EU + China = bad news for US

[medmo]

I caught a little of David Gergen being interviewed on CNN the other day. For those who don't know, Gergen was a prominent advisor to Clinton, Reagan, Ford, and Nixon. He was discussing Bush's speech and second term, and he mentioned that he knew of people who were concerned that some European leaders were going to see Bush's words and the plans he laid out as a continuation of the wedge that has formed between Europe and the US.

He said some European leaders may be thinking along the lines of, 'if the kind of freedom you're talking about spreading is the kind we're seeing in Iraq, we're not interested'. I personally didn't interpret the speech that way, but then again I am not a European leader and have never been a presidential advisor.

Gergen said, though, that the concern is if Europe continues to distance itself from the US, they will be very likely to form an alliance, economic and/or otherwise, with China. Europe is already more open and willing than the US to deal with China, and if things continue the way they are going, the result may be some sort of super - alliance.

Things would change in many ways for the US if this happened, obviously, and Bush would not be judged very kindly by American history books. On the other hand, if his plans succeed, he will go down as a visionary. It is possible for both to happen, I guess, but the result would still be the US losing its position in the world. After all, the US and a handful of fledgeling democracies doesn't exactly pack the same punch as the EU and China.

This is nothing more than the slightest of possibilities, of course, but still interesting to think about.

 

[deep]

The new world order
By Martin Walker

WASHINGTON, Jan. 17 (UPI) -- The tectonic plates of geopolitics have just shifted. On an issue of major strategic concern to the United States, the European Union has decided to flout American concerns and side with China, and Britain has put its vaunted "special relationship" with the United States to one side, and has gone along with its fellow Europeans. A new world order is coming.

Britain's Foreign Secretary Jack Straw heads to Beijing this week to kowtow before the Middle Kingdom, and tell his Chinese hosts that Britain's long opposition to removing the European embargo from selling arms to China is about to end.

Britain's Prime Minister Tony Blair explained personally to President George W. Bush that Britain could no longer hold out against the majority opinion in the European Union, and the ban that was imposed after the Tiananmen Square massacre of 1989 would have to be lifted. It would be replaced by an EU "code of conduct," Blair said, that would restrain sales of arms that could worsen tensions with Taiwan or change the balance of power in Asia. "The U.S. have an entirely legitimate and understandable interest both in the effectiveness of the EU's system of arms control and in issues of regional stability in that area," Straw said. "There will be intensive discussions with the Americans."

But Bush was not mollified by the British explanations, and U.S. officials see this as a grim augury for future EU-U.S. relations, just as Bush is heading over to Brussels next month for a trip that was supposed to mend fences, to smooth over bygone rows over Iraq and start off the second term with a new determination to strengthen Transatlantic ties.

The British went ahead despite explicit warnings from U.S. officials that there was a strong risk of retaliation by Congress, both by clamping down on technological cooperation between U.S. and European arms manufacturers and limiting access to the U.S. arms market. Britain would suffer most, with BAE (British Aerospace) and Rolls-Royce the two biggest foreign suppliers to the Pentagon, with broad security clearances that deem them to be virtually American companies.

link

 

[shart1780]

China isn't my favorite country by a longshot.. I have always kind of felt the country's has been way over-glorified.

 

[verte76]

China's human rights record sucks. I still remember the massacre in Tianenman Square. But an alliance with China could give the EU alot of power to do as they see fit. Interesting. If I had to give one word for Bush's policies it would be "risky".

 

[A_Wanderer]

Nations have fixed interests and never fixed allies, if in the long term the EU moves towards China then so what; the US will have the oil

 

[joyfulgirl]

Chalmers Johnson talks about this in his book Sorrows of Empire. He says if China's investors wake up one day and decide the euro is a better investment than the dollar and begin investing in the euro, the US economy crashes by 40% and we wake up a third world country (much like what happened with Argentina) and the effects would of course ripple around the world. He paints a pretty bleak picture and feels this is imminent, but I don't really understand economics so don't ask me any questions, lol.

 

[STING2]

The Worlds largest market is the United States and from a business perspective, both China and the EU have more interest in finding common ground with the USA, than going against it. It would be a global disaster for everyone if the USA economy were to crash by 40%. The GREAT DEPRESSION saw a 15% decline in the USA economy which hurt the rest of the world as well back in the 1930s. But this is NOT the 1930s and the world is FAR more interdependent today economically than it was in the 1930s. Much of China's economic growth today is dependant on exports to the United States. Anything that would hurt US consumers ability to continue to buy Chinese would have a serious impact on the Chinese economy. Same goes with the EU.

