direct instruction, which requires Tian to provide "evidence" that could be used to stigmatize China. Tian's acts have seriously harmed China's political security, and he was arrested in June 2019, according to information provided by state security agencies.

Li said this is a typical case of the US and Western anti-China forces infiltrating and inciting Chinese students and using them to serve the ideological warfare against China.

"Working for Western media outlets is not a problem, but if using the profession of a journalist as a cover to conduct activities to harm national security is a crime," Li said, noting that not all employees in Western media outlets are spies, but there are some Western journalists backed by Western politicians and intelligence agencies.

In cooking-up rumors about "genocide" and "forced labor" in China's Xinjiang, Western media are playing an important role, Li noted. "Just like this case, those 'journalists' are receiving funding and training in other countries, and implementing the tactic of anti-China politicians to destabilize China."


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On Wednesday, Chinese Foreign Ministry spokesperson Zhao Lijian said at the routine press conference that in 2020, the US ambassador to Turkey met with the head of the local ETIM (East Turkestan Islamic Movement) branch.

The ETIM, or Turkistan Islamic Party, is an extremist, terrorist and separatist organization that challenges China's sovereignty and stability in Xinjiang. The UN Security Council Al-Qaida Sanctions Committee has listed ETIM as a terrorist organization since 2002.

The Chinese Foreign Ministry played a video segment at the press conference, which showed Sibel Edmonds, a former FBI translator, revealing in a 2015 interview that "a lot of these people are taken out (from Xinjiang) by the Gladio operatives...they are trained, they are armed and then they are sent back."

Putting things together, one cannot help but wonder, what did the US ambassador to Turkey talk about with the head of anti-China force? What is Operation Gladio? Does the US intend to cause trouble in Xinjiang?" Zhao said.

According to the released information, in the past, some arrested former senior officials in Xinjiang said they even colluded with foreign separatist forces to conduct or tolerate terrorist attacks in the region, and use textbooks with extremist content in local schools, which brought serious damage to the national unity and political security.

Hong Kong frontline

Hong Kong is another frontline of China's national security and political security. Since the national security law for Hong Kong took effect in June 2020, foreign forces behind months-long anti-government riots in the city since June 2019 have begun to waver, given that offenders would face severe sentences — as high as life imprisonment. The law would also cut off "the invisible hands" behind the chaos caused by foreign troublemakers, experts said.

It's not surprising to many that Western forces used Hong Kong's open city status to incite color revolution through various channels, including media outlets, student unions, political parties and labor unions by funding, training, advising them or organizing illegal assemblies, protests and riots, all tactics that could be found in the 2019 turmoil.

The implementation of the national security law helped Hong Kong restore social order, plugging the loopholes in local security laws, Chris Tang Ping-keung, Commissioner of Police, told the Global Times on Wednesday, as the law has been functioning as an effective deterrence to those lawbreakers who endanger national security.

Since the implementation of the national security law for Hong Kong, 100 people have been arrested by the Hong Kong Police Force for suspected of endangering national security, Tang said.

Safeguarding national security is regarded as the top priority for the Commissioner of Police for 2021, which is also among the top four tasks for the HKPF. The police team will continue collecting and analyzing national security-related intelligence, investigating in criminal cases endangering national security and conducting intelligence-driven operations to prevent acts endangering the national security, Tang noted.

"The HKPF will also enhance cooperation with all institutions and stakeholders in safeguarding national security and earn more public trust and support," he said.

To facilitate public participation in safeguarding national security, the HKPF national security department has launched a hotline for reporting relevant non-emergency cases since November 5, 2020.

Nasty acts will backfire

Apart from targeting Xinjiang and Hong Kong which are traditional geopolitical hotspots, foreign hostile forces are also keen to use issues like LGBT, feminism and environmentalism which are easy to stir heated discussions on social media via disinformation and rumors to create problems by instigating conflicts between specific groups in China, said the anonymous expert on international intelligence.

Fortunately, this kind of practice is unable to cause a significant impact or escalate into a massive color revolution, since with the modernization and development of China, the majority of Chinese netizens are able to discuss these issues with a mature and reasonable attitude, and legal civil organizations on LGBT or environment protection will distance themselves from hostile foreign intervention, the expert said.

