China's New World Order
By Zhang Jun
Khasod English

SHANGHAI – Economists are increasingly divided over China’s economic future. Optimists emphasize its capacity for learning and rapid accumulation of human capital. Pessimists focus on the rapid decline of its demographic dividend, its high debt-to-GDP ratio, the contraction of its export markets, and its industrial overcapacity. But both groups neglect a more fundamental determinant of China’s economic prospects: the world order.

The question is simple: Can China sustain rapid GDP growth within the confines of the current global order, including its trade rules, or must the current US-dominated order change drastically to accommodate China’s continued economic rise? The answer, however, remains unclear.

One way that China is attempting to find out is by pushing to have the renminbi added to the basket of currencies that determine the value of the International Monetary Fund’s reserve asset, the Special Drawing Right (SDR). As it stands, that basket comprises the euro, the Japanese yen, the British pound, and the US dollar.

The SDR issue was the audience’s main concern when IMF Managing Director Christine Lagarde spoke in Shanghai in April. Her stance – that it is just a matter of time before the renminbi is added to the basket – garnered considerable media attention. (Regrettably, however, the media read too much into her statement.)

Full story: http://www.khaosodenglish.com/detail.php?newsid=1433344234&section=0200


-- Khaosod English 2015-06-04

Many economists attribute Beijing's aggressions in the South China Sea and in the East Sea to the continuing failures of its state and command model of political economy and finance.

Others attribute its new regional and global belligerence and bellicosity to the surfacing of a long cloaked revanchism and irredentism that comes naturally to the CCP and its PRChina.

It is both and more, much more..

The SDR vote at the IMF in October comes after the scheduled visit to Washington of Xi Jinping in September, if the visit is not cancelled by Prez Obama. And the OP is wrong to say IMF Director Christine LeGarde was misunderstood in Shanghai.

Edited June 4, 201511 yr by Publicus

That is a piece from a Chinese perspective and it is optimistic to be kind. The Chinese people are glaringly poor with an average annual per capita GDP of just $US6,600. The benefits of China's manufacturing growth haven't reached the rural masses. link

By comparison Thailand's is $5,700 and the US is $53,000 - obviously in a different league. Same link - World Bank.

China is communist and must support its people. China may have an edge on the largest economy but it must be divided among 1.4 billion people. China can't even grow enough food for its people and is a net importer of food and also oil. It is responsible to feed and house its people and provide medical care as communist countries must.

If China becomes enough of a pain with its military expansion against Japan and The Phils and the S. China Sea and others, the West could put an embargo on importing it's goods and bring it to its knees overnight. Its economy is fragile and has been shrinking and it operates at the pleasure of it customers - the West.

That is a piece from a Chinese perspective and it is optimistic to be kind. The Chinese people are glaringly poor with an average annual per capita GDP of just $US6,600. The benefits of China's manufacturing growth haven't reached the rural masses. link

By comparison Thailand's is $5,700 and the US is $53,000 - obviously in a different league. Same link - World Bank.

China is communist and must support its people. China may have an edge on the largest economy but it must be divided among 1.4 billion people. China can't even grow enough food for its people and is a net importer of food and also oil. It is responsible to feed and house its people and provide medical care as communist countries must.

If China becomes enough of a pain with its military expansion against Japan and The Phils and the S. China Sea and others, the West could put an embargo on importing it's goods and bring it to its knees overnight. Its economy is fragile and has been shrinking and it operates at the pleasure of it customers - the West.

55555555555555555555555555555555555555555555555555555555555555555555++++++++++++

Too ludicrous... The declining and decadent West would stand no chance against China, and China has a burgeoning middle class who lead prosperous and full lives....

http://www.bloomberg.com/news/articles/2015-02-10/why-china-s-middle-class-can-t-find-its-buying-power

Why China's Middle Class Can't Flex Its Buying Power

China isn't importing things the way it used to. January imports plunged about about 20 percent in dollar terms from a year ago, caused in part by falling commodity prices—China is a big buyer—and the drag of a slowing economy on corporate spending. China's exports weren’t pretty either, having fallen 3.3 percent last month. “Domestic demand in China remains very weak, especially in the two most important types of imports: raw commodities and capital goods,” wrote Louis Kuijs, chief China economist at Royal Bank of Scotland, earlier this week.

