Tag Archives: China

The Emerging China-Iran-Pakistan Alliance Is Directed DECIDEDLY Against The United States, by Lawrence Selling

China spearheads the Belt and Road Initiative, which will build out infrastructure throughout Eurasia. The project, and the alliances China is building, have a military component. From Lawrence Sellin at dailycaller.com:

In a January 10, 2018 Daily Caller article titled “China May Have Just Brokered An Iran-Pakistan Accommodation,” I outlined the extensive diplomatic and military initiatives underway in the past year to foster reconciliation between Iran and Pakistan, orchestrated behind the scenes by China.

That strategy supports the Belt and Road Initiative (BRI), China’s blueprint for global hegemony. It is a development plan, a program of infrastructure projects and a network of commercial agreements designed to link the world directly to the Chinese economy through inter-connected land-based and maritime routes.

As French Asia expert, Nadége Rolland noted, BRI is soft power projection with an underlying hard power component, a comprehensive China-centered economic, financial and geopolitical web with far-reaching, cascading consequences affecting American national interests. It is not just resource acquisition or utilization of China’s industrial over-capacity, but projects specifically designed to ensure economic and, in parallel, military dominance.

As China expands commercially, the Chinese military, in particular its navy, will advance concomitantly to protect China’s growing economic empire, as did the British in an earlier era. Chinese intent is to gain access to a number of harbors and airports to create a chain of mutually-supporting military facilities.

China’s plans to expand its naval footprint in Pakistan have accompanied signsof increasing military cooperation between Tehran and Beijing over the last several years.

In June 2017, Iranian warships joined a Chinese naval flotilla conducting exercises in the Persian Gulf. The Chinese ships also made an official visit to the Iranian port city of Bandar Abbas after having earlier docked in Karachi, Pakistan. One Chinese military affairs expert, speaking at the time, said China was poised to increase its military presence in the Middle East to support BRI and would involve itself more in the affairs of the region.

Chinese efforts towards Iran-Pakistan cooperation have also borne fruit. In recent months, there has been a flurry of agreements in tradedefenseweapons development, counter-terrorism, banking, train serviceparliamentary cooperation and — most recently — art and literature.

To continue reading: The Emerging China-Iran-Pakistan Alliance Is Directed DECIDEDLY Against The United States

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World Banks Are “Swimming Naked”, by Bill Bonner

Recently we’ve worried about southern European banks, especially Italy’s, but let’s not forget that an appreciable segment of the Chinese banking system has a lot of wood to chop before it can be considered solvent and safe. China’s efforts to deal with the situation will have global ramifications. From Bill Bonner at bonnerandpartners.com:

YOUGHAL, IRELAND – The Dow turned down a bit yesterday. The 10-year Treasury yield held at 3.07%.

As long as neither revisits its recent top and bottom, respectively, we presume the “primary trend” for both the bond market and the stock market is down.

Everything else is just noise.

Bad Guy Syndrome

We have been exploring the “bad guy” syndrome. The U.S. has invaded 70 countries since its founding. Modern Iran: zero.

The U.S. has weapons of mass destruction and has proven that it is ready to use them; it dropped an atomic bomb twice – both times on civilians.

Iran has no atomic weapons. The U.S. has troops in Afghanistan and Iraq, within easy striking distance of Iran… and now makes demands that no self-respecting sovereign nation would ever accept.

Iran has no troops in Mexico or Canada… no way to attack America… and makes no demands of it.

So who’s the bad guy? It doesn’t matter what we think. But what do the gods think?

We’ll come back to that question tomorrow.

Rabble-Roused

In the meantime… let’s stick with the primary trend. If the primary trend for equities really is down… we are unlikely to make any money in stocks for the next 10 or 20 years… at least.

It takes that long for a bear market to run its course. Individual stocks may go up. But, unless you are lucky or very well-advised, they won’t be the stocks you own.

Nominal prices may go up, but after you adjust for inflation, you will see that you have lost money.

And if the primary trend in bonds is also down, you should get out of the credit market… and stay out… for the rest of your life.

It takes a lifetime for the credit market to complete a full cycle. So we are unlikely to see another top. We’ll be lucky if we live to see another bottom; it might come in 10, 20, or 30 years.

To continue reading: World Banks Are “Swimming Naked”

China’s ‘Social Credit Score’ Could Blacklist Anyone Inconvenient, by Josh Owens

The world watches as China implements its social credit system. Most of the world fears it, a small psychopathic minority covet it. From Josh Owens at safehaven.com via wolfstreet.com:

The system is based on character and concocted from big data and artificial intelligence algorithms.

China’s ‘Brave New World’ move towards a mandatory ‘social credit’ system for all citizens by 2020 has already blocked people from 11 million flights and 4.25 million high-speed train trips, according to Chinese state-run media.