"Those extremists backed by Western forces have been marginalized in our society and their illegal activities online and offline will be managed and controlled effectively by relevant law-enforcement agencies," he noted.

Ironically, the US has found that some of its approaches to push color revolution worldwide could backfire, and the rise of Trumpism and intensifying Black Lives Matter movement and the Capitol Hill riot have seriously undermined its image and credibility when it tries to promote color revolutions in other countries, the expert said.

International cooperation

The Western-backed color revolution is a common threat faced by China and many countries including Russia, and countries in Central Asia, Middle East, Southeast Asia, Eastern Europe and Latin America. So defending political security now also requires international cooperation, analysts said.

Chinese Foreign Minister Wang Yi said at a press conference after his meeting with Russian Foreign Minister Sergei Lavrov in March that the two countries will jointly oppose color revolutions and safeguard their national sovereignty and political security.

"Fighting color revolutions is an important task for China and Russia to not just protect themselves but also safeguard regional peace and stability. The two countries could cooperate on intelligence sharing, joint operations against Western illegal NGOs that would create disinformation to hype instability and cybersecurity," Yang Jin, an expert at the Institute of Russian, Eastern European and Central Asian Studies at the Chinese Academy of Social Sciences, told the Global Times

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Thursday 27 June 2019

The hegemonic anxiety of America First


In the global political landscape looms a superpower with a military and economic might widely believed to remain unrivalled at least for decades to come.

Yet it appears that in recent years the hegemon -- the United States, or specifically its national security apparatus -- has grown increasingly restless. It sees the irrevocable collective rise of the developing world as a threat and refuses to accept what is natural and inevitable. That bodes trouble for all.

The peerless prowess that underpins the United States' leading role on the world stage stems from a combination of political, economic, geographical and other factors, including a grand vision that allowed it to work with others to establish the current international system.

Yet that strategic sobriety has noticeably given way to a sense of superiority. Three decades of unipolar hegemony has induced a historically ill-founded but deeply entrenched belief in Washington that the United States is an exceptional country above all others, and international affairs should be managed in either the American way or no way at all. Its past success in nipping every serious challenger to its dominance in the bud has only deepened its complacency.

But now with the unstoppable growth and ascent of developing countries, it appears destined that the U.S.-led West will have to share the stage with "the rest." Although the nascent shift is merely a logical outcome of history and does not cost Washington any of its legitimate interests, a self-inflicted anxiety is taking hold of what is called the national security state of America.

Hawkish decision-makers and opinion leaders are drowning out reason and morality in the United States and fanning the fear that America is losing what it is entitled to. Upholding the banner of "America First," the current U.S. government has in a little more than two years shown the world how far it is willing to go in order to "make America great again," although the United States remains the sole superpower in today's world.

Global trade is so far a major battlefront. In the eyes of incumbent U.S. policy-makers, the laws of economics and trade are nothing but a hoax, and any country that has a trade surplus with the United States is ripping it off.

They have waged waves of tariff offensives against not only China, but also U.S. allies like the European Union, Japan, South Korea and Canada, slapping heavy levies on imported products ranging from steel and auto parts to toys and bikes, regardless of rising financial burdens on domestic consumers and businesses, and the rules of the World Trade Organization (WTO).

Washington's assault on the rules-based multilateral global trading system is posing a serious threat to future global economic growth. Gita Gopinath, the International Monetary Fund's chief economist, warned in May that "the latest (tariff) escalation could significantly dent business and financial market sentiment, disrupt global supply chains and jeopardize the projected recovery in global growth in 2019."

The high-tech realm has also witnessed the United States scrambling to secure its supremacy. However, it is trying to do so not by sharpening its own edges in fair competition, but by employing the state power to drive out competitors.

Its unjustified crackdown on telecom equipment provider Huawei and other Chinese high-tech companies under the excuse of national security is reminiscent of its erstwhile plot against Japan's once booming semiconductor industry, and widely interpreted as an attempt to sabotage China's standard-setting capabilities in such key areas as the next generation of mobile communications and ensure China's permanent inferiority, at least in advanced technology.

In the realm of geopolitics, Washington's hegemonic anxiety disorder has become even more conspicuous, especially in its policies on the Middle East and Latin America. In recent months, the United States has flirted with going to war against Iran and orchestrating a coup d'etat in Venezuela.

