China and the US - Siamese twins

The Sino-US power duopoly constitutes the most
disruptive force in world economic life since
cheap British textiles crushed India's weaving
industry at the outset of the 19th century. An
impossibly high threshold confronts any other
part of the world seeking economic success. Not
in their wildest imaginings could American
planners have invented a more effective way of
projecting US power and suppressing prospective
challengers.



Something like a folie a deux unites US neo-
conservatives who fear China with America-haters
who hope that China will undermine US world
influence. Before radical Islam appeared on the
radar, the likes of William Kristol and Robert
Kagan warned in 1996 of the "emergence of China
as a strong, determined, and potentially hostile
power". As recently as December 13, Mark Helprin
complained in opinionjournal.com that "China is
now powerful and influential enough ... to make
American world dominance inconceivable".
Nonsense. It is China's success that is
inconceivable without US world dominance. If US
financial markets were to break up, China would
go into a tailspin.

Trade trumps war.

Oooooha.

In addition, like I've said here before, without
the continuing success of China-Mart, er, Wal-
Mart, China will hurt...and bad.

Why else would China peg their currency to the
falling dollar other than to assure their current
selling power? A rising yuan would probably sink
China's boat. But no peg lasts forever. See
Argentina.

War and revolution have destroyed the savings of
generation after Chinese generation. It may seem
disadvantageous for Chinese to sell goods to the
US in return for paper assets, but beauty is in
the eye of the bondholder. People who just have
struggled up from poverty place great value on
knowing that their children never will know what
it is to be poor. Once they have made themselves
secure, Chinese business people take risks on a
scale that astonish their counterparts in other
countries.

Fact. I know from personal experience about the
risk the Chinese are willing to take. They are
generally the most astute businessmen on the
planet.

They've got a job ahead of them buying enough of
that US debt with their hard-earned Wal-Mart dollars
to keep the whole thing afloat.

They will try.

Interesting analysis.