A new report suggests that a deeper problem lies ahead for multinational companies betting on China sales to drive global growth: The buying power of China’s middle class is not expanding as quickly as many anticipated. That’s pulling down overall per capita consumption growth, which dropped from 8.5 percent in 2009 to today's 7.1 percent. The trend is likely to continue.

“We expect a clear if not disastrous slowdown in China’s consumption growth in 2015,” wrote Ernan Cui, an analyst at Beijing-based researcher GavekalDragonomics, in a report released on Monday. “The hit to consumption growth will come from the more gradual, but very real, slowdown in earnings of the middle-income households.”

So much for the declining and decadent west. Oh...so much for the decadent west:

http://worldnewsdailyreport.com/china-billionaire-killed-by-champagne-bottle-cork/

He was notorious for his drinking habit, drug problems and bad temper, having been arrested more than thirty times over the years for various charges, including public drunkenness, disorderly conduct, disturbing the peace, driving under the influence of alcohol and assault on a hotel doorman.
........
According to the police, the champagne bottle could have been a Chinese counterfeit, an explanation that seems more than plausible for the exceptionally high level of carbon dioxide contained in it.

It is responsible to feed and house its people and provide medical care as communist countries must.

Hey! I live in China and can tell you there is no government medical care here. The Chinese either buy insurance or pay as they use any service or facility.

Google "China ghost cities" and see how they have a housing bubble ready to burst that will make the U.S. debacle look like a fart in a mud puddle. The global economic tsunami this will cause has me very concerned!

Edited June 4, 201511 yr by quandow

" must the current US-dominated order change drastically to accommodate China’s continued economic rise?"

Doesn't China have the power to force this change if they were to call in the U.S. debt?

Makes me wonder, what are they waiting for?

Call in us debt? I don't believe bonds work that way and most us debt is owned by the us government... then again.... trying to destroy one of your best customers on an economy driven on manufacturing? Smart? Idk.... the decadent and opulent west going down in the near term.....idk either... chinas economy is manufacturing and agriculturaly based.... they have a high population to arable land ratio leaving little room for growth and manufacturing becomes less competitive as salaries go up.... and they don't have alot of room(arable/habitable)to increase their population. .... they have to fight hard for those resources in the gulf for a reason.... china will become more powerful.... but it isn't gonna be that straightforward or easy as others say..... the usa on the other hand.... has a low population to arable land ratio, alot of resources, and their economy is more diversified.... they just tend to blow money on random wars that don't benefit (debateable but I don't want to)...

China is in a position to challenge the status-quo...US dollar and economic world dominance is in the balance...

The US has run up 18 trillion dollars in debt...has done no belt tightening...has printed gobs of US Dollars with no domestic product to backup the money printing...the money printing has gone into the US Stock Market...making it look very desirable when it is highly overbought...

The entire mystique of the US dollar is in its perception of being of great value...it is a mirage...someday soon the world will see this and retreat to gold and silver and a basket of currencies thus dethroning the dollar as the world's favored trade currency...

This will take some time...the plan is in place and working to remove the dollar as China, Russia, and India increase their stores of Precious Metals while the US tries to demean the metal as a relic of the past...

China's economy is one of the strongest in the world...the world in general is in poor shape economically...China is flexing it's economic and military muscle...it is poised to become a dominate nation in world affairs...

We are in fact...ushering in a New World Order...

It would be interesting to see China flex its' economic muscle and see what the west does.

China has always been a fractured country, always needing a strongman to hold it together. That could be its' downfall to any long-term supremacy.

" must the current US-dominated order change drastically to accommodate China’s continued economic rise?"

Doesn't China have the power to force this change if they were to call in the U.S. debt?

Makes me wonder, what are they waiting for?

US Debt 555.

China has to own dollars to engage in international trade. No one will accept its currency for things it must buy, or pay it in its currency for exports.

If China sold its US debt - US Treasuries it would be out of the import export business in a flash.

