The New Global Economy: Rise of China and Decline of USA

There is a limit to economic manipulations by empires. All empires have perished due to economic hardships. The Ottoman, Soviet and the British empires were no exception in the past century. Waste was the key product of these empires. Whether the only empire – the US – understands it or not, the fact is that its economy is being undermined due to its wasteful policies, living beyond its means and by dictating it’s economic and foreign policies on free nations and by treating them as satellites. The US has used economic sanctions (strangulation) against countries to gain an advantage but these are failing. In the latest round against Russia, the US has used the instrument of oil to apply sanctions in partnership with the Europeans who themselves are in economic hardships while China has agreed to partner with Russia to thwart the objective. On 15 January 2015 a Singapore’s newspaper reported that on 22 December 2014 Chinese Foreign Minister Wang Yi stated that though China is willing to help Russia if needed, it has the ability to overcome the current economic problems. China, a founding member of the BRICS, is lining up the bloc and that of the SCO – and their currencies – to support Russia in need.

The rise of the United States economy in the 70’s and 80’s was mainly due to the gold standard being abolished during Richard Nixon’s Presidency. This event was historic as it allowed the green back to be infinitely printed. In an effort to prop up the value of the dollar, Nixon negotiated a deal with Saudi Arabia that in exchange for arms and protection they would denominate all future oil sales in U.S. dollars. Subsequently, the other OPEC countries (primarily the Arabs and Iran under the Shah) agreed to similar deals thus ensuring a global demand for U.S. dollars and allowing the U.S. to export some of its inflation. It is only a matter of time when that partnership with Saudi Arabia may collapse.

The American debt can no longer be used to sustain GDP growth. After World War 2 the American economy was creating approximately $2.50 worth of economic growth for each dollar of debt that was being generated. By the 70’s that growth declined by 80% (or $0.50) and currently it is a meagre $0.05 for every dollar of debt. Jim Rickards author of the New York Times bestseller Currency Wars wrote: “Currency wars are one of the most destructive and feared outcomes in international economics. At best, they offer the sorry spectacle of countries’ stealing growth from their trading partners. At worst, they degenerate into sequential bouts of inflation, recession, retaliation, and sometimes actual violence.” Rickards blames the US Federal Reserve economic policies of printing trillions of dollars to stimulate the American economy.

In an article published by International Clearing House Peter Koenig wrote that “the US is able to maintain pressure on other currencies, currently the ruble, only as long as the petro dollar remains the major world reserve currency. This is the main reason why Washington gets away with a seven-fold indebted dollar (i.e. total outstanding and uncovered commitments are currently more than 7 times higher than the US GDP (US$ 17.6 trillion, 2014 est. – vs. US$ 128 trillion of unmet obligations –unfunded liabilities); making the US worldwide the most indebted country – by far”. But “Once the demand for the (petro) dollar fades – as hydrocarbons are no longer dealt in dollars – the value of the dollar will decline and at worst may result in hyperinflation in the dollar economies, including those closely linked to the US economy.”

China is a fast rising economic power in direct competition with the US having overtaken it in only the past 2 decades. There are several factors which will enable China to overtake the US as the major economic power, some of those being:

THE CURRENCY WAR

In April 2013, Australia had joined the ranks of several Southeast Asian countries to trade directly with China in the renminbi (yuan). These SE Asian countries were South Korea, Indonesia, Malaysia, Singapore and Thailand. Australia’s banks, superannuation funds and financial houses will be even better placed to help in the growth of China’s service economy. Australian Prime Minister Julia Gillard had said: “This is good news for the Chinese economy and good news for the Australian economy.” Australia now exports more goods to China than any other country, and trade between the countries has been growing.

In October 2013, China and European Union agreed to a currency swap deal to boost trade and investment amounting to 350 billion yuan and €45 billion. This was the first currency deal between China and a non-Asian trading partner. In June, China had struck a similar agreement with the Bank of England worth up to 200 billion yuan.