Bottom line, both China and the EU want to see a stronger dollar and a healthy economic situation in the worlds largest market because THEY make more money when thats the case!

Outside of economics, both China and the EU from a military perspective have extremely limited power projection capabilities, so their ability to do anything from a military perspective beyond the countries they border, combined is only a tiny fraction of what the United States has the capability to do.

 

[hiphop]

Economically, China is too interesting to ignore for European capital. China has made a leap forword regarding quality of certain products, f.e. electronica & high tech, in compare to American products.

Plus, just look at the market size. I think a billion of consumers in compare to roughly 300 millions can´t be estimated high enough. China is a super power, and the EU has to deal with it.

It´s very simple.

 

[STING2]

Economically, China is too interesting to ignore for European capital. China has made a leap forword regarding quality of certain products, f.e. electronica & high tech, in compare to American products.

Plus, just look at the market size. I think a billion of consumers in compare to roughly 300 millions can´t be estimated high enough. China is a super power, and the EU has to deal with it.

It´s very simple.

In the lastest Human Development Report, the United States is ranked at having the 8th highest standard of living in the world while China is all the way down at #94, only 8 spots ahead of the "Occupied Palestinian Territories" at #102.

China has over a Billion people, but not a Billion consumers able to buy products at international prices. Despite having over a Billion people, China's total GDP is less than half that of the United States, and China's Per Capita GDP is not even in the top 100, even when one adjust for "Purchasing Power Parity".

China is a growing and developing market, but any European company if they had to choose between the two, would choose to be able to sell their products in the United States as opposed to China.

If that does not demonstrate the point, consider which country buys the majority of U2's albums and the majority of its concert tickets at the highest price levels! If U2, a European band, from a business perspective, could pick only one country in the world to sell albums and concert tickets, it would be the United States easily! The same goes for most other European Business's.

 

[A_Wanderer]

However long term trade with China will be important because it is moving ahead ~ not a superpower right now but it could become one in the future.

 

[STING2]

However long term trade with China will be important because it is moving ahead ~ not a superpower right now but it could become one in the future.

Indeed it is possible, but it will be dependent on good trade with the USA as well as the US consumer in order to get to that point. A strong US economy benefits China as American consumers will have more income to buy products and services from China.

 

[hiphop]

You´re both looking at the past. I´m talking about the future. China has (officially) been (regarded) a superpower for the last decade. Wake up!

Without going into detail, the example with the recording industry does not make sense. Record sales are not comparable with the state of economy. For some products, China will be a market far more interesting than the U.S. (I´m not an expert in agriculture, but if you have a billion people to feed, you need many agricultural machines, for example), whereas in other industries - namely entertainment - a certain Western cultural perception and traditional trade relations are dominating.

 

[A_Wanderer]

I agree that China will be a more interesting market, sucessive Australian governments have been steadily making in-roads in China for the last few decades recently culminating in a multi-billion dollar natural gas deal and the beginning of trade negotiations relating to a bilateral free trade agreement in the long term.

China simply is not at a stage where it can rival the United States economically, ideologically or millitarily ~ in fact the move towards a free market demonstates the mutual benefits of both nations coexisting; I would hope that there can be an accomadation of interests when it is all the way there. I am not looking to the past, China is an emerging superpower and I think that over the next few decades it will rise into full superpower status but right now - not in the past, not in the future - it is premature to label them superpower and I do not think that it possesses such a status either officially or unofficially. In a decade or two if the building up they are doing now suceeds then it will be a different story.

Once China becomes strong enough to stand alone, it might discard us. A little later it might even turn against us, if its perception of its interests requires it.
- Henry Kissinger

When China awakes, it will shake the world.
- Napoleon Bonaparte

 

[A_Wanderer]

I may also state that contrary to popular belief China is still very much a communist state with all of the human rights abuses that for some bizzare reason seem to occur in communist countries ~ of course this is just a fluke because we all know that communism is a good idea only it has been implemented the wrong way every time it was tried, China's human rights problems stem more from Maoism of course and its lasting legacy. In any case economic expansion should not be without conditional liberalisation, human rights and possibly compromise on the issues regarding Taiwan.