China doesn't have excess money to loan. I has to buy the treasuries to own dollars and they are insignificant in the big scheme of things.

China is in a position to challenge the status-quo...US dollar and economic world dominance is in the balance...

The US has run up 18 trillion dollars in debt...has done no belt tightening...has printed gobs of US Dollars with no domestic product to backup the money printing...the money printing has gone into the US Stock Market...making it look very desirable when it is highly overbought...

The entire mystique of the US dollar is in its perception of being of great value...it is a mirage...someday soon the world will see this and retreat to gold and silver and a basket of currencies thus dethroning the dollar as the world's favored trade currency...

This will take some time...the plan is in place and working to remove the dollar as China, Russia, and India increase their stores of Precious Metals while the US tries to demean the metal as a relic of the past...

China's economy is one of the strongest in the world...the world in general is in poor shape economically...China is flexing it's economic and military muscle...it is poised to become a dominate nation in world affairs...

We are in fact...ushering in a New World Order...

There isn't enough gold in existence to back China's money or any other major currency much less several nations' currencies.

"At a price of US$1,500 per troy ounce, reached on 12 April 2013, one tonne of gold has a value of approximately US$48.2 million. The total value of all gold ever mined would exceed US$8.2 trillion at that valuation." LINK

money money money .....the OP is fixated on money matters. What's more important are environmental concerns. You can wallpaper your apartment with $100 bills, and stuff you couch and mattress with $100 Euro notes, but if you can't breathe the air or drink the water, you're up excrement creek.

.

Google "China ghost cities" and see how they have a housing bubble ready to burst that will make the U.S. debacle look like a fart in a mud puddle. The global economic tsunami this will cause has me very concerned!

super capialism

Quote "There isn't enough gold in existence to back China's money or any other major currency much less several nations' currencies."

There is if the price of gold changes to reflect that backing.

" must the current US-dominated order change drastically to accommodate China’s continued economic rise?"

Doesn't China have the power to force this change if they were to call in the U.S. debt?

Makes me wonder, what are they waiting for?

The same reason why the German banks haven't called the Greek debt.

No point in demanding payment from a country that cannot pay.

In the case of China, it has heavily invested in the USA and owns physical assets. If it calls its debt and that in turn hurts the US economy, the Chinese investments are damaged.

" must the current US-dominated order change drastically to accommodate China’s continued economic rise?"

Doesn't China have the power to force this change if they were to call in the U.S. debt?

Makes me wonder, what are they waiting for?

The same reason why the German banks haven't called the Greek debt.

No point in demanding payment from a country that cannot pay.

In the case of China, it has heavily invested in the USA and owns physical assets. If it calls its debt and that in turn hurts the US economy, the Chinese investments are damaged.

China owns only 7% of US debt and it is in the form of Treasuries which have to mature before the US has to pay them. If China wanted to divest itself of Treasuries at least two things would happen.

1. China would have to sell them on the open market, not to the US although the US might buy them.

2. China would not longer own any US dollars and would be instantly out of international trade - its bread and butter.

3. China suddenly would be unable to buy imports and would be locked out of world markets because it wouldn't have any negotiable money. No one will accept China's money for the food China needs to feed its people.

Selling US Treasuries would hurt only China and bring it to its knees. The result would be the opposite of what some people seem to think. This would be the way for China to break China.

China isn't wealthy and its economy is hurting. It has to hold USD to engage in international trade and this is why it is trying to change that. It wants its money back because it needs it. It can't afford to hold the US Treasuries.

China is in a position to challenge the status-quo...US dollar and economic world dominance is in the balance...

The US has run up 18 trillion dollars in debt...has done no belt tightening...has printed gobs of US Dollars with no domestic product to backup the money printing...the money printing has gone into the US Stock Market...making it look very desirable when it is highly overbought...

The entire mystique of the US dollar is in its perception of being of great value...it is a mirage...someday soon the world will see this and retreat to gold and silver and a basket of currencies thus dethroning the dollar as the world's favored trade currency...

This will take some time...the plan is in place and working to remove the dollar as China, Russia, and India increase their stores of Precious Metals while the US tries to demean the metal as a relic of the past...