While it sounds like an economic bust for transportation, state-run media are tossing the figures around as proof of the program’s success, with the Global Times citing a senior official suggesting that the form of punishment meted out by those with poor social credit would incentivize them to become better citizens.

The figures were said to be as of “the end of April,” though no starting point was mentioned.

Speaking at a credit development forum in Beijing on Saturday, Hou Yunchun, former deputy director of the State Council’s development research center—the center responsible for creating “Planning Outline for the Construction of a Social Credit System”—said the system was needed so that “discredited people become bankrupt.”

“If we don’t increase the cost of being discredited, we are encouraging discredited people to keep at it,” the Global Times cited Hou as saying.

The authorities have also used the social credit system to publish the names of 33,000 companies who have violated certain laws and regulations.

But the question is, what determines poor social standing?

China’s social credit system—which Western media have likened to the Netflix series Black Mirror—will “forge a public opinion environment where keeping trust is glorious. It will strengthen sincerity in government affairs, commercial sincerity, social sincerity and the construction of judicial credibility.”

The system is similar to a financial credit score, but based on character and concocted from big data and artificial intelligence algorithms. Upstanding citizens have high scores, while others (public nuisances, dissidents, etc) will be ostracized, marginalized—or kicked off trains and planes, for instance.

To continue reading: China’s ‘Social Credit Score’ Could Blacklist Anyone Inconvenient

The Battle For The Iranian Nuclear Deal: China Vs The US, by James Dorsey

An interesting analysis of the Chinese perspective on the Middle East, and China’s role in it. From James Dorsey at middleeastsoccer.blogspot.com:

Conventional wisdom has it that China stands to benefit from the US withdrawal from the 2015 international nuclear agreement with Iran, particularly if major European companies feel that the risk of running afoul of US secondary sanctions is too high.

In doing so, China would draw on lessons learnt from its approach to the sanctions regime against Iran prior to the nuclear deal. China supported the sanctions while proving itself adept at circumventing the restrictions.

However, this time round, as China joins Russia and Europe in trying to salvage the deal, things could prove to be different in ways that may give China second thoughts.

The differences run the gamut from an America that has Donald Trump as its president to a Middle East that is much more combative and assertive and sees its multiple struggles as existential, at least in terms of regime survival.

Fault lines in the Middle East have hardened because of Israel, Saudi and United Arab Emirates assertiveness, emboldened by both a US administration that is more partisan in its Middle East policy, yet at the same time less predictable and less reliable.

Add to this Mr. Trump’s narrow and transactional focus that targets containing Iran, if not toppling its regime; countering militancy, and enhancing business opportunities for American companies and the contours of a potentially perfect storm come into view.

That is even truer if one looks beyond the Gulf and the Levant towards the greater Middle East that stretches across Pakistan into Central Asia as well as China’s overall foreign trade.

China’s trade with the United States stood last year at $636 billion, trade with Iran was in that same period at $37.8 billion or less than five percent of the US volume.

The recent case of ZTE, one of China’s largest IT companies, tells part of the story.

Accused of having violated sanctions, the US Department of Commerce banned American firms from selling parts to ZTE, bringing the company to near bankruptcy. Mr. Trump appears to be willing to help salvage ZTE, but the incident significantly raises the stakes, particularly as China and the United States try to avoid a trade war.

That is but one consideration in China’s calculations. Potentially, other major bumps in saving the nuclear agreement lurk around the corner and could prove to be equally, if not more challenging.

To continue reading: The Battle For The Iranian Nuclear Deal: China Vs The US

A Yuge Mistake, by Robert Gore

Trump didn’t think this one through.

What does President Trump hope to accomplish by withdrawing the US from the Joint Comprehensive Plan of Action (JCPOA), or Iran nuclear deal? Does he want to go to war? Does he want to renegotiate the deal? Is he hoping sanctions stir so much unrest in Iran that its citizens overthrow the government?

Regardless of Trump’s goals, the withdrawal decision rests on a series of tactical errors and mistaken assumptions. He is overestimating US strength and underestimating that of its adversaries. His strategy has far too many moving parts. The risk that one or more fail is much higher than he apparently believes.

Trump may think he understands the Middle East and that he can trust his allies there. He’s wrong on both counts. The Middle East is a welter of ancient enmities and alliances, tribalism, sectarian strife, greed, duplicity, and intrigue (it’s not all that different from Washington) that nobody fully comprehends. Things are almost never as they appear. One categorical statement can be made: you put your own interests first or you don’t survive.

Saudi Arabia, the other Sunni Gulf states, and Israel have formed an alliance of convenience against their common enemy, Shiite Islam. Saudi Arabia is Sunni, Iran is Shiite, and the two countries have historically been the most powerful in the Middle East, vying for influence and dominance.