I may also state that a big part of the EU's planned economic expansion with China will be the lifting of the arms embargo and subsequent weapons purchases by the Chinese from European defence contractors. You also have the invitation to the Chinese into the new Galileo satellite navigation system. This will translate into megabucks for European firms as China's millitary is brought up to scratch and also the move from emerging superpower to superpower proper. It also makes great sense because in the event that the Chinese invade Taiwan and the US honours its obligations then European nations can stay on the sidelines until the radioactive dust settles and they will be the dominant power in the world, all competition will be gone. I am treating this with the same skepticism that the US is treated with in all of its deeds so don't get uppity and pretend that your countries don't act in their own interests ~ Australia sold wheat to Saddam for goodness sakes and the deals with our wheat board were shady in some areas.

No nation or collection of nations are perfect and dealing with China is an example of this, when countries rush to put their economic interests ahead of human rights they forfeit the moral high ground and in this world there is no nation that acts out of principle instead of greed.

 

[hiphop]

No nation or collection of nations are perfect and dealing with China is an example of this, when countries rush to put their economic interests ahead of human rights they forfeit the moral high ground and in this world there is no nation that acts out of principle instead of greed.

Agreed.

As to superpower or not:
http://www.garnertedarmstrong.ws/Mark_Wordfroms/China1/China1-23.shtml

China's global role cannot be ignored
Knight Ridder/Tribune News Service

Where is China heading? The direction the communist country takes is of the utmost concern not only to other East Asian countries, including Japan, but also to the international community.

Over the past quarter of a century, China has achieved average annual economic growth of 9 percent. The Chinese economy, which is expanding by gulping down capital and natural resources as if it were a black hole, now holds sway over the international market in all areas.

This could be seen as proof that China, which firmly established itself as the "factory of the world," has also become the "growth center of the world."

In line with the economy's rapid growth, the country's ambition to become a military power shows no sign of abating. China's military expenditures have increased by more than 10 percent every year since 1989, allowing the country to make marked progress in modernizing its military equipment, geared toward warfare involving advanced technology. In particular, the buildup of its navy and air force has been notable.

The prevailing view has it that the military balance between China and Taiwan will shift to put China in an advantageous position within a few years.

The energy propelling this growth is no longer focused only inward, but has begun to expand outside the country. One after another, Chinese business enterprises are entering the international market. Late last year, a leading Chinese personal computer company purchased International Business Machine Corp.'s personal computer business, sending shock waves around the world.

"Venturing abroad" seems to be the key phrase in China's strategy for making inroads into the foreign market, and its sights are set first and foremost on the countries that belong to the Association of Southeast Asian Nations.

ASEAN, which was originally seen as an anticommunist bloc, was for a long time at odds with China. From the beginning of grouping's formation, Japan boasted of its political and economic clout over the ASEAN countries. But after the Cold War ended, China stepped up its attempts to establish a presence in ASEAN countries by approaching them both economically and diplomatically, trying to counter Japan's position.

The race between Japan and China to conclude free trade agreements with ASEAN countries is a foretaste of the rivalry between the two countries, which is expected to escalate in the future.



Technology superpower from China starts to flex some muscle




The Chinese PC maker that gobbled up the manufacturing arm of IBM in Scotland may just be the first in a long line of global players emerging from the East. Iain S Bruce reports

http://www.sundayherald.com/46587

East has met west, and this time, the boot is on the other foot. That a corporate player from beyond our ken has stepped in to devour one of the 20th century’s most iconic brand names might have taken many by surprise, but this is no anomaly, this is no blip. This is how business is going to be, and you’d better get used to it now.

Even after days of speculation, IBM’s decision to sell its PC hardware division to Chinese computer maker Lenovo still came as a shock to many, but in reality the $1.75 billion (£900m) deal is merely symptomatic of geopolitics’ rapidly shifting sands. Creating the world’s third biggest PC vendor at the stroke of a pen, it not only stands as testament to China’s inexorable rise as a technology and manufacturing superpower, but also herald’s the dawn of a global marketplace that has long been talked of, but only now is beginning to really happen.

“What’s surprising is not that they sold out to China, but that they didn’t do it years ago. Essentially, this deal has allowed one company to dispose of a loss-making division while boosting the revenues and reach of a second, and in many ways it represents the only logical course of action available to them,” says Tim Sagar, UK head of Chinese electronics manufacturing giants Haier.

Some predict that China will become the next superpower, surpassing even the United States both economically and militarily, in the first half of this century.

http://english.people.com.cn/200212/16/eng20021216_108522.shtml

China is the world's richest nation in human resources, making it a "people superpower", Maurice Strong, the United Nations Under Secretary-General, said in Beijing Sunday.