Meanwhile, the current US government is seeking to reap the benefits of being what Martin Wolf, chief economics commentator at the Financial Times, called a "rogue superpower" while refusing to bear its due global responsibility. Its withdrawal from the Paris climate accord and the Iran nuclear deal has breached the global efforts to address many of the world's most pressing challenges.

In the post-Cold War era, the West once believed that the world had entered a period of "Pax Americana," where the United States would act as a builder of a rules-based international order and a guardian of peace. However, three decades later, Western countries are disappointed to discover that it has become a big bully pushing the world toward "Chaos Americana."

Given the high stakes, the international community, including the sober minds in America, needs to work together to help Washington make peace with the current historical trend. After all, every nation is part of the planet, every people is entitled to pursue happiness, and every country has the right to developing its economy and technology.

As for Washington, it should, as US political scientist Joseph Nye has suggested, learn the importance of using its power with others, not just over others, in today's increasingly interdependent world.

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Hegemonic practices of US will finally lead to failure

There's a proverb in the western world that self-knowledge is the most valuable knowledge. However, some US politicians, who are just not able to have a clear knowledge of themselves and the global situation, are still stubbornly following the outdated hegemonic approach.

With the strategy of "America first", these US politicians have never cared about the interests of other countries or the common welfare of global citizens.

They started the trade war under the excuse that the US is losing in its trade with China, but keep silent about the huge profits they have gained from the relationship. They make frequent statements that other countries have posed threat on US national security, but turn mute on their globally-reaching intelligence network. They strongly criticize international organizations such as the WTO, but make no mention of the fact that the US is a major founder and the largest beneficiary of the current global governance system.

White House National Trade Council Director Peter Navarro even said bluntly that other countries dare not to take retaliatory measures against the US because of the great power of the latter. Such arrogance revealed what truly lies under the slogan of "Make America great again".

The bullying and arbitrary practices of the US are supported by the hegemonic logic of the country that US rules apply to the whole world and other countries must compromise to ensure US interests.

From the "economic aggression" theory by US Vice President Mike Pence, to the fallacy made by Navarro that Chinese commodities are mortgaging America's future, and to the statement of former White House Chief Strategist Stephen Bannon that exporting of Chinese excess capacity gutted the upper Midwest of the United States, these US politicians take normal economic exchanges as "nails" and wish to hammer them. They are not willing to see the Chinese people live in a well-off society just like Americans do.

Under the banner of "America first", some US politicians just cannot keep a lid on their impulses and even started attacking their allies. Not long ago, Chancellor of Germany Angela Merkel expressed her views on the cracking foundation of the post-World War II order and the deterioration of trans-Atlantic ties. The US is becoming a rival of global countries.

Why the US politicians are still dreaming about the "chosen nation" and "shining city upon a hill"? It's because they still believe in the old philosophy that might is right, and perceives the world with a "law-of-the-jungle" mentality. Besides, they are taking international relations as a "clash of civilizations".

This explains why the US government always calls itself a monitor of global orders and a judge of international relations.

With the irreversible trend of today's multi-polarization, economic globalization, cultural diversification and social informatization, the US is still considering itself a savior of the world and taking the globe as its "backyard garden" where it can act arbitrarily and do everything it wants to. It is even making attempts to stop the building of a community with a shared future with the so-called "America first" policy.

At present, the US hegemony has aroused anger from across the world. Even some US enterprises are making adjustments in reaction to the pressure from the US government. A series of "made-in-America" companies including Harley-Davidson, Inc., have "escaped" from the US, and Exxon Mobil Corporation and Tesla are also building factories in China.

However, the US hegemony is nothing but a wishful thinking. According to American scholar Stephen Roach, the US had merchandise trade deficits with 102 countries in 2018, which reflected the extreme insufficiency of the country's domestic savings - a situation caused by the rash approvals of budget deficit made by the congress and decision makers.

Some scholars attributed the inequality in the US to its wrong policies, rather than economic globalization. Unfortunately, some US politicians made wrong prescriptions, and called other countries a barrier on the way to "make America great again".

Blaming the others for its own mistakes, the US will miss the opportunity for self-improvement and hurt the country and people via the diversion of domestic contradictions.