On 8 November 2014 Prime Minister Stephen Harper of Canada announced in China that the two countries have joined the ranks of several countries which have inked agreements with China to deal directly in their respective currencies. This basically removes the middle currency, the US dollar. Canadian exporters doing business with China had to use the US dollar resulting in higher currency exchange costs and longer wait to close deals. Not so any longer. Trade between Canada and China is expected to double and triple in the coming years.

The renminbi had a market share of less than 1% in 2009 but that share has been steadily growing where it has now reached a market share of 18% by mid-2014. In comparison the market share of the US dollar is nearly 65%. In early 2013, the renminbi had ranked 12th place but by March 2014, the renminbi had climbed to seventh, behind the dollar, euro, pound, yen, and the Australian and Canadian dollars when ranked by value of payments made in that currency. Another measurement of the renminbi’ s acceptance is the number of global financial institutions doing business in the yuan. It has grown from a meagre 1000 in 2010 to over 10,000 in 2014. These numbers reflect the yuan gains as the Chinese economy continues to grow and more countries continue to sign agreements in currency trades.

Chinese currency manipulation and the clandestine gold purchases by China (and now Russia) is likely to aggravate the currency war looming on the horizon.

BREAKING THE CONNECTIVITY BOTTLENECK IN ASIA

The business of America has always been business. The US has played the role of Shakespeare’s Merchant of Venice willing to extract the pound of flesh. The business of China is also business but without extracting the pound of flesh. Whereas China has been extending its global influence through friendship, the US has been extending its global influence through submission by using its huge arsenal of weapons. US, along with the western European nations, has been extracting its pound of flesh through the World Bank, IMF and the Asian Development Bank (ADB). The financial assistance provided by these institutions does not come without strings that exclusively benefit the sponsors and much less to the recipients.

China has been more interested in extending its influence in Asia mainly through development of infrastructure projects. In late 2013, China first announced the founding of the Asian Infrastructure Investment Bank (AIIB) with a registered capital of $50 billion and then doubling it to $100 billion in mid-2014. The financing of the infrastructure projects will lead China to play an extended role in regional economic growth and political influence. 21 countries including Pakistan, India, Bangladesh, Malaysia, Singapore, Mongolia, Myanmar, Uzbekistan and Kazakhstan signed up as founding members and recognizing AIIB.

On 8 November 2014, Chinese President Xi Jingping announced that China would contribute $40 billion towards a new Silk Road fund designed to improve trade and transport links in Asia. This is above and beyond the AIIB fund. In a meeting in Beijing with leaders from Pakistan, Bangladesh, Cambodia, Laos, Mongolia, Myanmar and Tajikistan, State media Xinhua reported Xi stating that the goal of the fund is to “break the connectivity bottleneck” in Asia.

In one of my previous articles titled “Middle East: The Regional Chessboard“, I’d mentioned about several strategic alliances and relations, one among which was regarding Pakistan and China. China has built the 1300 km Karakoram highway which together with the Indus highway provides a direct link to Gwadar port. The port would serve as a direct link for China to the warm waters of the Indian Ocean. Whereas major powers Britain, Soviet Union and the US have failed to gain access to the warm waters through military adventures, China has succeeded through friendship to gain access to the Indian Ocean.

China is aspiring to build land and sea routes to facilitate trade and finance from Asia to the Mediterranean and Europe. The two key sea routes would be established through Myanamar and Pakistan. The map shows the land routes in red and the sea routes in blue. To achieve the sea route goal China plans to invest $20 billion on a BOT (Build, Operate, Transfer) basis to link Myanmar’s Kyauk Phyu port on the Bay of Bengal by 800 km high speed rail to Mu Se near China’s border connecting Beijing and other cities facilitating that ships will no longer need to sail through Malacca strait.

TRADE COMPETITION

The USA is the largest and most important economy in the world in terms of Gross Domestic Product (GDP). THE USA GDP accounted for US$ 16 trillion or 19% of the global GDP. In 2012, US imports and exports accounted for US$3,985 billion with imports of US$2,375 billion and exports of US$ 1,610 billion with trade deficit of US $765 billion.