China's economy is one of the strongest in the world...the world in general is in poor shape economically...China is flexing it's economic and military muscle...it is poised to become a dominate nation in world affairs...

We are in fact...ushering in a New World Order...

The problem is China may just implode all on its own. They've got massive inequality, massive corruption, massive pollution, a housing bubble like no one's ever seen, and just way too many people. Maybe they should just take over, say, Australia. That would solve some of their problems.

China is in a position to challenge the status-quo...US dollar and economic world dominance is in the balance...

The US has run up 18 trillion dollars in debt...has done no belt tightening...has printed gobs of US Dollars with no domestic product to backup the money printing...the money printing has gone into the US Stock Market...making it look very desirable when it is highly overbought...

The entire mystique of the US dollar is in its perception of being of great value...it is a mirage...someday soon the world will see this and retreat to gold and silver and a basket of currencies thus dethroning the dollar as the world's favored trade currency...

This will take some time...the plan is in place and working to remove the dollar as China, Russia, and India increase their stores of Precious Metals while the US tries to demean the metal as a relic of the past...

China's economy is one of the strongest in the world...the world in general is in poor shape economically...China is flexing it's economic and military muscle...it is poised to become a dominate nation in world affairs...

We are in fact...ushering in a New World Order...

Which brings me to recall Ernest Hemingway's celebrated novel The Sun Also Rises, in which somebody asked a guy how he went bankrupt. "Two ways," the guy said. "Gradually then suddenly."

The PRChina continues in the gradual stage, GDP of 12% in 2010 to less than 6% this year and falling. Suddenly comes sooner or later but it also comes.

Debt to GDP ratio is crashing up against 300%. Since November last year the RMB has nosedived 2.4% against the USD and nobody wants it, unless you count Russia which thinks it needs an even closer shave than it's been getting and the IMF.

The housing and property bubble in Beijing alone is $24 Trillion and it began bursting this time last year, sort of like the hissing sound from a retread tire. State banks, which is all the banks, don't have money to lend. Debtors don't have money to pay.

Provincial and local governments have their shell development companies they set up with taxpayer funds and now the borrowers can't pay so there's no tax money any more. The shadow banking system which is 40% of GDP is as dry as as the Yellow River is short of the Yellow Sea. .

Critically required reforms are stagnant. The most important and vitally needed reform to increase household income is bust, increasing since 2012 by 0.02 percent. Deflation set in during Q1 and continues to intensify. Capital is fleeing to include the wealthiest PRChinese and their families whose attitude is known by everyone of make it here while you can and use it over there [the West].

Hand up plse anyone here who owns RMB...well that settles that doesn't it.

Edited June 4, 201511 yr by Publicus

Look at the capital reserves China holds. It's trade balance. The gap from today to tomorrow in global GDP terms as a percent to total global GDP. Sure lots of poor peor but the scale can't be ignored any longer. The British pound in the global currency basket you must be kidding. It's deader than a dodo.

Look at the capital reserves China holds. It's trade balance. The gap from today to tomorrow in global GDP terms as a percent to total global GDP. Sure lots of poor peor but the scale can't be ignored any longer. The British pound in the global currency basket you must be kidding. It's deader than a dodo.

China's debt as Publicus mentioned is 300% of its GDP. China not only has no money, its hopelessly in debt.

The reserves you may be talking about could be the US Treasuries it holds so that it can own dollars to engage in international trade. China can't afford to hold those reserves and that's why its pushing to get its currency into the international basket. That's not going to happen for a lot of reasons including China's lack of transparency with its shadow banking system. China will have to continue to hold USD in reserve or stop importing and exporting which would crash it overnight.

Perhaps you could tell us why the Chinese CNY will buy just .1 British Pounds?

Slowing down in my old age I guess cause I overlooked mentioning the People's Bank of China which is the personal possession of the Chinese Communist Party has printed four times more money since 2005 than the Fed and the PRChina hasn't yet had its own horrendous crash.

