Tag Archives: China

US Recklessly Eyes China as Target in Economic War, by Joe Lauria

If the U.S. sanctions China in the same way it has sanctioned Russia, it will be doubling down on stupidity. From Joe Lauria at consortiumnews.com:

Western officials say Russia is asking China for military help — denied by Beijing — in what is clearly an effort to build a case to include China in its economic war against Moscow, writes Joe Lauria.

Biden-Xi video summit on Friday. (White House)

The United States is setting up China as a second target of its intense economic war against Russia in what could have cataclysmic effects on the world economy, including the West.

The U.S. could not impose the most stringent sanctions on Moscow without the Russian invasion of Ukraine, and now the U.S. is trying to link China to the war.

Washington’s move to frame Beijing emerged Monday when unnamed U.S. officials told its allies that Russia had asked China for military aid in Ukraine. Reuters reported: “The message, sent in a diplomatic cable and delivered in person by intelligence officials, also said China was expected to deny those plans, according to the official, who spoke on condition of anonymity.”  China indeed denied it.

Importantly, Reuters added: “The U.S. government offered no public evidence to back its assertions of China’s willingness to provide such aid to Russia.”

On that same day Jake Sullivan, the U.S. national security adviser, led a delegation to Rome to meet with Yang Jiechi, a member of the Chinese politburo. After the meeting, an unnamed senior U.S. official in Rome told reporters: “We have deep concerns about China’s alignment with Russia at this time, and the national security adviser was direct about those concerns and the potential implications and consequences of certain actions.”

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All That Glitters Is Not Necessarily Russian Gold, by Pepe Escobar

Is the unipolar world already a thing of the past? From Pepe Escobar at thesaker.is:

The “rules-based international order” – as in “our way or the highway” – is unraveling much faster than anyone could have predicted.

The Eurasia Economic Union (EAEU) and China are starting to design a new monetary and financial system bypassing the U.S. dollar, supervised by Sergei Glazyev and intended to compete with the Bretton Woods system.

Saudi Arabia – perpetrator of bombing, famine and genocide in Yemen, weaponized by U.S., UK and EU – is advancing the coming of the petroyuan.

India – third largest importer of oil in the world – is about to sign a mega-contract to buy oil from Russia with a huge discount and using a ruble-rupee mechanism.

Riyadh’s oil exports amount to roughly $170 billion a year. China buys 17% of it, compared to 21% for Japan, 15% for the U.S., 12% for India and roughly 10% for the EU. The U.S. and its vassals – Japan, South Korea, EU – will remain within the petrodollar sphere. India, just like China, may not.

Sanction blowback is on the offense. Even a market/casino capitalism darling such as uber-nerd Credit Suisse strategist Zoltan Poznar, formerly with the NY Fed, IMF and Treasury Dept., has been forced to admit, in an analytical note: “If you think that the West can develop sanctions that will maximize the pain for Russia by minimizing the risks of financial stability and price stability for the West, then you can also trust unicorns.”

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The Dominance Of The U.S. Dollar Is Fading Right Before Our Eyes, by QTR Fringe Finance

The U.S. dollar’s days as the reserve currency are numbered. From QTR Fringe Finance at zerohedge.com:

It was just a couple of weeks ago that I wrote an article arguing that the economic sanctions we have cast upon in Russia, due to its invasion of Ukraine, likely mark the beginning of a period where China and Russia would bifurcate the global monetary system, leading them to eventually challenge the U.S. dollar’s reserve status.

Now, Saudi Arabia is joining the fray, further threatening to tip the balance of the global monetary scales that have kept the U.S. dollar afloat for decades.

The fact that predictions of a “new economy” and “new monetary system” only exist on fringe blogs like mine and haven’t gone mainstream given the current economic situation with Russia (even amidst our abuses of printing the dollar over the last several decades) is baffling to me.

As I noted to Andy Schectman in a recent podcast, our quality of life in the United States and our nation’s entire economy is an elephant balancing, on one leg, on the toothpick of the U.S. dollar’s reserve status.

