China's Demand Makes Old Signposts Useless

The remarkable spending on commodities out of China continues; this single country demand continues to make old signposts useless. "Doctor Copper" is now hostage to the Chinese whims. There were thoughts in early April that after China had finished its stockpiling [Mar 23: FT.com - Chinese Stockpiling Spurs Copper Price Rally] prices might falter [Apr 6: Analysts Estimate Copper Prices Could Fall 21% in Q2] but after a short break, China is back at it.

Via WSJ

• China's copper imports fall off the cliff after April in most years, but 2009 could prove different, with sustained Chinese imports keeping prices firm. Continued healthy demand would be bullish for the global market, given China is currently the only buyer of size.
• In four of the past five years, Chinese copper imports fell sharply in May. The drops were as much as 26% to 59%, compared with April. Only in 2005 did imports rise, increasing 12.8% from April. China tends to buy most of its raw materials during the first few months of the calendar year, ahead of the more active summer trade.
• Partly because of strong Chinese imports, LME copper stocks have already fallen 25% since late February to 394,925 metric tons. The trend looks set to continue.
• Prices have generally held up despite a mild correction in the second half of April, partly on unfounded fears that Chinese demand was slowing, as in previous years.
• During the first quarter of 2009, China imported a record 937,034 tons of copper, up 32.9% from a year earlier, according to data from the Customs Department.

It appears the Chinese plan to follow in the footsteps of easy money Alan Greenspan [Feb 16 2009: Is China Pulling an Alan Greenspan?] (or more recently easy money Ben Bernanke) have led to unprecedented loan growth; and all this money needs a home. Quite a bit seems to be going into every feasible commodity....

Next is oil. As we reported 2 months ago, China's strategic reserve was full [Mar 9: Reuters - China Government Oil Reserve Full], but they were building even more storage.

The first set of China's strategic oil reserves, which can hold about 100 million barrels, were built over the past two years, but data on their status is considered a state secret and information about their operations or tank levels is scarce. China plans to build a second-phase strategic reserve that will nearly triple the first batch to 280 million barrels by 2011, and industry executives have said the current storage capacity has already become a hurdle to bringing in more imports.

As oil surges, we see the same Chinese hands behind the scenes.

Via Bloomberg

• Oil rose above $60 a barrel for the first time in six months after China, the world’s second biggest energy-consuming country, increased crude imports by 14 percent in April.
• “The Chinese numbers are pretty stunning,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis. “The Chinese are looking at prices now as a good value and they are worried about all of the dollar assets they have. They are buying everything, any raw material they can get their hands on.”

I said this in 2007, I said it in 2008, I will say it now and I am sure I'll say it in 2015: Americans simply do not grasp the competition that is coming down the pike. We are too busy spending our "stockpile" on bailing out the oligarchs' personal pocketbooks.

All this massive commodity spending, even as a negative 2nd derivative happens. Chinese exports in April were worse than March, and "worse than expected". So much for 2nd derivative improvement. No worries though, when we drink Kool Aid we only point out the 2nd derivatives that improve, and ignore those that don't.

• China's exports plunge continues to be worse than expected, impeding recovery for the first major economy to emerge from the global slump. Marking the sixth straight month of declines, April exports tumbled 22.6% from a year earlier, compared with the market consensus forecast of 18.0% and March's 17.1% drop.

But China pushes ahead; after all, that money China is doling out has to go somewhere - anywhere. Needed, or not needed.

• Meanwhile, China's fixed-asset investments in factories and property developments jumped 30.5pc from a year earlier as China’s £400bn stimulus package send a wave of fresh lending through the Chinese economy.
• But beyond railway expansion and housing construction, policy-driven investment could be propping up manufacturing and industrial capacity that the market doesn't want. (Bingo) Morgan Stanley analysts have warned that China investors face a profit letdown, as the state-owned industrial sector prioritizes protecting jobs and produces in excess despite depressed prices. That excess output will still need to be absorbed by the West, as Chinese domestic demand cannot rise fast enough.
• ....economists have warned that investment in the private sector remains relatively weak, raising the risk of renewed asset bubbles, bad debt and waste from excess investment in factory capacity and other projects.

