Parts I & II of "China's Grand Strategy", an essay I'm writing


ZeEa5KPul

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China’s Grand Strategy

I’m quite taken with Halford Mackinder’s conception of Eurasia as the heartland of the World-Island (the geographic area comprising Eurasia, Africa, and Western Europe). In keeping with his thesis, I see the overwhelming focus of Chinese grand strategy until at least mid-century, and very probably beyond, to be the essential unification of the Eurasian heartland. This should not be taken to mean “unification” in a political sense – the populations of the region are far too culturally and linguistically distant for that to have a chance of success, as the Soviet Union painfully learned – or even a “soft” unification following the lines of the EU – as I shall argue later, I consider even monetary union a step too far (although, to be fair, only a step).

In what sense, then, do I mean “unification”? I believe the best answer to this question would be to examine it along different dimensions: politically, strategically, economically, and culturally. But before I do that, let me first define what I mean by the term “Eurasia”.

Exclusion of India:

The natural definition would be the geographic region encompassing the continent of Asia and the European peninsula. This differs somewhat for how I wish to use the term. First, it is often considered – and rightly so – that India, as a large and populous nation in Asia, is a part of Eurasia. Here I argue that it should be excluded from this particular geopolitical analysis for the following reasons: First and foremost, it is difficult to connect economically to the rest of Eurasia (the geographical region) as the Himalayas and the Tibetan Plateau effectively separate it (observe a topographical map, the impression is striking in a way no 2D map can convey). Second, it has not shed the legacy of British colonialism, and so looks principally to the culture of its former conquerors for guidance and example. Third, unresolved hostilities with China disincline it from participating in any Eurasian integration project where China plays a leading, or even a prominent, role. It is for these reasons that I argue that India is best understood as a maritime state – similar to Japan or Australia – rather than a heartland one.

One might object that Pakistan and other South Asian countries should also be excluded as – with the exception of the third point – they share these disqualifying characteristics with India. I shall attempt to argue the contrary using the example of Pakistan. Pakistan, as a geographically smaller and “narrower” state, can be economically connected to China by boring through the Himalayas (at some expense). To approach the same level of per-capita connectivity with India – if it were even willing to countenance such a thing – is a far more daunting prospect. The legacy of British colonialism scars Pakistan as it does India, but Pakistan is a far less populous country and has far warmer and closer relations to China; better yet, has had them for a long time. It is more conceivable that Pakistan would be far more amenable to Chinese cultural influence than India would be. Indeed, many Pakistanis have taken to studying Chinese to chase after opportunity; and 5,000 scholarships for Pakistani students to study at Chinese universities goes a lot farther in Pakistan than it would in India.

In short, Pakistan’s smaller geographical size and population, along with its willingness to cooperate with China make the prospects for Sino-Pakistani connectivity and integration far brighter than they are for India.

Exclusion of Western Europe:

Similarly to India, I wish to argue for excluding Western Europe – which I shall define, without serious controversy, as the countries west of Germany (inclusive). The primary reason for this exclusion is not geographical as it is with India, but rather economic, cultural, and strategic.

Let me begin by examining the economic reason for this exclusion. As fully-developed economies, the countries of Western Europe are primarily interested in preserving their monopoly on the commanding heights of technology, primarily against a committed effort by China to scale these heights and stake its claim to them. This struggle principally takes the form of exclusionary investment and trade regulations, closing of markets, as well as a concerted media campaign to paint Chinese technological advancement as illegitimate and underhanded. These states will certainly not willingly assist an effort by China to further its economic and strategic objectives.

Aside from the direct threat these countries perceive to their economic well-being, there is also the consideration that once China has attained comprehensive technological equality with them, they will lose the leverage they enjoy over developing countries as exclusive technology and capital suppliers.

The cultural and strategic reasons are equally important. All of these countries are security clients of the United States – and have been so for a long time – hence they have a strong interest in following (or at the very least not actively opposing) US strategic policy. It should be quite clear to any reader that the primary geopolitical opponent to the United States (which, culturally, must always have one) throughout the 21st century is China. Therefore, it takes no great wit to deduce that the countries of Western Europe will experience a great pressure to align their policies with that of their patron and take what steps they can to thwart China’s strategic designs.
 

ZeEa5KPul

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China’s present position and future prospects:

According to the IMF, China has a $13.5 trillion nominal and $25.3 trillion purchasing power parity adjusted GDP as of 2018. It is the second-largest and largest economy in the world by those respective measures. Remarkably, given its vast populous, China’s nominal per-capita GDPs is $9,600, while its PPP-adjusted per-capita GDP is $18,100; the 71st and 78th largest in the world by those respective measures. This clearly shows that the low-hanging fruit of China’s development are far from exhausted and, despite economic headwinds, China can expect a prolonged period of very rapid growth.