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Doug Casey on What Happens Next in the Conflict With Russia

The Ukraine-Russia war will inflict more damage on the U.S. empire than it will on Russia. From Doug Casey at internationalman.com:

Russia

International Man: Prior to the Russian invasion of Ukraine, we discussed the rising tensions between the US and Russia over Ukraine.

What is your take on what has transpired since then?

Doug Casey: I think it makes sense first to recount the genesis of this war.

It started when an American-backed coup overthrew the Ukrainian government in 2014. A US-backed thug replaced a Russian-backed thug— nothing unusual, except that Ukraine shares a long border with Russia. The Russians viewed that much as the Americans would if the Russians had put a puppet government in Ottawa.

Next, the two Russian majority provinces in Ukraine, Donetsk and Luhansk (Donbas) seceded from Ukraine. Secession is usually the best way of solving a political problem between groups with radically differing religions, ethnicities, cultures, or what-have-you. It’s much better than staying “united,” with one group dominating the other. The Russians simultaneously took back Crimea, which Nikita Kruschev had arbitrarily transferred to the Ukrainian SSR from the Russian SSR in 1954.

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Say Hello to Russian Gold and Chinese Petroyuan, by Pepe Escobar

The U.S. government is pushing Russia and China away from using the dollar and undermining its reserve currency status. From Pepe Escobar at unz.com:

Russia says half its gold assets were frozen – is this for real or a slick play by Moscow?

It was a long time coming, but finally some key lineaments of the multipolar world’s new foundations are being revealed.

On Friday, after a videoconference meeting, the Eurasian Economic Union (EAEU) and China agreed to design the mechanism for an independent international monetary and financial system. The EAEU consists of Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia, is establishing free trade deals with other Eurasian nations, and is progressively interconnecting with the Chinese Belt and Road Initiative (BRI).

For all practical purposes, the idea comes from Sergei Glazyev, Russia’s foremost independent economist, a former adviser to President Vladimir Putin and the Minister for Integration and Macroeconomics of the Eurasia Economic Commission, the regulatory body of the EAEU.

Glazyev’s central role in devising the new Russian and Eurasian economic/financial strategy has been examined here. He saw the western financial squeeze on Moscow coming light-years before others.

Quite diplomatically, Glazyev attributed the fruition of the idea to “the common challenges and risks associated with the global economic slowdown and restrictive measures against the EAEU states and China.”

Translation: as China is as much a Eurasian power as Russia, they need to coordinate their strategies to bypass the US unipolar system.

The Eurasian system will be based on “a new international currency,” most probably with the yuan as reference, calculated as an index of the national currencies of the participating countries, as well as commodity prices. The first draft will be already discussed by the end of the month.

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Russia’s Invasion Of Ukraine Will Benefit China, by Gregory R. Copley

Here’s an unusual assessment of the beneficiaries of the Ukraine-Russian war from Gregory R. Copley at oilprice.com:

  • China has, in recent years, become increasingly isolated on the global stage and was considered a major foreign policy concern for the United States and its allies.
  • Russia’s invasion of Ukraine has not only reignited geopolitical tensions in Europe but has also pushed Russia towards China and ensured the entrenchment of a new Eurasian bloc.
  • China will be watching the development of Russia’s invasion closely, searching for parallels and lessons for its potential invasion of Taiwan.

Russia’s war with Ukraine has, for the time being, saved the Communist Party of China (CPC) and therefore the People’s Republic of China (PRC).

The isolation of Russia as part of the US-led global information warfare campaign has completed the process of driving Russia “back into the arms of Beijing”. This was occurring at a time when the economy of the PRC was imploding and the CPC, under General-Secretary Xi Jinping, was attempting to retain global power while essentially ring-fencing its economy from outside influence.

The situation does not guarantee the PRC’s revival as a wealthy power, but, even though it now becomes more dependent on Russia, it does at least allow the Communist Party of China to survive.

The PRC, as the world’s largest importer of food and energy, and now with diminishing foreign currency reserves, sees that Russia has nowhere else to go except to elevate the PRC to the position of Moscow’s most important trading and security partner.