Comments

[John Galt:]

I did read "the Art of War" and it was an amazing book. The thing that stuck out to me the most was concerning (military victories). The greatest possible victory you could have is when your enemy surrenders without a fight. The greatest victory isn't losing 5% of your Army to kill all of them or any other annihlation. If you keep winning battles while losing nothing, you can go on forever... sort of like the Buffet/Graham value investing proposition. Don't make a trade looking at the dollar signs of how much you could make, look at how much you could lose and your margin of safety.

The thing that bothers me though is people looking at China like our "Enemy". Why are they bad guys, because they live on the other side of the world? Because they share different (artificial borders)? Do you want their people to suffer? Should they want us to suffer?

A stronger China actually HELPS us out. Production and prosperity is not a zero sum game. What happens if China invents the world's next great invention? The Chineese are not bad people and they are NOT our enemy. In fact, they LIKE us. Don't listen to any (politican/media) that tells you otherwise.

Aug 10 09:15 AM

[Stone Fox C...:]

Maybe this article would be better if it included data from June/July. China exports will likely start increasing at a fast clip just like Germany just reported. Then you combine the demand from China with growing demand from the US and commodities like copper will be back to recent highs.

Aug 10 11:52 AM

[Ricard:]

Yet another laughably naive comment.

Why did the US fight China to a stalemate in Korea? Do you think this had to do with economics or overwhelming Chinese military strength? LOL.

Do you think the outcomes in Vietnam or Iraq had anything to do with the power of the opposition, or unrestricted warfare?

The fact is, America suffers from a crisis of conscience. Had MacArthur had his way, the Korean War would have annexed China into the US sphere of influence as well. Vietnam would not have even been an issue. Russia may have panicked by now and pressed the button. Or, the US could have used that window of opportunity to push an agenda as the sole nuclear power in the world.

Of course the military is the worst option, and the final option. But, it is the foundation upon which everything else is built. Read page 1, one hundred times. Ignore this at your own peril. The Chinese know this better than anyone, and dare not even squeak an objection while it is in such a pitifully poor state of affairs militarily. 21st century warfare through economics...LOL. The economy is only useful as far as it allows for power projection through the military. If you think Vietnam, Afghanistan, North Korea, or Iraq were failures for America, what do you think those respective countries think of their outcome? Outside of pride, they've been knocked anywhere from 20 to 50 years back in time economically and militarily, and countries like Vietnam and soon Iraq are now economically co-opted by America (not the USSR, although you can make a strong case that China was also a winner), along with Japan, Germany, Europe as a whole, etc. America won Vietnam if you look at it through this lens, and it is well on its way to winning Iraq. This was at a minimal cost to GDP for America (compared to the damage wrought).

I am not condoning such action. It is merely a political reality that you will not see in the media, yet is all-important. By suggesting an economic war (as opposed to the current rhetoric of economic cooperation), you are suggesting that this outcome will come sooner than you think. If you look at the lines drawn, any conflict will be dangerously close to China, if not in China itself. 70 years of time has not changed this basic reality.

As I've already stated, the US is 10 steps ahead of the game even in 'unrestricted warfare', and China knows this. If you look past your own pride, you will see that this is the 'tao' of warfare today, and America possesses it, not China. America's biggest problem now is that its real window of opportunity passed many years ago, and other nations have nearly reached parity with the US per capita. It is no longer the lion amongst the sheep.

If you really think economics matter more than the military, let me ask you two simple questions. Which economy is larger, Europe as a whole, or America? Now, if you chose Europe (the correct answer by nearly 50%), who really controls NATO today? If you chose Europe here, I don't think reading the Art of War one hundred times will do you any good. I am not saying that this will be true in the future. What I am saying is that you cannot ignore the military - it is primary, and every other consideration COMBINED (outside of the 'tao') pales in comparison.

Interpret the Art of War in different manners (business is warfare, law is warfare) at your own peril. Even a dead economy with a ferocious military can deal untold damage - this was China's experience with the Mongolians 900 years ago, and the Middle East's experience with Israel throughout history. This has been the experience of every country to date that has attempted to co-opt Afghanistan. This is the fear of generals in America if they destroy too much of what's left in the Middle East. What you will notice is that things may seem to change, but really don't. 21st century warfare...'this time it's different'...laughable.

If China is given enough time without provoking a disastrous conflict, China will not only reach per capita parity with the US economically, but will far surpass it in absolute terms. This is actually China's to control, if it assumes the correct posture in the face of a superior enemy. This is the fear in the American political realm, and this is why the rhetoric is so shrill and at times baseless here.