China is the second largest and most important economy behind US in terms of GDP. China’s GDP accounted for US$ 12 trillion or 14% of the global GDP. In 2012, China’s import and export totaled US$ 4,200 billion. China’s import was US$ 2,000 billion, and its export was US$ 2,200 billion with trade surplus of US$ 259.75 billion. China is the world’s second largest trading nation behind the US – leading the world in exports and coming in second for imports.

China and S. Korea have recently agreed in principle for a free trade agreement (FTA). S. Korea is China’s second largest trading partner where trade between the two countries amount to $230 billion. The announcement came on the sidelines of the 2014 Asia Pacific Economic Conference in Beijing.

What is most interesting between the economies of the two giants is the share of the economic structures in terms of agriculture, industries and services. The US agriculture, industries and services comprises 1.2%, 19.1% and 79.7% respectively while that of China is 10.1%, 45.3% and 44.6%.

THE STRATEGIES FOR ECONOMIC DOMINANCE

China has clearly locked in upon strategic economic partnership with Asian countries, Australia and Canada similar to what the US has with its G-7 partners. Currently the G-7 countries dominate the global trade along with their respective global convertible currencies- the US$, C$, Yen and Euro.

In closing, I reiterate that Chinese currency manipulation and the clandestine gold purchases by China (and now Russia) are likely to aggravate the currency war looming on the horizon. This will certainly lead to the decay of the US economic and political domination and the emergence of new economies dominated by a basket of international currencies to purchase oil replacing the dominance of the Petrodollar. The combined policies of US Federal Reserve and the US Treasury are leading the nation towards an economic and national security precipice. Jim Rickards said in a US Treasury meeting that “The Fed and the Treasury are the greatest threats to national security, not Al- Qaeda.” Jim Rickards in his book The Death of Money: The Coming Collapse of the International Monetary System published in April 2014 wrote that: “our biggest economic competitors—China, Russia, and the oil producing nations of the Middle East—are doing everything possible to end U.S. monetary hegemony.”

In the coming years, the world will most likely be divided into West and East – the Western hemisphere will continue to be influenced (not dominated) by the US economic and political policies and the East by China through a partnership with Muslim nations, BRICS and SCO countries. It will be the currencies, US Dollar and the Chinese Yuan that will play the dominant roles in the hemispherical division.


Originally published on 2015-01-25

About the author: Gulam Asgar Mitha is a retired Techinal Safety Engineer. He has worked with several N. American and International oil and gas companies. He has worked in Libya, Qatar, Pakistan, France, Yemen and UAE. Currently Gulam lives in Calgary, Canada and enjoys reading and keeping in tune with current global political issues. Exclusive for ORIENTAL REVIEW. The views expressed do not necessarily coincide with the Editorial’ ones.

Source: Oriental Review

Read our Disclaimer/Legal Statement!

Donate to Support Us

We would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.

 