The alliance dreams of replacing the governments of Shiite Iran, Iraq, and Syria (Shiites are a minority in Syria, but Bashar al-Assad is Alawite, a Shiite sect) with Sunni satrapies. Next best is chaos and terror in those countries to keep them weak. The Sunnis, with the tacit support of Israel, bankrolled al Qaeda and ISIS to further their goals of chaos and regime change in Syria and Iraq

The United States has been duped into the alliance. There are no good reasons for the US to become involved in the Middle East’s toxic internecine rivalries. Israel can take care of itself, the US has its own oil, and even if it didn’t, the petro-states have to sell theirs to someone.

The US government has never articulated a coherent rationale for its Middle Eastern involvement, because there is none. It has sown the discord and destruction the Sunnis and Israel desire, enriched US defense and intelligence contractors, and fueled neoconservative pipe dreams of a “stable” (i.e. US-dominated) Middle East, all at a huge cost in blood, money, moral standing, destabilizing refugee flows, and terrorist blowback.

Nothing screams “duped” like Trump citing Benjamin Netanyahu in his Iran Nuclear Agreement withdrawal speech. Netanyahu lied in 2003 when he swore Iraq had weapons of mass destruction and assured the world a US invasion would be the best thing that ever happened to the Middle East. Netanyahu got what he wanted—Saddam Hussein deposed and Iraq subjugated at no cost to Israel. The US got stuck with the tab, which it’s still paying. After his Iraq whopper, Netanyahu should be held in the same regard as the boy who cried wolf. The rest of the world does, ignoring Netanyahu’s “evidence.” Much of it was old news, and Mossad is a proficient document fabricator. As for the US, fool me once….

Back to the original question: what does Trump hope to accomplish? Even if Trump were as stupid and crazy as his most demented critics claim (he’s not, not by a long shot), he wouldn’t be so stupid and crazy as to actually want to go to war with Iran. After the inglorious succession of Vietnam, Afghanistan, Iraq, Libya, and Syria, you don’t attack a nation that is larger, more populated, more economically advanced, and a tougher military challenge than any of those prior targets. You especially don’t attack when that nation’s big brothers are Russia and China.

Trump’s bluffing. He’s trying to give the bluff more credibility by embracing figures who may be just stupid and crazy enough to want a war with Iran: Netanyahu, Saudi Arabian crown prince Mohammed bin Salman, John Bolton, Mike Pompeo, and Trump’s largest campaign contributor, Sheldon Adelson (who once said Iran should be nuked). Iran, Russia, and China will call his bluff.

Iran has huge oil and natural gas reserves and China is the world’s largest importer. As part of the de-dollarization offensive against the reserve currency, Russia and Iran accept payment for their oil in yuan. Iran is a geographic and commercial linchpin of the Belt and Road Initiative (BRI). Russia and China are involved in Iranian development and infrastructure projects and sells arms to the Iranian military. They will not sit still for a US war and regime change operation directed at their ally.

There are three main objections to the Iran nuclear deal. Obama’s sleight of hand in getting the deal—which is not a treaty—through Congress still rankle. The deal’s 10 and 15-year sunset clauses makes it a moratorium on nuclear development, not a permanent ban. And the inspection provisions do not allow for inspections of certain military facilities where Iran could be surreptitiously developing a bomb.

The procedural objections are valid, but do not impinge on the tactical merits of Trump’s withdrawal. If Iran considers itself no longer bound by the deal, withdrawal brings forward the sunset clause to the date of the withdrawal. That means Iran could restart its nuclear program today and, if Netanyahu’s warnings are correct, have a bomb in a year or two. Iran would also kick out the International Atomic Energy Agency inspectors, so the JCPOA signatories would lose even the “imperfect” inspection and monitoring capabilities they had under the agreement.

Trump would only risk bringing the objectionable sunset dates forward and losing the JCPOAs inspection and monitoring capabilities if he thought he could win a “better,” more stringent deal through renewed sanctions, threats of war, upheaval within Iran, and renegotiation. It’s a variation on his North Korea strategy, which may produce some sort of breakthrough agreement with that nation.

However, Trump’s negotiating position is weaker than Obama’s when the JCPOA was signed. The US has lost the war in Syria against the same alliance it would go up against in Iran. Sanctions have become the US’s main non-military weapon. Germany, France, and Great Britain may fall in line, but they’ll be hurt economically if they do. If they don’t, sanctions won’t work.

There’s no chance Russia and China will observe them. With Turkey, which helped Iran evade the last round of sanctions, they will help it evade the new ones. China will buy Iran’s oil and natural gas, providing it with yuan and perhaps gold reserves outside the US-dominated global payments system. The BRI will go on, building links from Iran to the rest of Eurasia. Iran is not North Korea, and with the support of its big brothers has far more ability to stand up to Trump.