I actually think that China's leadership has fully digested the Art of War, and that is why my emerging market investments are in that country. I will assume you are not in any position of power in the Chinese government, as sentiments like yours will destroy my investment.


On Aug 10 02:58 AM hondaicivic wrote:

> Then tell me why the US lost the Vietnam war, and soon to be Iraq
> and Afghanistan? By the way, when I mention war I never said anything
> about military. This is the 21st century buddy, economics is the
> choice of weapon, not military. Are you positive you read The Art
> of War many times like you said? If you did, you understand that
> military is the least emphasized. "Unrestricted Warfare" which was
> published in 1999 by two PLA colonels basically reiterates what I
> just said. Look it up.

Aug 10 12:11 PM

[Ricard:]

IMHO, the explanation is simple. The Chinese merely want to achieve their full potential. It only follows that they will challenge the hegemon. Only Russia has achieved enough size and strength to offer a direct challenge to America, yet if all of the economists in the world are correct, China will become several times the Russian challenge. I think of it as 'natural' politics, where the alpha male attempts to destroy all challengers and physically or mentally castrates them, a la Germany, Japan, Europe as a whole...


On Aug 10 09:15 AM John Galt wrote:

> The thing that bothers me though is people looking at China like
> our "Enemy". Why are they bad guys, because they live on the other
> side of the world? Because they share different (artificial borders)?
> Do you want their people to suffer? Should they want us to suffer?

Aug 10 12:15 PM

[Ricard:]

I could have replaced my long ramblings with this one short comment:


"Then tell me why the US lost the Vietnam war, and soon to be Iraq
and Afghanistan? "

"By the way, when I mention war I never said anything about military. This is the 21st century buddy, economics is the choice of weapon, not military."


You bring up military conflicts, and then posit that the military is not a factor.

Art of War, Chapter 3 -

"One who knows neither the enemy nor himself will invariably be defeated in every engagement."


On Aug 10 02:58 AM hondaicivic wrote:

Aug 10 01:00 PM

[ArtfulDodger:]

War, China? Against the US? The Chinese are not stupid people. Why would they even think of destroying their honey hole?

Aug 10 01:22 PM

[hondaicivic:]

You could have saved me the time and energy and wrote something like this instead of trying to write a novel.


On Aug 10 01:00 PM Ricard wrote:

> I could have replaced my long ramblings with this one short comment:
>
>
>
> "Then tell me why the US lost the Vietnam war, and soon to be Iraq
>
> and Afghanistan? "
>
> "By the way, when I mention war I never said anything about military.
> This is the 21st century buddy, economics is the choice of weapon,
> not military."
>
>
> You bring up military conflicts, and then posit that the military
> is not a factor.
>
> Art of War, Chapter 3 -
>
> "One who knows neither the enemy nor himself will invariably be defeated
> in every engagement."

Aug 10 03:55 PM

[TraderMark:]

its an old article, I think they pulled one of the links to my article from Friday which was about the Baltic Dry Index dropping 17% in a week - see my comment higher up in the thread.

speaking of which, what a commentary focus on this one.


On Aug 10 11:52 AM Stone Fox Capital wrote:

> Maybe this article would be better if it included data from June/July.
> China exports will likely start increasing at a fast clip just like
> Germany just reported. Then you combine the demand from China with
> growing demand from the US and commodities like copper will be back
> to recent highs.

Aug 10 04:10 PM

[Ricard:]

I think you have saved enough time and energy and should invest it in reading about your own history, not PRC propaganda literature.

On Aug 10 03:55 PM hondaicivic wrote:

> You could have saved me the time and energy and wrote something like
> this instead of trying to write a novel.

Aug 10 04:55 PM

[coreopsis:]

Unfortunately, while there seem to be many interesting 'bits' here and there, this post is mostly incomprehensible. As just one example of its obtuseness, the point is made that it is only military strength that matters. Then, below, it laments the fact that the EU has caught up with the US per capita GDP and the 'window of opportunity' [for what] is lost. Please take a writing course sometime soon.