US scholar Robert Kagan argues that America's decline is being actively willed by unnamed "politicians and policymakers", and they are "in danger of committing pre-emptive superpower suicide out of a misplaced fear of declining power".

No country in the world is willing to be manipulated by other countries in human history. Mutual respect, sincere cooperation and win-win benefits should be the principle held by each country when it comes to international relations.

Of course, it's not easy for the arrogant US politicians to be aware of this. The bright side is that facts don't lie and speak louder than words.

There is an idiom in China that ultimate power incurs humiliation. Any country that deviates from the path of win-win cooperation and sticks to zero-sum games, disobeys rules for fair competition and pressures others, and goes against the trend of economic globalization and resorts to conservatism will end up losing.

Hegemony will only consume the power of a nation and accelerate the process of its recession. Such cases are just prevalent in history.

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Chinese President Xi Jinping will hold multilateral meetings with leaders of BRICS countries, trilateral talks with leaders of India and Russia as well as meetings with leaders of African countries during the G20 summit in Japan from Thursday to Saturday, Chinese officials said


China to uphold multilateralism, oppose protectionism at G20 Osaka summit

China is ready to work with relevant sides to firmly uphold multilateralism, and oppose unilateralism and protectionism at the upcoming Group of Twenty (G20) summit in Osaka, Japan, said senior officials in Beijing Monday.

Fighting protectionism G20's top task amid trade war

Amid an impasse between the US and China, the G20 summit in Japan offers a platform where US President Donald Trump will be able to talk with Chinese President Xi Jinping, if all goes well. It is too early to predict the outcome, but the summit has rekindled hopes that the two sides may resume trade talks after negotiations to reach a broad deal left hanging last month.

Fighting protectionism G20's top task amid trade war

Amid an impasse between the US and China, the G20 summit in Japan offers a platform where US President Donald Trump will be able to talk with Chinese President Xi Jinping, if all goes well. It is too early to predict the outcome, but the summit has rekindled hopes that the two sides may resume trade talks after negotiations to reach a broad deal left hanging last month.

US policies can cause global recession: expert 

The US has increased trade conflict with China, and also Europe. What was the primary reason for Washington to start the trade dispute with them? Will China and Europe further expand cooperation to deal with US unilateral and protectionist behavior?

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Tuesday 18 December 2018

When Will the U.S. Dollar Collapse?


https://youtu.be/N8IyDSrMY3w

collapsing dominos with international currency symbols on them
A dollar collapse is when the value of the U.S. dollar plummets. Anyone who holds dollar-denominated assets will sell them at any cost. That includes foreign governments who own U.S. Treasurys. It also affects foreign exchange futures traders. Last but not least are individual investors.

When the crash occurs, these parties will demand assets denominated in anything other than dollars. The collapse of the dollar means that everyone is trying to sell their dollar-denominated assets, and no one wants to buy them. This will drive the value of the dollar down to near zero. It makes hyperinflation look like a day in the park.

Two Conditions That Could Lead to the Dollar Collapse

Two conditions must be in place before the dollar could collapse. First, there must be an underlying weakness. As of 2017, the U.S. currency was fundamentally weak despite its 25 percent increase since 2014. The dollar declined 54.7 percent against the euro between 2002 and 2012. Why? The U.S. debt almost tripled during that period, from $6 trillion to $15 trillion. The debt is even worse now, at $21 trillion, making the debt-to-GDP ratio more than 100 percent. That increases the chance the United States will let the dollar's value slide as it would be easier to repay its debt with cheaper money.

Second, there must be a viable currency alternative for everyone to buy. The dollar's strength is based on its use as the world's reserve currency. The dollar became the reserve currency in 1973 when President Nixon abandoned the gold standard. As a global currency, the dollar is used for 43 percent of all cross-border transactions. That means central banks must hold the dollar in their reserves to pay for these transactions. As a result, 61 percent of these foreign currency reserves are in dollars.

Note:  The next most popular currency after the dollar is the euro. But it comprises less than 30 percent of central bank reserves. The eurozone debt crisis weakened the euro as a viable global currency.

China and others argue that a new currency should be created and used as the global currency. China's central banker Zhou Xiaochuan goes one step further. He claims that the yuan should replace the dollar to maintain China's economic growth. China is right to be alarmed at the dollar's drop in value. That's because it is the largest foreign holder of U.S. Treasury, so it just saw its investment deteriorate. The dollar's weakness makes it more difficult for China to control the yuan's value compared to the dollar.

