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Friday, November 20, 2009

Will China Fret After the Threat of the Clenched Fist?

You most probably know that Barack Obama, president of the US, met the other day in Beijing comrade Hu Jintao, president of the People's Republic of China. It was a private meeting. Being well informed bloggers you might also know what did they talk about, though I doubt it. But, I am positive you DO NOT KNOW what was Obama supposed to tell his host during that tete-a-tete exchange of views.

Now, there is this abrasive Martin Wolf, a columnist for the Financial Times, who knows exactly, word-for-word, what should have president Obama (hissing or between glistering fangs) told his Chinese host. Wolf and Financial Times are the mouthpieces of the rotten, avaricious, international, big (dirty and all) money.

If the FT spoke for the sinking, totally insignificant UK it would have been waste of time to deliberate about this article. Those words should have been "some brutal truths" on the following lines.

At first Obama should have sweet parleyed Hu Jintao saying that US believed that "the rise of a strong, prosperous China can be a source of strength for the community of nations".

Then Obama should have turned more businesslike and declare that the US simply does not care what happens with its primary creditor (China) after investing "incredible" amounts into US currency.

"I am president of the US. I am not going to put our economy into a depression, to protect the value of Chinese savings. After all, nobody in the US asked you to intervene on so massive a scale in currency markets and so accumulate the incredible total of $2,275bn in foreign currency reserves by September of this year, much of it in our currency.

Then, according to Wolf, the American should have unmistakably showed his teeth and growled by saying:.

"You have, I am sure, decided that such lectures mean nothing. What you may fail to understand is the speed with which democracies can shift their attitude from the open hand to the clenched fist. If, over the next year or two, your current account surplus exploded upward, while our deficit did the same, it would be impossible for us to ignore.

All this would not have been of any significance if provided by somebody else in another publication. Martin Wolf speaks for the wolfs and hawks of the international capital and therefore his position indicates the state of the collective mind of the power-shakers. This sort of reasoning is both illogical and false. The pressure on China to revalue the renminbi is more than absurd, it has no market sense. If the renminbi is so blatantly undervalued - why does not the US or the liberal capital managers simply buy as much of the Chinese currency as possible and (when Beijing eventually realizes that it is in Chinese and global advantage to revalue) make huge profit out of that?

To threaten China with a clenched fist is, mildly phrased, both laughable in the current state of affairs and idiotic as a concept of solving complex global disparities.

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