On Aug 10 12:11 PM Ricard wrote:

> Yet another laughably naive comment.
>
> Why did the US fight China to a stalemate in Korea? Do you think
> this had to do with economics or overwhelming Chinese military strength?
> LOL.
>
> Do you think the outcomes in Vietnam or Iraq had anything to do with
> the power of the opposition, or unrestricted warfare?
>
> The fact is, America suffers from a crisis of conscience. Had MacArthur
> had his way, the Korean War would have annexed China into the US
> sphere of influence as well. Vietnam would not have even been an
> issue. Russia may have panicked by now and pressed the button.
> Or, the US could have used that window of opportunity to push an
> agenda as the sole nuclear power in the world.
>
> Of course the military is the worst option, and the final option.
> But, it is the foundation upon which everything else is built. Read
> page 1, one hundred times. Ignore this at your own peril. The Chinese
> know this better than anyone, and dare not even squeak an objection
> while it is in such a pitifully poor state of affairs militarily.
> 21st century warfare through economics...LOL. The economy is only
> useful as far as it allows for power projection through the military.
> If you think Vietnam, Afghanistan, North Korea, or Iraq were failures
> for America, what do you think those respective countries think of
> their outcome? Outside of pride, they've been knocked anywhere from
> 20 to 50 years back in time economically and militarily, and countries
> like Vietnam and soon Iraq are now economically co-opted by America
> (not the USSR, although you can make a strong case that China was
> also a winner), along with Japan, Germany, Europe as a whole, etc.
> America won Vietnam if you look at it through this lens, and it is
> well on its way to winning Iraq. This was at a minimal cost to GDP
> for America (compared to the damage wrought).
>
> I am not condoning such action. It is merely a political reality
> that you will not see in the media, yet is all-important. By suggesting
> an economic war (as opposed to the current rhetoric of economic cooperation),
> you are suggesting that this outcome will come sooner than you think.
> If you look at the lines drawn, any conflict will be dangerously
> close to China, if not in China itself. 70 years of time has not
> changed this basic reality.
>
> As I've already stated, the US is 10 steps ahead of the game even
> in 'unrestricted warfare', and China knows this. If you look past
> your own pride, you will see that this is the 'tao' of warfare today,
> and America possesses it, not China. America's biggest problem now
> is that its real window of opportunity passed many years ago, and
> other nations have nearly reached parity with the US per capita.
> It is no longer the lion amongst the sheep.
>
> If you really think economics matter more than the military, let
> me ask you two simple questions. Which economy is larger, Europe
> as a whole, or America? Now, if you chose Europe (the correct answer
> by nearly 50%), who really controls NATO today? If you chose Europe
> here, I don't think reading the Art of War one hundred times will
> do you any good. I am not saying that this will be true in the future.
> What I am saying is that you cannot ignore the military - it is primary,
> and every other consideration COMBINED (outside of the 'tao') pales
> in comparison.
>
> Interpret the Art of War in different manners (business is warfare,
> law is warfare) at your own peril. Even a dead economy with a ferocious
> military can deal untold damage - this was China's experience with
> the Mongolians 900 years ago, and the Middle East's experience with
> Israel throughout history. This has been the experience of every
> country to date that has attempted to co-opt Afghanistan. This is
> the fear of generals in America if they destroy too much of what's
> left in the Middle East. What you will notice is that things may
> seem to change, but really don't. 21st century warfare...'this time
> it's different'...laughable.
>
> If China is given enough time without provoking a disastrous conflict,
> China will not only reach per capita parity with the US economically,
> but will far surpass it in absolute terms. This is actually China's
> to control, if it assumes the correct posture in the face of a superior
> enemy. This is the fear in the American political realm, and this
> is why the rhetoric is so shrill and at times baseless here.
>
> I actually think that China's leadership has fully digested the Art
> of War, and that is why my emerging market investments are in that
> country. I will assume you are not in any position of power in the
> Chinese government, as sentiments like yours will destroy my investment.
>

Aug 10 05:16 PM

[hondaicivic:]

"PRC propaganda literature"......I think you need to stop watching FOX news and CNN and actually look at history from a different angle, not the crap they feed you from the mainstream media and teach you in elementary-high school level. And here you're talking about propaganda, you gotta be kidding me. That little brief introduction of history in the Pacific you gave me earlier show me how much you know about history. But then again.......you are a patriot of the United States of America.


On Aug 10 04:55 PM Ricard wrote:

> I think you have saved enough time and energy and should invest it
> in reading about your own history, not PRC propaganda literature.
>
>
> On Aug 10 03:55 PM hondaicivic wrote:

Aug 10 06:10 PM

[Ricard:]

I cannot teach you how to read, but it would generally help if you actually finish the sentence:

"Or, the US could have used that window of opportunity to push an
agenda as the sole nuclear power in the world."