This comfortably places China as the largest national economy in Eurasia (by any conception of the term, since any sane conception excludes the United States). Despite its preponderant scale, China’s economy maintains distinctive characteristics of a developing economy: a large, low value-added manufacturing sector principally geared toward exporting low-cost goods, weak enforcement of intellectual property laws and an indigenous IP portfolio of dubious quality, a weak domestic welfare system, and a closed financial system with robust capital controls, among many others.

China balances these shortcomings with a strong, centralized, and hyper-competent government capable of pursuing long-term industrialization plans, world-class infrastructure, high rates of government and private investment, high rates of research and development spending, and high national savings and foreign reserves.

At present, China’s interaction with the other nations of Eurasia (and its periphery more generally) is almost entirely commercial. To take one example of this commercial hyper-focus, China has a mutual defense treaty with only one country: the Democratic People’s Republic of Korea (North Korea); contrast this with the multiplicity of defense treaties of different types the United States has around the world. Although the United States is a historical anomaly in this regard, China’s dearth of allies is also historically peculiar and is not at all commensurate with a country of its present - let alone future - stature. Whether this is the correct strategic approach for China to take is something I will presently defer examining.

The principal take-away here is that China is a country that straddles two worlds: the hyper-modern, cosmopolitan future typified by the glittering skyscrapers of its first-tier cities, and the backward, rural past typified by the poorest regions of its interior. For the immediate future, China’s highest national priority is to lift the foot mired in the past and plant it firmly in modernity. All of China’s foreign relations, including its relations with Eurasian states, must be understood through this overarching imperative.

To attain the admittedly arbitrary development goal of a PPP adjusted per-capita GDP of between half and two-thirds that of the United States by 2050, assuming that the US per-capita growth rate of 1.0% and a Chinese population growth rate of 0.5%, China must grow at an average rate of between 3.25% and 4.25% per annum over 30 years. For comparison, China grew at an average annual rate of 6.9% over the past 5 years. Given how far China currently is from the technological frontier, such rates of growth over a prolonged period appear eminently achievable barring a catastrophic implosion of the Chinese state.

If such growth is beyond China’s reach, that unhappy result must be the consequence of greatly diminished global growth. Needless to say, such massive economic turmoil will not leave the US unscathed – the US might even be the source of such contagion, as it was in the Great Recession of 2008 when its economy contracted as a result of the implosion of a severely over-leveraged housing bubble. For better or worse, globalization has tied together nations’ economic fates.

As China develops and its per-capita GDP rises, pressures to reform its financial system gain impetus. As I noted previously, China maintains strict capital controls – indeed, it has recently introduced legislation that punishes operators of “underground banks” with jail time if they flout these controls. While this is absolutely necessary to protect China from the ravaging effects of international speculative capital (so-called “hot money”) and capital flight, one cannot escape the conclusion that such a choice effectively strangles any near-term prospects of significantly internationalizing the yuan.

This is no mean issue. The overwhelming bulk of trade China conducts internationally is done in the national currency of what is most generously described as a geopolitical rival. Some modest efforts to internationalize the yuan, most notably the recent launching of an oil futures bourse in Shanghai, are promising; but they still confront the towering wall of capital controls.

A notable “concession” China has offered in recent trade negotiations with the United States is the opening of its financial system to foreign competition. Whatever the short-term disruption this might have (and it is quite predictable that these foreign companies will take significant market share), the long-term benefits of sharpening and honing domestic financial firms through exposure to tough competition is wholly beneficial, and marks an important step in the maturation of the Chinese financial system. Of course, any such deal must be reciprocal, with Chinese firms having the freedom to operate in Western markets.

Part II

[The PLA’s Modernization and its Objectives]

The People’s Liberation Army – the formal name of the Chinese armed forces – is in the midst of an epochal transformation; moving away from its origins as a massive, historically under-equipped and under-mechanized ground force bound to China toward a balanced military capable of fluently performing joint operations far from the homeland. The PLA is divided into five service branches: the Ground Force, Navy (encompassing a naval air arm and a marine corps), Air Force, Rocket Force (ground-launched ballistic and cruise missiles – both conventional and nuclear – play such a prominent role in Chinese military doctrine that an entire service branch has sprung up around them), and Strategic Support Force (the branch of the military concerned with space, cyberspace, and electronic warfare).