And because this is literally an issue that could save a declining PRC, Beijing’s assessment of the ongoing conflict between Russia and the West over Ukraine has to be along far more pragmatic lines than Western assessments, which tend to be either based around irrational fear or euphoric optimism.

General Secretary Xi and his team are, as a result, evaluating ongoing lessons from the current Russian military conflict against Ukraine, and the new phase of the Russian strategic war with the US. Their assessments cannot follow the unrealistic views being promulgated by Western analysts.

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The end of fiat hoving into view… by Alasdair Macleod

Skyrocketing food and energy prices, rising interest rates, crashing financial markets, and economic depression will spell the end of Western fiat currencies. From Alasdair Macleod at goldmoney.com:

Tragic though the situation in Ukraine has become, the real war which started out as financial in character some time ago has now become both financial and about commodities. Putin made a huge mistake invading Ukraine but the West’s reaction by seeking to isolate Russia and its commodity exports from the global marketplace is an even greater one.

Furthermore, with Ukraine being Europe’s breadbasket and a major exporter of fertiliser, this summer will bring acute food shortages, worsened by China having already accumulated the bulk of the world’s grains for its own population. Inflation measured by consumer prices has only just commenced an accelerated rise.

Because they discount falling purchasing power for currencies, rising interest rates, and collapsing bond prices are now inevitable. Being loaded up with bonds and financial assets as collateral, the consequences for the global banking system are so significant that it is virtually impossible to see how it can survive. And if the banking system faces collapse, being unbacked by anything other than rapidly disappearing faith in them fiat currencies will fail as well.

Unforeseen financial and economic consequences

Back in the 1960s, Harold Wilson as an embattled British Prime Minister declared that a week is a long time in politics. Today, we can also comment it is a long time in commodity markets, stock markets, geopolitics, and almost anything else we care to think of. The rapidity of change may not be captured in just seven calendar days, but in recent weeks we have seen the initial pricking of the fiat currency bubble and all that floats with it.

This is turning out to be an extreme financial event. The background to it is unwinding of economic distortions. Through a combination of currency and credit expansion and market suppression, the difference between state-controlled pricing and market reality has never been greater. Zero and negative interest rates, deeply negative real bond yields, and a deliberate policy of artificial wealth creation by fostering a financial asset bubble to divert attention from a deepening economic crisis in recent years have all contributed to the gap between bullish expectations and market reality.

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Creating New Enemies, by Philip Giraldi

The U.S. has managed to drive China and Russia into loving embrace. From Philip Giraldi at unz.com:

SHANGHAI, CHINA – MAY 20: Russian President Vladimir Putin (L) and Chinese President Xi Jingping (R) attend a welcoming ceremony on May 20, 2014 in Shanghai, China. Putin is on a two day visit to China (Photo by Sasha Mordovets/Getty Images)

It should come as no surprise that many observers, from various political perspectives, are beginning to note that there is something seriously disconnected in the fumbling foreign policy of the United States. The evacuation failure in Afghanistan shattered the already waning self-confidence of the American political elite and the continuing on-again off-again negotiations that were by design intended to go nowhere with Iran and Russia provide no evidence that anyone in the White House is really focused on protecting American interests. Now we have an actual shooting war in Ukraine as a result, a conflict that might easily escalate if Washington continues to send the wrong signals to Moscow.

To cite only one example of how outside influences distort policy, in a phone call on February 9th, Israeli Prime Minister Naftali Bennett advised President Joe Biden not to enter into any non-proliferation agreement with Iran. Biden was non-committal even though it is an actual American interest to come to an agreement, but instead he indicated that as far as the US is concerned, Israel could exercise “freedom of action” when dealing with the Iranians. With that concession has ended in all probability the only possible diplomatic success that the Administration might have been able to point to.