Could bitcoin replace the dollar as the new world currency? It has many benefits. It's not controlled by any one country's central bank. It is created, managed, and spent online. It can also be used at brick-and-mortar stores that accept it. Its supply is finite. That appeals to those who would rather have a currency that's backed by something concrete, such as gold.

But there are big obstacles. First, its value is highly volatile. That's because there is no central bank to manage it. Second, it has become the coin of choice for illegal activities that lurk in the deep web. That makes it vulnerable to tampering by unknown forces.

Economic Event to Trigger the Collapse

These two situations make a collapse possible. But, it won’t occur without a third condition. That's a huge economic triggering event that destroys confidence in the dollar.

Altogether, foreign countries own more than $5 trillion in U.S. debt. If China, Japan or other major holders started dumping these holdings of Treasury notes on the secondary market, this could cause a panic leading to collapse. China owns $1 trillion in U.S. Treasury. That's because China pegs the yuan to the dollar. This keeps the prices of its exports to the United States relatively cheap. Japan also owns more than $1 trillion in Treasurys. It also wants to keep the yen low to stimulate exports to the United States.

Japan is trying to move out of a 15-year deflationary cycle. The 2011 earthquake and nuclear disaster didn't help.

Would China and Japan ever dump their dollars? Only if they saw their holdings declining in value too fast and they had another export market to replace the United States. The economies of Japan and China are dependent on U.S. consumers. They know that if they sell their dollars, that would further depress the value of the dollar. That means their products, still priced in yuan and yen, will cost relatively more in the United States. Their economies would suffer. Right now, it's still in their best interest to hold onto their dollar reserves.

Note: China and Japan are aware of their vulnerability. They are selling more to other Asian countries that are gradually becoming wealthier. But the United States is still the best market (not now) in the world.

When Will the Dollar Collapse?

It's unlikely that it will collapse at all. That's because any of the countries who have the power to make that happen (China, Japan, and other foreign dollar holders) don't want it to occur. It's not in their best interest. Why bankrupt your best customer? Instead, the dollar will resume its gradual decline as these countries find other markets.

Effects of the Dollar Collapse

A sudden dollar collapse would create global economic turmoil. Investors would rush to other currencies, such as the euro, or other assets, such as gold and commodities. Demand for Treasurys would plummet, and interest rates would rise. U.S. import prices would skyrocket, causing inflation.

U.S. exports would be dirt cheap, given the economy a brief boost. In the long run, inflation, high interest rates, and volatility would strangle possible business growth. Unemployment would worsen, sending the United States back into recession or even a depression.

How to Protect Yourself

Protect yourself from a dollar collapse by first defending yourself from a gradual dollar decline.

Important:  Keep your assets well-diversified by holding foreign mutual funds, gold, and other commodities.

A dollar collapse would create global economic turmoil. To respond to this kind of uncertainty, you must be mobile. Keep your assets liquid, so you can shift them as needed. Make sure your job skills are transferable. Update your passport, in case things get so bad for so long that you need to move quickly to another country. These are just a few ways to protect yourself and survive a dollar collapse.

US Trade Deficit With China and Why It's So High

The Real Reason American Jobs Are Going to China 


The U.S. trade deficit with China was $375 billion in 2017. The trade deficit exists because U.S. exports to China were only $130 billion while imports from China were $506 billion.

The United States imported from China $77 billion in computers and accessories, $70 billion in cell phones, and $54 billion in apparel and footwear. A lot of these imports are from U.S. manufacturers that send raw materials to China for low-cost assembly. Once shipped back to the United States, they are considered imports.

In 2017, China imported from America $16 billion in commercial aircraft, $12 billion in soybeans, and $10 billion in autos. In 2018, China canceled its soybean imports after President Trump started a trade war. He imposed tariffs on Chinese steel exports and other goods. 