Whether or not any of the other JCPOA signatories implement sanctions, they probably will not support a more stringent agreement. It would be a classic case of rewarding what they regard as Trump’s bad behavior. The Europeans are annoyed and Russia and China certainly won’t play ball.

If Trump doesn’t get his new agreement, there are yawning downsides. Iran may continue to abide by the JCPOA if sanctions are evaded or rejected by the Europeans. There would then be no willingness among the signatories to renegotiate and no need to do so. Trump will have done nothing but hasten the world’s transition from US unipolar dominance and humiliate himself.

Or Iran may kick out the inspectors and try to build a bomb, the outcome Trump thought he was preventing. He would then have to decide whether to wage a war that could draw in the world’s major powers and engulf the Middle East.

Trump is overplaying a weak hand. There’s no 4D chess here; he just hasn’t thought this one through. His gesture pleases Israel, Saudi Arabia, and neoconservatives back home, but it will be Trump and the United States, not his “friends,” who will bear the cost of failure.

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Europe May Fold, but China and Russia See Opportunity, by Michael Krieger

If one were to look at Iran as an opportunity, rather than as an enemy who will destroy everything that is good and right, then the US’s withdrawal from the nuclear deal forcloses US opportunities and creates them for other nations, notably Russia and China. From Michael Krieger at libertyblitzkrieg.com:

And we recently discovered, if it was not known before, that no amount of power can withstand the hatred of the many. 

–  Marcus Tullius Cicero

Although European leaders are talking a big game about keeping the Iran deal (JCPOA) alive following Trump’s unilateral withdrawal, there’s a good chance nations across the pond, especially the UK and France, will ultimately fold to U.S. demands. This is despite the fact these countries stand to lose far more economically than America. Acquiescing to U.S. imperial demands as submissive client states is simply what Europe does. On the other hand, China and Russia sense opportunity for major geopolitical gains and will not back down.

Political leaders in China and Russia must be licking their chops at the short-sighted stupidity of Donald Trump’s decision to ditch the Iran deal. As mentioned in previous pieces, the Trump administration isn’t just saying the U.S. will sanction Iran from its end, but that it could leverage the global financial system and its dependency on the USD, to punish those who dare defy U.S. policy.

As discussed in the recent post, The Road to 2025 (Part 3) – USD Dominated Financial System Will Fall Apart, this unilateral move against Iran is likely to be a key catalyst in the planet transitioning away from a financial system completely and totally dominated by the USD into a more multi-polar currency world. Trump’s essentially willing to trade away U.S. global geopolitical and financial dominance because he’s obsessed with taking out the Iranian regime.

While Europe may not be willing to make a huge fuss about all this right now, its leaders, and more importantly its citizenry, know exactly what this means. As long as the global financial system is totally dominated and controlled from the U.S. via the USD, no country on earth can be truly sovereign, in terms of economic or foreign policy.

To continue reading: Europe May Fold, but China and Russia See Opportunity

China really is to blame for millions of lost U.S. manufacturing jobs, new study finds, by Jeffry Bartash

Maybe Trump was on to something. He did win an election, after all. From Jeffry Bartash at marketwatch.com:

Many economists have long blamed automation as main culprit

iStockphoto
Robots are not to blame for the loss of millions of U.S. manufacturing jobs.

Millions of Americans who lost manufacturing jobs during the 2000s have long ”known” China was to blame, not robots. And many helped elect Donald Trump as president because of his insistence that China was at fault.

Evidently many academics who’ve studied the issue are finally drawing the same conclusion.

For years economists have viewed the increased role of automation in the computer age as the chief culprit for some 6 million lost jobs from 1999 to 2010 — one-third of all U.S. manufacturing employment. Firms adopted new technologies to boost production, the thinking goes, and put workers out of the job in the process. Plants could make more stuff with fewer people.

In the past several years fresh thinking by economists such as David Autor of MIT has challenged that view. The latest research to poke holes in the theory of automation-is-to-blame is from Susan Houseman of the Upjohn Institute.

Academic research tends to be dry and complicated, but Houseman’s findings boil down to this: The government for decades has vastly overestimated the growth of productivity in the American manufacturing sector. It’s been growing no faster, really, than the rest of the economy.

What that means is, the adoption of technology is not the chief reason why millions of working-class Americans lost their jobs in a vast region stretching from the mouth of the Mississippi river to the shores of the Great Lakes. Nor was it inevitable.

Autor and now Houseman contend the introduction of China into the global trading system is root cause of the job losses.

Put another way, President Bill Clinton and political leaders who succeeded him accepted the risk that the U.S. would suffer short-term economic harm from opening the U.S. to Chinese exports in hopes of long-run gains of a more stable China.

To continue reading: China really is to blame for millions of lost U.S. manufacturing jobs, new study finds