The Biden Administration’s by default global security policy is currently reduced to what some critics have described as “encirclement and containment.” That is why an overstretched US military is being tasked with creating ever more bases worldwide in an effort to counter perceived “enemies” who often are only exercising their own national sovereignty and right to security within their own zones of influence. Ironically, when nations balk at submitting to Washington’s control, they are frequently described as “aggressors” and “anti-democratic,” the language that has most particularly been used relating to Russia. The Biden policy, such as it actually exists, appears to be a throwback to the playing field in 1991-2 when the Soviet empire collapsed. It is all about maintaining the old American dream of complete global dominance coupled with liberal interventionism, but this time around the US lacks both the resources and the national will to continue in the effort. Hopefully the White House will understand that to do nothing is better than to make empty threats.

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Russia And China Aren’t The Natural Allies Many Assume Them To Be, by Ryan McMaken

Sooner or later big and powerful next-door neighbors China and Russia are going to butt heads. From Ryan McMaken at mises.org:

In the wake of mounting tensions between the US and Russia over Ukraine, one now finds countless media stories on the “China-Russia axis” and the “bond between Russia and China.” The ideological benefit of connecting Russia to China is undoubtedly clear to anti-Russia hawks. Russia is a relatively weak state with a small economy. China, on the other hand, tends to look more formidable. By connecting Russia to China in a new version of George W. Bush’s “axis of evil,” it becomes easier to downplay calmer voices noting the many limitations Russia faces in terms of its geopolitical ambitions.

But just how secure is this supposed Sino-Russian friendship? While the two states may broadly agree on the need to limit US hegemonic power, the two are likely to also find many reasons to view each other as more immediate sources of conflict.

In his book Unrivaled: Why America Will Remain the World’s Sole Superpower, China scholar Michael Beckley notes there are many issues mitigating China-Russia “unity”:

Russia and China currently maintain a strategic partnership, but this relationship is unlikely to become a genuine alliance…. In parts of the world that matter most to them, Russia and China are more rivals than allies…. For every example of Sino-Russian cooperation, there is a counterexample of competition. For instance, Russia sells weapons to China, but it recently reduced sales to China while increasing sales to China’s rivals, most notably India and Vietnam. Russia and China conduct joint military exercises, but they also train with each other’s enemies and conduct unilateral exercises simulating a Sino-Russian war. The two countries share an interest in developing Central Asia, but Russia wants to tether the region to Moscow via the Eurasian Economic Union whereas China wants to reconstitute the Silk Road and link China to the Middle East and Europe while bypassing Russia.

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How Ukraine fits into the global jigsaw, by Alasdair Macleod

This is the best overall analysis I’ve seen of the Ukraine situation. From Alasdair Macleod at goldmoney.com:

  • Ukraine is part of a far bigger geopolitical picture. Russia and China want US hegemonic influence in the Eurasian continent marginalised. Following defeats for US foreign policy in Syria and Afghanistan and following Brexit, Putin is driving a wedge between America and the non-Anglo-Saxon EU.
  • Due to global monetary expansion, rising energy prices are benefiting Russia, which can afford to squeeze Germany and other EU states dependent on Russian natural gas. The squeeze will only stop when America backs off.
  • Being keenly aware that its dominant role in NATO is under threat, America has been trying to escalate the Ukraine crisis to suck Russia into an untenable occupation. Putin won’t fall for it.
  • The danger for us all is not a boots-on-the-ground war — that’s likely to only involve the pre-emptive attacks on military installations Putin initiated last night — but a financial war for which Russia is fully prepared.
  • Both sides probably do not know how fragile the Eurozone banking system is, with both the ECB and its national central bank shareholders already having liabilities greater than their assets. In other words, rising interest rates have broken the euro system and an economic and financial catastrophe on its eastern flank will probably trigger its collapse.

The bigger picture is Mackinder’s World Island

The developing tension over Ukraine is part of a bigger picture — a struggle between America and the two Eurasian hegemons, Russia and China. The prize is ultimate control over Mackinder’s World Island.

Halford Mackinder is acknowledged as the founder of geopolitics: the study of factors such as geography, geology, economics, demography, politics, and foreign policy and their interaction. His original paper was entitled “The Geographical Pivot of History”, presented at the Royal Geographical Society in 1905 in which he first formulated his Heartland Theory, which extended geopolitical analysis to encompass the entire globe.

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