I'm sorry if you did not know this was true for a small part of world history, but MacArthur sure did. I'm sure most of the reading public does too. I'm not going to condone MacArthur's strategy of using nukes on Chinese territory, but he clearly demonstrated the capacity to utilize an advantage in difficult situations.

I'm not going to posit that military strength is all that matters in international politics, but it is by far the most important factor, and any country that ignores it risks annihilation. Economies only goes so far without a military. To argue that the US lost the Vietnam war due to superior economic factors on the Vietnamese side is about as productive as doing a swan dive into an empty swimming pool.

I hope this comment is clearer for you. You may have difficulty reading it because it is simply not everyday Fox News/CNN propaganda, to quote our esteemed colleague hondaicivic. I tend to argue difficult cases, so I apologize if my 1/2 hour novella was slightly difficult to parse - my editor was busy building sand castles during recess time. If you have any questions, by all means ask. But please leave the patronizing 5th grade English teacher speeches at the front door.

To hondaicivic: your reply is a non-argument. You've shunned reasonable debate a couple comments back.

On Aug 10 05:16 PM coreopsis wrote:

> Unfortunately, while there seem to be many interesting 'bits' here
> and there, this post is mostly incomprehensible. As just one example
> of its obtuseness, the point is made that it is only military strength
> that matters. Then, below, it laments the fact that the EU has caught
> up with the US per capita GDP and the 'window of opportunity' [for
> what] is lost. Please take a writing course sometime soon.

Aug 10 07:07 PM

[User 303141:]

May be China is preparing for a war with India. They probably want to move into NE India in a big way. If you check some of the rhetoric coming out of Chinese media in last few months, you can tell. Even India has started building up military facilities in its North East. I think India should renounce its no first use Nuclear weapons policy as a warning.


On Aug 09 09:47 AM Roger Knights wrote:

> Maybe China's preparing for a war.

Aug 10 07:08 PM

[User 303141:]

In addition (see my comment above), India should also declare some of Chinese cities as targets if provoked into a war

Aug 10 07:11 PM

[User 303141:]

Nukes would be India's only defense as it's military is not as strong as Chinese military

Aug 10 07:13 PM

[mna:]

This guy gets it. There's no reason to think of China as an enemy. Embracing them and making sure they join the world order in an orderly and responsible manner benefits everyone. The downfall of the US is a long time in the making, and keeping them down won't help us become any more powerful. It'll just drag both powers down a slippery slope of escalating confrontation and violence.


On Aug 10 09:15 AM John Galt wrote:

> The thing that bothers me though is people looking at China like
> our "Enemy". Why are they bad guys, because they live on the other
> side of the world? Because they share different (artificial borders)?
> Do you want their people to suffer? Should they want us to suffer?
>
>
> A stronger China actually HELPS us out. Production and prosperity
> is not a zero sum game. What happens if China invents the world's
> next great invention? The Chineese are not bad people and they
> are NOT our enemy. In fact, they LIKE us. Don't listen to any (politican/media)
> that tells you otherwise.

Aug 10 08:15 PM

[mna:]

Ricard,
I'll tell you right now. None of that matters. I think you overestimate 2 things. 1) American taste for war 2) American ability to wage a sustained long distance war on foreign soil.

IF the US is willing to go in all out, guns blazing, killing everyone in sight and using scorched earth. Then yes, it can win a war on chinese soil. Of course, nowadays, it will NEVER happen, not the least of which is because we're above that genocide stuff. So it's pointless to pine about the superiority of American military might, when it can't be deployed in an effective way without the rest of the world turning on us.

Also, this is on the premise that we attack NOW. In just 5 years, it'll be tough to say who can win or lose if we fight on chinese soil. In 10-15 years time. We'd probably lose. In 30 years time. We'd be losing on neutral soil.

Let's face the facts. The times are long gone when military might is the sole measure of strength. Especially against a nuclear capable country. Cockflexing may make you feel better, but ultimately has no consequence in the real world.


