China also recently announced plans to
strategically refocus its one trillion dollar foreign-currency war chest.
Rather than continuing to rely on US Treasury bonds, which yield
relatively small returns and risk dollar depreciation, Beijing is
expected to increasingly snap up natural resources and energy assets
across the world.
It's no wonder that China is ditching the US,
which currently faces a national debt of almost nine trillion dollars,
growing at the rate of $2.04 billion dollars per day. The subprime
housing bubble threatens rising defaults and decreased stateside
consumption, while the personal savings rate for Americans
fell to a shocking negative 1% in 2006, the worst level since the Great Depression.
It isn't in China's interest for the US to crash and burn economically,
but neither is propping up dollar indefinitely, especially if it ceases
to be the oil transaction currency standard. The danger, however, is
that if China divests of dollars in earnest, other countries will
follow suit. The Bush administration's disastrous fiscal policies, not
to mention
lack of transparency regarding money-supply data, have already caused Central Banks internationally to begin quietly diversifying away from the greenback.
China's inevitable rise was predicted in a 2005 National Intelligence
Council report, warning: "In the same way that commentators refer to
the 1900s as the 'American Century,'
the 21st century may be seen as a time when Asia, led by China and India, comes into its own.
A combination of sustained high economic growth, expanding military
capabilities, and large populations will be at the root of the expected
rapid rise in economic and military power for both countries."
Which brings up a potential US attack on Iran. In late 2004, the
governments of Beijing and Tehran signed agreements valued at up to
$100 billion for
China to develop and purchase Iranian oil and gas.
In the aftermath of a US military strike on the country, the status of
those contracts might be called into question.
But as the famed
military strategist Sun Tzu once noted, "There is no instance of a
country having benefited from prolonged warfare." Instead, he advised
waiting quietly as an enemy self-destructs, then sweeping in to reap
the profits, an effective plan for Beijing during the Bush years
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