READ MORE!
Afghanistan: The War That Shames America
After 17 bloody years, the longest war in US history continues without relent or purpose in Afghanistan.There, a valiant, fiercely-independent people, the Pashtun (Pathan) mountain tribes, have battled the full  might of the US Empire to a stalemate that has so far cost American taxpayers $4 trillion, and 2,371 dead and 20,320 wounded soldiers.  No one knows how many Afghans have died. The number is kept secret.Pashtun tribesmen in the Taliban alliance and their allies are fighting to oust all foreign troops from Afghanistan and evict the western-imposed and backed puppet regime in Kabul that pretends to be the nation’s ...
READ MORE
Voting Discrimination in America
The Supreme Court’s acceptance of a case about the allocation of voting districts will have consequences far beyond the millions of U.S. taxpayers its ruling may deprive of representation. A decision that only counts voters, rather than all persons, will undermine the very foundation of the Republic. The American Revolution was fought over “taxation without representation,” and those who wrote the Constitution carefully apportioned taxation and representation among the states “according to their respective Numbers . . . of free Persons . . . and . . . three-fifths of all other Persons.” The authors clearly equated We, the People with ...
READ MORE
Why America is a Dictatorship
America is a country in which dollars count far more than voters do, and that’s what all of the data shows. And that’s a dictatorship by the richest. This kind of country, this kind of country, and this kind of country, get this kind of President. And the rulers blame it on the public, instead of on the billionaires, the actual rulers themselves (the behind-the-scenes rulers). These rulers selected the politicians and offered those to the public to select from in ‘elections’ — and they then blame the public for the choices that the public make, from amongst these bad final ...
READ MORE
The US Aggression on Syria and the Principles of a “Just War”
The US military forces committed a classical example of the aggression on one sovereign and independent state on April 6th, 2017 by bombing a territory of Syrian Arab Republic by 59 Tomahawk cruise missiles killing civilians who are proclaimed as usually as “collateral damage”. A formal excuse for the aggression was based as many times before (from Vietnam, Kosovo, Afghanistan, Iraq, Libya… cases) on traditional political false flags and mainstream media fake news used by the US propaganda machinery to sanction the Pentagon’s hegemonic policy of the Pax Americana. The Fundamental Dilemma The fundamental dilemma is why the US administrations of Obama ...
READ MORE
America’s Recent Achievements in the Middle East
Here are before-and-after pictures, at https://twitter.com/MAL0mt/status/701077438525263873/photo/1, of what the U.S. government has achieved, in the Middle East: What’s especially interesting there, is that in all of these missions, except for Iraq, the U.S. was doing it with the key participation of the Saud family, the royals who own Saudi Arabia, and who are the world’s largest buyers of American weaponry. Since Barack Obama came into the White House, the operations — Libya, Yemen, and Syria — have been, to a large extent, joint operations with the Sauds. ‘We’ are now working more closely with ‘our’ ‘friends’, even than ‘we’ were under George W. Bush. As President Obama instructed his military, ...
READ MORE
White Lies and Black Disbelief in a Fading Empire
Having already violated every tenet of international law in its proxy jihadist war against Syria, including the seizure of one-third of the country, the United States invoked a Non-Law, a Law That Never Was, to justify its missile strikes against fictitious “chemical warfare” facilities. Syrian President Assad “kills his own people,” said Trump, leader of the nation whose police kill more of its “own people” than any country except (fellow white settler state) Brazil, and whose prisons entomb one-quarter of all the world’s inmates. (One out of every eight prisoners on the planet is an African American.) On the Saturday morning ...
READ MORE
The US: The Century of Lost Wars
Introduction Despite having the biggest military budget in the world, five times larger than the next six countries, the largest number of military bases – over 180 – in the world and the most expensive military industrial complex, the US has failed to win a single war in the 21st century. In this paper we will enumerate the wars and proceed to analyze why, despite the powerful material basis for wars, it has led to failures. The Lost Wars The US has been engaged in multiple wars and coups since the beginning of the 21st century.  These include Afghanistan, Iraq, Libya, Syria, Somalia, Palestine, Venezuela and ...
READ MORE
UN, France & US in Libya and Ivory Coast: Using Violence and Islamic Forces Just Like Kosovo