Scale and size do matter so the CCP's personal economy will be missed by some, such as Walmart, some toy retailers and people who buy crappy cigarette lighters. However the CCP's economy provides nothing of critical value to global markets, such as investment or venture capital, technological innovation, major financing and the like.

No one gets innovate capital or R&D projects from Beijing so the global economy will simply adjust to new cheap manufacturers in places such as Kenya, Mayanmar, Peru and a bunch of others already in process of becoming the Post China 16 low cost manufacturing countries.

The RMB needs to be free floated and the CCP's very closed capital markets would need to be opened, which is why the IMF voted no last time on the RMB and the SDR basket and which the CCP Boyz in Beijing know they can't do unless they're willing to turn control of the economy and financial systems over to the market almost completely...never in a million years will the CCP Boyz do that or agree to accept either.

As we're presently seeing in the South China Sea and in the East China Sea the only thing to fear more than an ascendant China is a failing one. There certainly never was a peaceful rising China. With Russia on the ropes and China sliding down the chute, the New World Order already feels and looks like a better place.

Quote "There isn't enough gold in existence to back China's money or any other major currency much less several nations' currencies."

There is if the price of gold changes to reflect that backing.

Who has enough money to buy it 555? Who would agree to sell it all to China anyway? China has about 11% of all the world's money value in circulation. All of it isn't enough to buy all of the gold ever mined in the world at today's prices never mind if they drove the price up trying to corner the market. The Euro is about 25% of all of the world's money with the US behind at 20%. Japan is right behind that with 18%.

LINK

The short version is that all of the tea money in China wouldn't buy all of the gold ever mined in the world even at today's gold price so China will never back its currency with gold.

Edited June 4, 201511 yr by NeverSure

Which brings me to recall Ernest Hemingway's celebrated novel The Sun Also Rises, in which somebody asked a guy how he went bankrupt. "Two ways," the guy said. "Gradually then suddenly."

The PRChina continues in the gradual stage, GDP of 12% in 2010 to less than 6% this year and falling. Suddenly comes sooner or later but it also comes.

Debt to GDP ratio is crashing up against 300%. Since November last year the RMB has nosedived 2.4% against the USD and nobody wants it, unless you count Russia which thinks it needs an even closer shave than it's been getting and the IMF.

The housing and property bubble in Beijing alone is $24 Trillion and it began bursting this time last year, sort of like the hissing sound from a retread tire. State banks, which is all the banks, don't have money to lend. Debtors don't have money to pay.

Provincial and local governments have their shell development companies they set up with taxpayer funds and now the borrowers can't pay so there's no tax money any more. The shadow banking system which is 40% of GDP is as dry as as the Yellow River is short of the Yellow Sea. .

Critically required reforms are stagnant. The most important and vitally needed reform to increase household income is bust, increasing since 2012 by 0.02 percent. Deflation set in during Q1 and continues to intensify. Capital is fleeing to include the wealthiest PRChinese and their families whose attitude is known by everyone of make it here while you can and use it over there [the West].

Hand up plse anyone here who owns RMB...well that settles that doesn't it.

So, let me see, is this a good time to buy a 5 room apartment overlooking Tienamin Square? I've got a few thousand dollars saved up, and can trade in my Fender Telecaster - would that be enough?

A post misquoting a member has been removed and a reply.

The OP singing the praises of Beijing's proposed Silk Road to Europe ignores that even from last year India has made clear the CCP's new Silk Road either overland or maritime is not for India.

As India has made clear, it is not acceptable to India that the CCP Boyz should try to dominate economics, finance or trade in a swathe from Thailand, through Myanmar, Bangladesh, India, Pakistan and into southern Iran. Whatever made the CCP Boyz think India could or would agree to become a provincial outpost of the CCP in Beijing suggests strongly the CCP Boyz in Beijing may indeed be mad.

To call the CCP Boyz in Beijing simply grandiose would be either kind or naive.

Why India Isn't About To Join China's Maritime Silk Road

China is trying to develop a series of ports and bases in Myanmar, Bangladesh, Pakistan and Sri Lanka, and trying to encircle India, a logic that has been vehemently opposed by India.