On Aug 10 07:07 PM Ricard wrote:

> I cannot teach you how to read, but it would generally help if you
> actually finish the sentence:
>
> "Or, the US could have used that window of opportunity to push an
>
> agenda as the sole nuclear power in the world."
>
> I'm sorry if you did not know this was true for a small part of world
> history, but MacArthur sure did. I'm sure most of the reading public
> does too. I'm not going to condone MacArthur's strategy of using
> nukes on Chinese territory, but he clearly demonstrated the capacity
> to utilize an advantage in difficult situations.
>
> I'm not going to posit that military strength is all that matters
> in international politics, but it is by far the most important factor,
> and any country that ignores it risks annihilation. Economies only
> goes so far without a military. To argue that the US lost the Vietnam
> war due to superior economic factors on the Vietnamese side is about
> as productive as doing a swan dive into an empty swimming pool.<br/>
>
> I hope this comment is clearer for you. You may have difficulty
> reading it because it is simply not everyday Fox News/CNN propaganda,
> to quote our esteemed colleague hondaicivic. I tend to argue difficult
> cases, so I apologize if my 1/2 hour novella was slightly difficult
> to parse - my editor was busy building sand castles during recess
> time. If you have any questions, by all means ask. But please leave
> the patronizing 5th grade English teacher speeches at the front door.
>
>
> To hondaicivic: your reply is a non-argument. You've shunned reasonable
> debate a couple comments back.
>
> On Aug 10 05:16 PM coreopsis wrote:

Aug 10 08:32 PM

[Ricard:]

It may surprise you that I agree with the spirit of your comments. I do not underestimate America's taste for wars, especially on foreign soil - that's what I meant when I mentioned America's 'crisis of conscience'.

However, I would not underestimate the possibility that a future world-scale conflict may arise again. You may argue that we have evolved beyond such a framework, but I would counter-argue that the reason is because a valid challenger has not made itself known since the USSR. America's sphere of influence is enormous, and those outside of the sphere tend to have few advantages against the reigning hegemon. China, India, Russia, maybe South America, maybe Africa. That's all that's left outside of the sphere, and India is quickly being absorbed.

The key would be how base the rhetoric becomes. I think if push comes to shove, the rhetoric here can be toned upwards several notches. We may see posters again about 'the enemy' - sub-human primates a la WWII - and lock up all Chinese Americans and ship them to North Dakota awaiting a fate unknown (human rights do not matter to anyone when survival is at stake, sorry to burst that bubble). So, it would depend upon how China engages with the US. If they choose to reciprocate, or one-up us, and they lose international support, then there is really nothing stopping us (outside of MAD) from launching another shock-and-awe campaign. I know such talk is frightening, but again, I posit that the safety that all nations experience is one granted by the blood, sweat, and tears of armed conflict, and that there is no replacement. I respect Russia's current stance because they have truly taken this concept to heart.

I would also point to Russia to counter your argument that we have evolved beyond petty strife and 'cockflexing'. To point to John Mearshimer's work, the international arena is one where anarchy reigns, and power (military might) fills the void and creates a semblance of order amid chaos. Again, scary stuff, but certainly not beyond the realm of impossibility. Had we truly evolved to to a perspective resembling Joseph Nye's arguments (which is the perspective you posit, that the support and consensus of the international community is paramount), then we should have done everything in our power during the 90s to co-opt Russia into our sphere of influence. But we didn't. I consider that the great failure of the Clinton Administration, one that was totally masked by the economy, stupid. The door was opened by Gorbachev. He literally invited us in. But we didn't bite. We did not help in Russia's time of chaos and need. Putin is the consequence of our decision.

I also question your time scale. Economists tend to agree that on an absolute basis, China's GDP may surpass ours by 2025. That will still put it at developing levels, without a technological edge. A land invasion of China has always been at best an incredibly difficult proposition, orders of magnitude more difficult than Iraq. But, the Iraqi conflict does show how to win - our goal, unlike Korea and Vietnam, was regime change, and with Maliki's recent visit and thanks, I'd posit that we've succeeded and won in Iraq. Korea and Vietnam always resembled more like fighting decay as opposed to taking the offensive (and amazingly in Korea we did preserve the regime, despite MacArthur's fall and Chinese objections on the battlefield), and if we were to invade China, it would much more resemble a war in Iraq than Korea or Vietnam in purpose. Outside of MAD, the technological might of America is such that any meaningful conflict would end in very short order once we gained air superiority.