Albanian terror in Kosovo against the Serbs from June 1999 up to the end of 2000 The current problems in Libya and Ivory Coast are complex and clearly the opposition has different aspirations.  After all, both sides are involved in a bloody conflict and the use of violence is being used by each faction in these divided nations.  Therefore, it appears that the “new democratic warriors” of peace and freedom carry guns and kill their enemies, just like their enemies would kill them. This article is not about defending the leaders of either nations and clearly the leader of Libya is known ...
READ MORE
The United States as Destroyer of Nations
In the aftermath of the U.S. invasion of Iraq in 2003 – an invasion which many Iraqis believe left their country in the worst condition it has been since the Mongol invasion of 1258 — there was much discussion in the media about the Bush Administration’s goal for “nation-building” in that country.   Of course, if there ever were such a goal, it was quickly abandoned, and one hardly ever hears the term “nation-building” discussed as a U.S. foreign policy objective anymore. The stark truth is that the U.S. really has no intentions of helping to build strong states in the Middle ...
READ MORE
A Contribution to Biography (C.V.) of Philanthropist George Soros
Many conspiracy theories have been created about Hungarian-American financier and philanthropist George Soros since his rise to economic wealth. Many of them deal with the intersection between his political beliefs and his financial wealth. However, here we present a real truth on who was and is George Soros. What is missing from official George Soros' C.V. by © “Free Media Group” 2017. © “Free Media Group” 2017   Read our Disclaimer/Legal Statement! Donate to Support Us We would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, ...
READ MORE
The U.S. Military Interventions (1945- )
Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection & Pinterest. Read our Disclaimer/Legal Statement! Donate to Support Us We would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.
READ MORE
America’s Forever War Strategy
America is unique among history’s warrior states – prioritizing endless wars, not ending them to achieve a new era of peace and stability. The notion is anathema to the nation’s military, industrial, and media establishment. Wars are waged for power and profits, no other reasons. All post-WW II US wars were and continue to be acts of naked aggression against nations threatening no one – raping and destroying them, the human cost incalculable, the villainy unprecedented. Throughout its history, America has been perpetually at war at home and/or abroad, never a time of peace and stability – a shocking indictment of its abhorrent ...
READ MORE
Demonizing Russian Media
One of the West’s top points in condemning Vladimir Putin’s “regime” since 2007 has been his alleged suppression of democratic institutions, including an assault on media freedom and imposition of government-directed propaganda. This week, the accusation was repeated in a resolution of the European Parliament calling for stronger counter-measures in defense of European values against “information warfare” from Moscow. The charges — that Russian media are only an instrument of state propaganda directed at the domestic population to keep Russian citizens in line and at foreign audiences to sow dissent among Russia’s neighbors and within the European Union — are taken ...
READ MORE
The Real Reasons Why FBI Director James Comey Reopened the Hillary Email Investigation
This last Friday it became public record that FBI Director James Comey reopened the Hillary Clinton email server investigation after repeatedly testifying before Congress and the world up to last July that he’d closed the case, after in his words not finding sufficient evidence of “any criminal wrongdoing” to indict her in spite of her four years as Secretary of State egregiously breaching our national security:’  -committing obstruction of justice and willful tampering with evidence, -deleting 30,000 emails after receiving a court subpoena constituting destruction of evidence, -not to mention repeatedly engaging in perjury before Congress and the FBI. But obviously a federal investigation still in process in late June never stopped Bill Clinton’s illegal ...
READ MORE
The U.S. War Crimes against North Korea: Sinchon Massacre by the U.S. Military Exposed
SINCHON COUNTY, North Korea–Over the past few years the Korean people have been able to expose the truth about a number of atrocities by Washington’s military forces during the 1950–53 Korean War. Many others, however, remain covered up and receive virtually no mention outside the Korean peninsula. One such massacre took place in Sinchon, a city located in what is today North Korea. During the Socialist Workers Party and Young Socialists leadership delegation’s visit to the Democratic Peoples Republic of Korea (DPRK), we toured the Sinchon Museum, which documents what north Koreans consider the worst atrocity to have taken place in ...
READ MORE
A Collection of Thoughts about American Foreign Policy