India's participation in the new Maritime Silk Road, if it turns out to be more than a marketing campaign, is doubted. India considers the development of sea ports by China for the maritime silk road as a containment strategy to neutralize India.

Even with the String of Pearls and even though India has no maritime disputes with China, any Indian participation in maritime silk road would undermine India's strategic position and posture, especially, if, say, the infrastructure developed for trade is militarized.

http://www.quora.com/Why-doesnt-India-want-to-join-Chinas-Silk-Road-projects-that-can-benefit-India-too

So the continuing chatter out of Beijing about its huge $40 billion Silk Road project has thus far been a lot of gazing at a shimmering rainbow on the distant horizon to Beijing's west. With six New Silk Road routes proposed from the south of Asia, through central Asia, and along the north of Asia, neither are Iran nor Russia much interested in becoming provincial outposts of the CCP Boyz in Beijing, China.

Theze guyz in Beijing need to get real.

The Obama administration could begin to appear to be prescient in its opposition to Beijing's proposed Asia Infrastructure Investment Bank that would finance the MSR project.

Edited June 5, 201511 yr by Publicus

Which brings me to recall Ernest Hemingway's celebrated novel The Sun Also Rises, in which somebody asked a guy how he went bankrupt. "Two ways," the guy said. "Gradually then suddenly."

The PRChina continues in the gradual stage, GDP of 12% in 2010 to less than 6% this year and falling. Suddenly comes sooner or later but it also comes.

Debt to GDP ratio is crashing up against 300%. Since November last year the RMB has nosedived 2.4% against the USD and nobody wants it, unless you count Russia which thinks it needs an even closer shave than it's been getting and the IMF.

The housing and property bubble in Beijing alone is $24 Trillion and it began bursting this time last year, sort of like the hissing sound from a retread tire. State banks, which is all the banks, don't have money to lend. Debtors don't have money to pay.

Provincial and local governments have their shell development companies they set up with taxpayer funds and now the borrowers can't pay so there's no tax money any more. The shadow banking system which is 40% of GDP is as dry as as the Yellow River is short of the Yellow Sea. .

Critically required reforms are stagnant. The most important and vitally needed reform to increase household income is bust, increasing since 2012 by 0.02 percent. Deflation set in during Q1 and continues to intensify. Capital is fleeing to include the wealthiest PRChinese and their families whose attitude is known by everyone of make it here while you can and use it over there [the West].

Hand up plse anyone here who owns RMB...well that settles that doesn't it.

So, let me see, is this a good time to buy a 5 room apartment overlooking Tienamin Square? I've got a few thousand dollars saved up, and can trade in my Fender Telecaster - would that be enough?

Developers and lenders do want your business urgently so there's a waiver on the prior provision that you also indenture your only child until age 25, but that's a limited time offer so you might want to sign without further hesitation or delay.

Spanking new beach front property and prices on the Spratlys are rather attractive at this time too with some developers throwing in for free your own personalized bomb shelter and also a Philippine flag just in case. Nightly all you can eat seafood bar included.

Personally I am about ready for a new world order as the old world order has been out of order FUBAR for far too long

Personally I am about ready for a new world order as the old world order has been out of order FUBAR for far too long

will any 'new world order' (NWO) suffice?

Here's Chinese-style NWO: concrete block apartments from horizon to horizon and beyond, all points on the compass. Sell masses of plastic stuff. Don't worry about The Great Pacific Trash Vortex. Don't be concerned about any oppressed people, either in China or without. Focus only on money issues. Environmental issues are for pussies.

Here's Boomerangutang-style NWO: reduce population #'s via incentives on couples to have less babies. Free tube tying for any adult who chooses. Free condoms for anyone. Educate and empower girls as much as boys. All companies which use sugar in their products, pay a sugar-tax which goes to medical funds to assist obese people. Legalize all drugs, along with education. Reduce every country's nuclear arsenal by 50% each year until there are no nukes left. All countries should do what they reasonably can to reduce fossil fuel use and emissions, ...not just rich and developed countries. Currently, China doesn't want to do much to reduce carbon emissions, saying it's still a poor country and should be allowed to burn as much coal and oil as they can - to catch up with rich countries.