People were a national's fundamental resource on which all development depended, and China's international strength was people, Strong told the on-going 2002 International Human Resources Forum.

Strong said China was moving rapidly toward greater integrationwith the global economy, benefiting from the opening-up of its economy and membership of the World Trade Organization, through which the whole nation was improving its knowledge and technical capacities.

This could be seen in the increasing exports of China-made products and the growing number of foreign companies moving their plants to China, he added.

China's unprecedented economic growth provided a great magnet for foreign companies and investors. More than 400 of the Fortune 500 companies had invested in China.

 

[hiphop]

Adding an article on the current situation:

EU vs. U.S. vs. China: Partnership paradoxes
Richard Bernstein International Herald Tribune
Friday, January 21, 2005
--------------------------------------------------------------------------------

BERLIN Probably the next big strategic difference between Europe and the United States won't be about Iran or the Middle East or even on the broader question of unilateralism versus multilateralism. It's going to be about China, which, in the official European view is a "strategic partner," even as Chinese-American rivalry looms.

Two events in the past few days illustrate the European-American divide on this question.

First was the decision of China's government to make a nonevent of the death of Zhao Ziyang, the former party chief and prime minister, who fell out of favor in 1989 when he opposed the use of military force to quell the student-led democracy protests of that year, and remained under house arrest until his death this week.

And second was the decision by the United States to penalize eight Chinese companies, including some of the country's biggest military contractors, for supplying missile technology to Iran.

The relegation of Zhao to nonpersonhood shows that when it comes to sensitive issues of Communist Party prestige and authority, China, contrary to widespread belief in the West, is still very much a Communist dictatorship, a country whose leaders, as Orwell might have put it, sometimes require that the truth be made falsehood and falsehood made truth. And the leftover Orwellian nature of the Chinese government has tended to have more weight in U.S. policy making on China than it has in Europe.

The arms transfers to Iran, a more practical problem, illustrate the widening European-American divide on strategic thinking about China, with Europe less inclined to impose restraints on China than the United States. And, of course, this difference relates to the biggest area of trans-Atlantic disagreement, the emerging consensus in Europe that the arms embargo the European Union members have maintained against China since 1989 has become an anachronism, and that, probably before the end of this year, it is going to be lifted.

Indeed, who can entirely disagree with such a decision? It has been almost 16 years since Tiananmen. China's leadership today, may as in the Zhao case, still resemble the old gang that ordered the assault on the democracy protesters, but the assault's instigators, like Deng Xiaoping and Li Peng, have passed from the political scene. China in general shows no signs of playing a rogue role in global affairs.

Moreover, European diplomats argue that any lifting of the arms embargo would not be followed by actual arms sales to China. The effect, they say, would be largely symbolic. The European Union, sensitive to American concerns, would strengthen what is called the Code of Conduct governing arms sales that would severely limit the kinds of military technologies that China could actually acquire.

"China and Israel are the two countries that have already agreed to participate in Galileo," Cristina Gallach, spokeswoman for the EU's foreign policy chief, Javier Solana. Galileo is the proposed EU rival to the American satellite navigation system, the Global Positioning System. "This does not match with an arms embargo," Gallach said. "There is a total incongruity, and the Chinese in particular are keen to remove this incongruity."

Could that lead to conflict with the United States, the country that would face China militarily if it ever came to war with Taiwan? "We look at the Chinese as a strategic partner," Gallach said. "Some Americans might have the temptation to look at China as a strategic competitor in the long term, so we have to start by analyzing the situation in a sober manner, and to try to work together with the Americans."

Many American experts on China, and some in the Bush Administration, think that the strengthened Code of Conduct would be a fine way of squaring this particular circle. And yet, from the American standpoint, there remains something unsettling about a "strategic partnership" between China and Europe.

David Shambaugh, a China specialist at George Washington University, writing in a recent issue of Current History, observes that China and the European Union constitute "an emerging axis in world affairs," one of whose common points is "a convergence of views about the United States, its foreign policy and its global behavior." In other words, China and the EU agree that the United States has to be constrained. Strategic partners indeed.

But there is a paradox here - perhaps difficult to believe in the wake of the Iraq war - but true nonetheless. It is that it is easier for countries and groups of countries that are not superpowers and have no global strategic interests to act without constraints than it is for the sole superpower.