Current Trade Deficit

As of July 2018, the United States exported a total of $74.3 billion in goods to China. It imported $296.8 billion, according to the U.S. Census Bureau. As a result, the total trade deficit with China is $222.6 billion. A monthly breakdown is in the chart.
US$211.1
Jul 18
US$202
Jan 18
US$205
Feb 18
US$210
Mar 18
US$210
Apr 18
US$214
May 18
US$213
Jun 18
US$211
Jul 18

Causes

China can produce many consumer goods at lower costs than other countries can. Americans, of course, want these goods for the lowest prices. How does China keep prices so low? Most economists agree that China's competitive pricing is a result of two factors:
  1. A lower standard of living, which allows companies in China to pay lower wages to workers.
  2. An exchange rate that is partially fixed to the dollar.
If the United States implemented trade protectionism, U.S. consumers would have to pay high prices for their "Made in America" goods. It’s unlikely that the trade deficit will change. Most people would rather pay as little as possible for computers, electronics, and clothing, even if it means other Americans lose their jobs.

China is the world's largest economy. It also has the world's biggest population. It must divide its production between almost 1.4 billion residents. A common way to measure standard of living is gross domestic product per capita. In 2017, China’s GDP per capita was $16,600. China's leaders are desperately trying to get the economy to grow faster to raise the country’s living standards. They remember Mao's Cultural Revolution all too well. They know that the Chinese people won't accept a lower standard of living forever.

China sets the value of its currency, the yuan, to equal the value of a basket of currencies that includes the dollar. In other words, China pegs its currency to the dollar using a modified fixed exchange rate. When the dollar loses value, China buys dollars through U.S. Treasurys to support it. In 2016, China began relaxing its peg. It wants market forces to have a greater impact on the yuan's value. As a result, the dollar to yuan conversion has been more volatile since then. China's influence on the dollar remains substantial.

Effect

China must buy so many U.S. Treasury notes that it is the largest lender to the U.S. government. Japan is the second largest. As of September 2018, the U.S. debt to China was $1.15 trillion. That's 18 percent of the total public debt owned by foreign countries.

Many are concerned that this gives China political leverage over U.S. fiscal policy. They worry about what would happen if China started selling its Treasury holdings. It would also be disastrous if China merely cut back on its Treasury purchases.

Why are they so worried? By buying Treasurys, China helped keep U.S. interest rates low. If China were to stop buying Treasurys, interest rates would rise. That could throw the United States into a recession. But this wouldn’t be in China's best interests, as U.S. shoppers would buy fewer Chinese exports. In fact, China is buying almost as many Treasurys as ever.

U.S. companies that can't compete with cheap Chinese goods must either lower their costs or go out of business. Many businesses reduce their costs by outsourcing jobs to China or India. Outsourcing adds to U.S. unemployment. Other industries have just dried up. U.S. manufacturing, as measured by the number of jobs, declined 34 percent between 1998 and 2010. As these industries declined, so has U.S. competitiveness in the global marketplace
.

What's Being Done

President Trump promised to lower the trade deficit with China. On March 1, 2018, he announced he would impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. On July 6, Trump's tariffs went into effect for $34 billion of Chinese imports. China canceled all import contracts for soybeans.

Trump's tariffs have raised the costs of imported steel, most of which is from China. Trump's move comes a month after he imposed tariffs and quotas on imported solar panels and washing machines. China has become a global leader in solar panel production. The tariffs depressed the stock market when they were announced.

The Trump administration is developing further anti-China protectionist measures, including more tariffs. It wants China to remove requirements that U.S. companies transfer technology to Chinese firms. China requires companies to do this to gain access to its market.

Trump also asked China to do more to raise its currency. He claims that China artificially undervalues the yuan by 15 percent to 40 percent. That was true in 2000. But former Treasury Secretary Hank Paulson initiated the U.S.-China Strategic Economic Dialogue in 2006. He convinced the People's Bank of China to strengthen the yuan's value against the dollar. It increased 2 to 3 percent annually between 2000 and 2013. U.S. Treasury Secretary Jack Lew continued the dialogue during the Obama administration.

The Trump administration continued the talks until they stalled in July 2018.

The dollar strengthened 25 percent between 2013 and 2015. It took the Chinese yuan up with it. China had to lower costs even more to compete with Southeast Asian companies. The PBOC tried unpegging the yuan from the dollar in 2015. The yuan immediately plummeted. That indicated that the yuan was overvalued. If the yuan were undervalued, as Trump claims, it would have risen instead.

Source: The Balance


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