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Java Jag is written by a New York City Executive who has been reading newspapers since he was 12 and has been paying keen attention to the economic world since then. He is a contrarian and has done quite nicely in his investments for some 30 years, thank you very much. Currently holds UUP bought... More
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  • Boxer Rebellion Round Two  0 comments
    Oct 19, 2010 10:28 AM

     A parable: It was a difficult, confusing time in the empire. Once the greatest nation on earth, a technology leader, the world’s largest economy with high standards of living and a robust culture, it led the way in its region and looked down on those less developed, i.e., the whole world. Once, all the countries that came into contact with it treated it with deference and respect.

    But, in these new hard times, endless corruption, unsustainable payments to the elite and political intrigue weakened the central government. Internal divisions of religion and class so weakened the ruling class that they could not defend against foreign influence and, ultimately, occupation.


    Foreign corporations encroached on the empire and forced cheaply made industrial goods upon the people, destroying centuries of native industries. Textiles and manufactured products brought from abroad weakened the currency and increased the debt. Taxes were raised to finance the government’s obligations.  Hardship and hunger increased. There was little or nothing the nation had to offer foreigners, so trade imbalances ballooned. The government did not have a solution and became increasingly helpless and desperate.  Their backs were against the wall.

    Does this sound like the United States of America in 2010? Another correct answer would be China in 1900, the year of the Boxer Rebellion.

    China fell hard. The late 19th century found China on its knees. Technology savvy European powers were able to break through China’s physical and cultural walls, forcing China into a half century of humiliation and self-destruction. The West stopped at nothing. They pushed opium on the empire, creating a market of misery out of millions of addicts. They forced Christianity upon the ancient believers in Confucius and Lao-Tzu’s Taoism, disrupting religious beliefs that existed for two thousand years. They granted trading rights to themselves, marginalizing or eliminating the sovereignty of regional Chinese governments and emasculating the central one. Chinese currency had no convertibility, so the only form of payment acceptable to westerners was gold or silver. America, for its part, wanted an “open door” trade policy to break the European stranglehold on imports.

    What happened next is illustrative and what today’s currency-and-trade oppressive Chinese leadership must fear. For they know full well their own history.

    The self-described “fists of righteous harmony” (termed “Boxers” by westerners) aimed to redress the humiliation felt by the Chinese. Arising in the north of Shandong Province, this shadowy organization was infused with a mythical martial arts spirit and a Jihad type belief in their own immortality --the importance of the Muslim Chinese in the Boxer rebellion has been largely ignored. The desperate and ineffectual Empress Tzu Hsi, last of the Ch’ing dynasty, was unsure how to control the Boxers, who wanted to “destroy the foreigner.”  The situation quickly got out of hand.

    The “righteous fists” had their own agenda.  They demanded nothing short of a nationalistic cleansing and a restoration of China’s greatness and sovereignty. The opium traders, the low cost manufactured goods, and the Christian missionaries all had to go immediately and by force.

    The fists swept the countryside, killing, burning and destroying any and all signs of western influence. They slaughtered missionary families and burnt their churches. They set fire to the foreign legations that existed in the main cities. As Charlton Heston fans may remember, this all culminated in 1900 with the surviving foreigners holed up in Peking for fifty-five days, until an arriving Western multi-national army rescued them.

    Why would the Chinese fear this movement happening in America?  Because the shoe is on the other foot.  Having destroyed our manufacturing industry, the Chinese continue to force the opium of low priced goods on us. Now, as then, trans-national companies put their interests before their country’s interests and dictate trading terms. Profits are all. U.S. steelworkers and Senator Schumer, in the role of Boxer General Dong Fuxiang, seeing their country bleeding, have risen to the occasion, and are on the offensive.

    Even the parallel of the Chinese being forced to raise internal taxes to make up for the revenue that poured into the hands of Liverpool manufacturing millionaires, resonates today when we look at our states and cities and their fiscal crises.

    The Chinese know what a popular rebellion looks like. Boxer was one. Tiananmen another. Premiere Wen Jiabao knows what domestic unrest and civil instability can bring. He has been pleading and threatening not to import it to China. Better in Michigan.

    When the Chinese, who monitor everyone’s media very carefully, see that the movement to free ourselves from their tyrannous mercantile yoke is serious, look for window-dressing concessions like allowing them to build factories and invest here. It will happen.  They are not stupid and that 2.4 trillion dollar pile of reserves has to go somewhere. When they see that politicians --currently there are some thirty nine house and senate races using China’s unfair trade as a theme -- get elected, they will get very nervous.

    The Boxer Rebellion ultimately failed and Western powers doubled their imposition of misery on the Chinese. They forced them to further weaken the government’s authority and to pay crippling reparations. Eventually this led to Mao and the Draconian rule of the Communists. Let’s hope America will have a more successful rebellion and redress the oppressive trade policies of the Chinese in a more enlightened and effective manner.

       



    Disclosure: No Positions
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