To some extent, this has to do with the weight of a gesture, which is where China's instructions to its press to ignore Zhao's death comes into the picture. A superpower does not always get its way in the world, but its words and gestures and policies have consequences in a way that those of middle-size powers do not.

It's easier in this sense for Europe than the United States to relinquish its human rights rhetoric when it conflicts with other interests, such as economic advantage. That is why most European members of the United Nations Commission on Human Rights have voted against or abstained in the unsuccessful U.S. effort to have the Chinese record officially scrutinized there.

China can sell missile technology to Iran in part because it has no strategic interests in the Middle East - only the narrow national interest of ensuring oil supplies. And Europe can lift its arms embargo against China because the EU, however it might want to play a big role in a multipolar world, has no strategic interests in Asia - only the narrow interest of benefiting from the China trade.

 

[cardosino]

Adding an article on the current situation:


It's easier in this sense for Europe than the United States to relinquish its human rights rhetoric when it conflicts with other interests, such as economic advantage. That is why most European members of the United Nations Commission on Human Rights have voted against or abstained in the unsuccessful U.S. effort to have the Chinese record officially scrutinized there.

Funny (in a sad way) just how much hypocrisy there is on both sides.

Europeans are much more likely to lecture the US on human rights issues such as Gitmo, the Death Penalty, the Iraq war, etc while at the same time totally ignoring the Genocides being perpetrated in the Balkan conflicts of the early '90's and working harder ot deal with the Chinese. And Vice-Versa.

The Governments of neither the US or the European Communities really gives 2 hoots about putting human rights over Politics and Business IMHO.

 

[trevster2k]

I agree cardosino.

It's all about the benjamins. Another example is how the US government treats Cuba, a Communist country, so differently than China, a Communist country. Or Saudi Arabia and Kuwait, both dictatorships versus Iran or Syria. My reasoning, the economics and the politics. Every government is guilty of this kind of behaviour. Shameful.

 

[STING2]

You´re both looking at the past. I´m talking about the future. China has (officially) been (regarded) a superpower for the last decade. Wake up!

Without going into detail, the example with the recording industry does not make sense. Record sales are not comparable with the state of economy. For some products, China will be a market far more interesting than the U.S. (I´m not an expert in agriculture, but if you have a billion people to feed, you need many agricultural machines, for example), whereas in other industries - namely entertainment - a certain Western cultural perception and traditional trade relations are dominating.

NO, were not looking at the past, were looking at the LATEST economic data and military data from 2004! I can go into greater detail. The Majority of China's military is equipped with technology from the 1960s! Its most advanced weapon systems have been purchased from Russia. Its GDP is less than half of the United States and the per capita GDP is the equilavent of poverty here in the USA.

The fact is, most people in China are just as poor as people in the Palestinian Occupied Territories as noted by the latest Human Development Report. China in a few decades will have the worst aging crises in the world, as the ratio of young workers to older pensioners will severely strain the economy. This is partly because of China's "one child policy".

Strength in the global market place is a two way street. For China to grow economically stronger, they will need for America to continue to grow stronger as well. They will also become very dependent on oil supplies from the Persian Gulf, oil supplies that they do not have the military capability to help keep secure by themselves.

 

[Macfistowannabe]

Things would change in many ways for the US if this happened, obviously, and Bush would not be judged very kindly by American history books. On the other hand, if his plans succeed, he will go down as a visionary. It is possible for both to happen, I guess, but the result would still be the US losing its position in the world. After all, the US and a handful of fledgeling democracies doesn't exactly pack the same punch as the EU and China.

This is nothing more than the slightest of possibilities, of course, but still interesting to think about.

Having opposition isn't always an indicator that you're a bad president. Lincoln for example overcame massive opposition, and as you said, went down as a visionary.

 

[Macfistowannabe]

The fact is, most people in China are just as poor as people in the Palestinian Occupied Territories as noted by the latest Human Development Report. China in a few decades will have the worst aging crises in the world, as the ratio of young workers to older pensioners will severely strain the economy. This is partly because of China's "one child policy".

And CHINA will have to face serious regrets on that policy, and serious regrets about their government promoting a lack of ambition.