Again, I am long China. But, saber-rattling from China and talks of even the possibility of the above scenario working for China will not work in its favor for a very long time. These political realities need to be recognized, and comments like those from the Secret Protection bureau (regarding Rio Tinto) do not aid China in any meaningful fashion. If anything, they breed mistrust and disrespect, and the only real chance that China has against a superior force is to play its hand very carefully. It has to take the moral high-ground, or at least unseat America from it, and gestapo-type politicking is about as bad an approach as you can get towards this end.

Unlike business and economics, political power is by nature a zero sum game. For one to gain some, someone else has to lose some. I think China has what it takes to gain a large amount of it, but it will not be through military conflict in the foreseeable future.


On Aug 10 08:32 PM mna wrote:

> Ricard,
> I'll tell you right now. None of that matters. I think you overestimate
> 2 things. 1) American taste for war 2) American ability to wage
> a sustained long distance war on foreign soil.
>
> IF the US is willing to go in all out, guns blazing, killing everyone
> in sight and using scorched earth. Then yes, it can win a war on
> chinese soil. Of course, nowadays, it will NEVER happen, not the
> least of which is because we're above that genocide stuff. So it's
> pointless to pine about the superiority of American military might,
> when it can't be deployed in an effective way without the rest of
> the world turning on us.
>
> Also, this is on the premise that we attack NOW. In just 5 years,
> it'll be tough to say who can win or lose if we fight on chinese
> soil. In 10-15 years time. We'd probably lose. In 30 years time.
> We'd be losing on neutral soil.
>
> Let's face the facts. The times are long gone when military might
> is the sole measure of strength. Especially against a nuclear capable
> country. Cockflexing may make you feel better, but ultimately has
> no consequence in the real world.

Aug 10 09:35 PM

[Paul Harper:]

as an anlaogy, lets look at this from the same perspective as at the end of WW2. European protagonists were exhausted after nearly 6 years of global war & the nascent new power (America) stepped in with the Marshall Plan & eased the pain.
Following the Cold War, with the western economies exhausted (for varying reasons) & with the Chinese economy opening up & assuming more strength, the balance has changed, now it is the Chinese that are offering the solution & America requires the "handouts".
As the authour stated in a previous piece : "it's China's world, we just live in it" , something that I feel we must accept going forward.
Regards the "hubris" & sabre rattling in the comments on this article, I am astounded at some of the opinions expressed. Please have a look at trade figures between China & India ... I think you will see that each is slowly becoming reliant on the other, especially as we have no € / £ / $ to pay for goods.
Regards my "popular" comment that China doesn't need a navy, I would encourage my detractors to sit quietly & think about the following.
China is not set to make the same mistakes as Britain & the US, they do not want to assume the role of world police, hence no requirement for a blue water navy for power projection. They are quite happy to create hegemony via economic methods, not via the barrel of a gun.

Fin

Aug 11 02:44 AM

[Ricard:]

I would counter and ask that you also quietly consider the following:

Perhaps Britain and America didn't make the 'mistake' that you claim they made (imperialism is my guess as to what you're talking about) - they simply lacked the internal scale to take full advantage of it, although the jury is still out on America.

Name a nation that, beyond the last 200 years, has ever shunned advanced military technology, and still survives. Egypt? Look at their military. China? Developing it as we speak. India? American imports solve that problem. And the crown jewel of my argument - Israel. Take one look at the Israeli political stance, and then try to argue that China will not modernize its military.

China doesn't have a blue water navy as we speak because its economy didn't allow it to afford one until just recently. Now it will be presented with the choice of building one, and there is plenty of speculation that it isn't even a choice - it WILL build one, and shortly at that.

www.globalsecurity.org...

theasiandefence.blogsp...

Just because it's not reported daily on CNN or Fox News 'propaganda' channels doesn't mean that it's not a reality. I bear no hostility towards anyone on this forum, but I would kindly suggest that those of the opinion that military development runs secondary to the economy re-arrange their priorities.


On Aug 11 02:44 AM Paul Harper wrote:

> Regards my "popular" comment that China doesn't need a navy, I would
> encourage my detractors to sit quietly &amp; think about the following.
>
> China is not set to make the same mistakes as Britain &amp; the US,
> they do not want to assume the role of world police, hence no requirement
> for a blue water navy for power projection. They are quite happy
> to create hegemony via economic methods, not via the barrel of a
> gun.
>
> Fin

Aug 12 01:46 PM