Louis XVI needed a revolution, Napoleon needed two historic military defeats, the Spanish Empire in the New World needed multiple revolutions, the Russian Czar needed a communist revolution, the Austro-Hungarian and Ottoman Empires needed World War I, Nazi Germany needed World War II, Imperial Japan needed two atomic bombs, the Portuguese Empire in Africa needed a military coup at home, the Soviet Empire needed Mikhail Gorbachev … What will the American Empire need? I don’t believe anyone will consciously launch World War III. The situation now is more like the eve of World War I, when great powers were armed and ...
READ MORE
Israel’s Failed Attempt to Start WWIII
There is one thing that Israel fears more than anything else in Syria. The loss of its ability to fly its F-16’s with impunity and hit whatever targets it wants claiming defensive measures to stop Iran, their existential enemy. Israel finally admitted to carrying out over 200 such missions over the past 18 months, only a few of which ever made any kind of international media, recently. And with the sneak attack on Latakia which involved using a Russian IL-20 ELINT war plane as radar cover Israel has now not only raised the stakes to an unacceptable level, it has also ensured ...
READ MORE
The President Needs Congressional Authorization for Military Action as Required by the Constitution
“While we all condemn the atrocities in Syria, the United States was not attacked. The President needs congressional authorization for military action as required by the Constitution, and I call on him to come to Congress for a proper debate. Our prior interventions in this region have done nothing to make us safer, and Syria will be no different.” Senator Rand Paul, (R-Kentucky), 7 April 2017. A central concern of the Founding generation, when writing the Constitution, was to ensure that no one man, or one man and his clique, could take the republic to war. To that end, the Constitution ...
READ MORE
70 Years of Disinformation: How the CIA Funded Opinion Magazines in Europe
When an intelligence agency arranges to disseminated fake news it is called “disinformation” and it is a subset of what is referred to as covert action, basically secret operations run in a foreign country to influence opinion or to disrupt the functioning of a government or group that is considered to be hostile. During the Cold War, disinformation operations were run by many of the leading players in both the North Atlantic Treaty Organization and in the opposition Warsaw Pact. Sometimes the activity and the sponsorship were clearly visible, as when Radio Free Europe and Radio Moscow would exchange barbs about ...
READ MORE
How Britain Helped Create ISIS
Britain is gripped by fear, panic and anger, after being struck by three terror attacks in the space of three months. Innocent men, women and children have been killed in the terror rampage, filling many homes with tragedy and despair. Martial law has practically been declared in many regions of the country, with troops now being a common site on the streets of Royal Britannia. Many are looking for someone or something to blame, as rage is increasingly triumphing over reason.  Lost in all this hysteria however, there sits a glaring connection that needs to be illuminated: the connection between these ...
READ MORE
Afghanistan: The War That Shames America
Voting Discrimination in America
Why America is a Dictatorship
The US Aggression on Syria and the Principles of a “Just War”
America’s Recent Achievements in the Middle East
White Lies and Black Disbelief in a Fading Empire
The US: The Century of Lost Wars
UN, France & US in Libya and Ivory Coast: Using Violence and Islamic Forces Just Like Kosovo
The United States as Destroyer of Nations
A Contribution to Biography (C.V.) of Philanthropist George Soros
The U.S. Military Interventions (1945- )
America’s Forever War Strategy
Demonizing Russian Media
The Real Reasons Why FBI Director James Comey Reopened the Hillary Email Investigation
The U.S. War Crimes against North Korea: Sinchon Massacre by the U.S. Military Exposed
A Collection of Thoughts about American Foreign Policy
Israel’s Failed Attempt to Start WWIII
The President Needs Congressional Authorization for Military Action as Required by the Constitution
70 Years of Disinformation: How the CIA Funded Opinion Magazines in Europe
How Britain Helped Create ISIS
Policraticus

Written by Policraticus

SHORT LEGAL DISCLAIMER: The website’s owner & editor-in-chief has no official position on any issue published at this website. The views of the authors presented at this website do not necessarily coincide with the opinion of the owner & editor-in-chief of the website. The contents of all material (articles, books, photos, videos…) are of sole responsibility of the authors. The owner & editor-in-chief of this website is not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the contents of all material found on this website. The owner & editor-in-chief of this website is not responsible for the content of external internet sites. No advertising, government or corporate funding for the functioning of this website. The owner & editor-in-chief and authors are not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the text and material found on the website www.global-politics.eu

Website: http://www.global-politics.eu