 

[all_i_want]

well, hong kong is sending their old and poor to china now, and in the future china can send its old and poor to... i dont know, central asia maybe?

or maybe theyll just shoot them all and be done with it

on a serious note, i think IF china gets rid of the one child policy they will definitely become a superpower halfway through this century, although it might be spending half of the world resources by then

 

[deep]

http://www.latimes.com/business/la-fi-chinaecon26jan26,1,2383514.story
THE WORLD
China's Economic Growth Sizzles
Unexpectedly big gain has major bearing on U.S. Beijing likely to be pressured on currency.
By Don Lee and Evelyn Iritani
Times Staff Writers

January 26, 2005

SHANGHAI — China's economy grew at a surprisingly breakneck pace at the end of last year, the government said Tuesday in a report sure to increase pressure on Beijing to address its burgeoning trade imbalance with the United States and other countries.

At a sizzling 9.5%, growth in the fourth quarter was nearly a full percentage point higher than most economists had expected. What's more, the report comes as China is trying to slow its growth to a more sustainable pace.

The economic acceleration at year-end lifted growth for all of 2004 also to 9.5%, the fastest rate in eight years. By comparison, the much-larger U.S. economy has been increasing at about a 4% annualized rate.

China's fortunes have a direct bearing on many pocketbooks across the U.S.

Robust growth in the world's most populous nation is a boon for some, including California cotton farmers and Arizona copper miners, who are enjoying strong sales to China. But others, such as furniture and apparel makers, are suffering as a result of intense Chinese export competition, which also was reflected in the latest report.

Analysts said the larger-than-expected rise in China's gross domestic product was due at least partly to a widening trade surplus with other nations. As such, the latest statistics are likely to renew calls for Beijing to revalue its currency, the yuan, which is pegged to the dollar.

Because the dollar has been weak, the yuan's value has been lower, too, which makes Chinese products cheaper in overseas markets.

Americans have blamed a loss of U.S. jobs on an undervalued yuan, and U.S. and European trade officials have been urging Beijing to at least allow the currency to float in a broader range with the dollar.

"The Chinese economy continues to do great damage to the U.S. economy," said Peter Morici, a University of Maryland trade expert. "This growth is stolen from the American Midwest."

China could face a new round of demands to revalue the yuan at the Group of 7 meeting of central bankers and finance ministers in London next week. On Tuesday, a senior Chinese official reiterated that the country wasn't ready to take such a step.

It's far from clear that a revaluation of the yuan would make a big dent in America's trade deficit with China, which through November stood at a gaping $147.7 billion — up nearly 30% from a year earlier.

But the attention that the United States, Europe and others have focused on the matter underscores the increasingly important role of China's economy, which some analysts believe could overtake America's in size in 20 years.

The statistics released Tuesday showed China continues to be the fastest-growing major economy in the world. To support its massive industrialization, China has been a key driver of sales and prices of commodities such as oil, steel and cement.

 

[deep]

Associated Press
Economist: China Loses Faith in Dollar
01.26.2005, 03:25 PM

China has lost faith in the stability of the U.S. dollar and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a top Chinese economist said Wednesday at the World Economic Forum.

At a standing-room only session focusing on the world's fastest-growing economy, Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said the issue for China isn't whether to devalue the yuan but "to limit it from the U.S. dollar."

But he stressed that the Chinese government is under no pressure to revalue its currency.

China's exchange rate policies restrict the value of the yuan to a narrow band around 8.28 yuan, pegged to US$1. Critics argue that the yuan is undervalued, making China's exports cheaper overseas and giving its manufacturers an unfair advantage. Beijing has been under pressure from its trading partners, especially the United States, to relax controls on its currency.

"The U.S. dollar is no longer - in our opinion is no longer - (seen) as a stable currency, and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English.

"So the real issue is how to change the regime from a U.S. dollar pegging ... to a more manageable ... reference ... say Euros, yen, dollars - those kind of more diversified systems," he said.

"If you do this, in the beginning you have some kind of initial shock," Fan said. "You have to deal with some devaluation pressures."

The dollar hit a new low in December against the euro and has been falling against other major currencies on concerns about the ever-growing U.S. trade and budget deficits.

Fan said last year China lost a good opportunity to do revalue its currency, in July and October.

"High pressure, we don't do it. When the pressure's gone, we forgot," Fan said, to laughter from the audience. "But this time, I think Chinese authorities will not forget it. Now people understand the U.S. dollar will not stop devaluating."

 

[Scarletwine]

It's very scary to me. I read several arrticles today that paint a bleak picture for the US. More and more the economist here and worldwide are seeing an Argentina type crash in our near future. Make those tax cuts permanent and we go down faster. We need to increase revenue to back those deficit dollars.

After the new deficit numbers came out Bush still says he will cut the deficit in half by the end of his term. The only way that can happen is to dismantle almost all the New Deal.