The Chinese military envisions its reforms taking place in two phases – the first from the present up to 2035 when the PLA “completes modernization” and 2049 (the centenary of the foundation of the People’s Republic of China) when the PLA becomes a “world-class fighting force.” These pronouncements are vague (and quite probably understated, in keeping the “hide and bide” dictum of Deng Xiaoping), but their exact details are not terribly significant to this analysis. I hold that the primary role of the Chinese armed forces going forward is to bring about a posture of “global counter-intervention.” Simply stated, this is the expansion of China’s present regional counter-intervention (what is termed in the West as anti-access/area denial) - the ability to deter or defeat a military intervention by a rival power (usually the United States) in a specific geographic area - to China’s interests around the world. This should not be taken to imply that China seeks to blunt US intervention anywhere in the world; for instance, deterring America from intervening in the Caribbean is both prohibitively difficult and of dubious strategic value. Here “global” means not confined to a specific region. To be able to do this effectively, China will require a military with capabilities and tactics very similar to that of the American military – but with a very different strategic doctrine and purpose.

I do not wish to burden this essay with a lot of technical detail regarding the PLA’s technological advancement, procurement, training, etc. as there are already several excellent sources that I would simply be regurgitating available to the interested reader. I shall state only that the modernization program proceeds apace and that the goals set before it are readily achievable. What I wish to examine is the strategic implications of China succeeding in so starkly shifting the military balance of power between it and the United States, first in East Asia and then farther afield.
 

ZeEa5KPul

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[The Proximate Struggle]

America, as a power very distant from the World-Island, relies critically on a network of alliances with weaker states to be able to maintain a military presence on the fringes of Eurasia. As such, it faces huge logistical challenges in sustaining this presence (the so-called “tyranny of distance”) and is never able to exert maximum power in one region, lest challengers in the other regions use this absence in ways America perceives as inimical. It is important to note here that this network of alliances is chiefly how America exercises political influence over its allies – its previously preponderant economic influence has already been eroded by China, as the vast majority of these countries trade more with China than they do with America; trade and investment that is still growing briskly. There is a limit to how much military protection America can withdraw from Europe without this influence declining precipitously, which in turn bounds the military resources America can dedicate to East Asia. China, free from these alliance obligations and calculations, faces no such demands on its armed forces – it can dedicate them in their entirety to the regional theater.

The strategic calculations of America's Asian allies is thus a crucial determinant of the presence America can maintain in China’s region and the power it can project therein. Any ally, if it is capable of exercising sufficient sovereignty over affairs of national defense, will remain committed to the alliance only if it continues to perceive that America is an adequate security provider. America’s ability to be so is, put a bit crudely, a product of two factors: America’s capability and America’s resolve. The former factor is clearly in America’s favour – although I will note here that China’s military modernization and build-up is closing this gulf more quickly than most realize. It is the second factor that is deeply problematic for America, and that is what I will turn my attention to now.

It has been noted by many geostrategic analysts that America’s geographic remove from the World-Island behind two vast oceans, and its two vastly weaker neighbours insulate it from military threats to such a degree that it is all but impossible to conquer or subdue by force. This is most certainly correct. However, what these analysts never consider is that this surfeit of safety, coupled with near-autarky, makes America a very unstable security guarantor. The reader might scoff at this assertion and retort, “How could that possibly be? America has remained steadfastly committed to its alliances since the end of World War II. Surely that argues for America’s stability as a security guarantor.” This is a prima facie strong objection, so it is worth examining carefully.

[America Between Two Enemies]

Consider the opponent America faced during the Cold War – the Soviet Union was a messianicly driven state that had as its raison d’être the wholesale transformation of the economic, political, social, even personal lives of every human being on Earth, and regularly reminded them of this. It occupied vast swathes of Europe, a region that is culturally resonant to Americans, who in turn felt that it was their blood-duty to liberate their brethren from the "Eastern barbarian hordes." Unhappily for the Soviet Union, its revolutionary zeal also extended to its commitment to a very specific, very inadequate form of economic management. Its ideology at once artificially boosted Americans’ resolve and prevented it from ever acquiring the capability to pose a potent threat. As has been wryly noted, the Soviet Union was never “the Soviet Union.”

Contrast this with China today. China maintains, and mostly upholds, a commitment to non-interference in the internal affairs of other states. Indeed, it is the United States that suffers from a messianic obsession with changing China’s domestic politics. China neither occupies nor threatens regions of emotional significance to America; certainly the countries (and renegade provinces) of East and Southeast Asia do not hold the same cultural cachet in America as European - especially western and northern European - countries do. Anyone doubting this need only compare the depictions of the respective populations in American media, the attitude of Americans towards immigrants and tourists from these countries, and the conduct of American tourists in those countries. This lack of cultural affinity is also revealed by the absence of a NATO-like regional alliance network – America’s alliances are solely with countries it conquered, in the first or second degree, not kin. The reader might bemusedly remember that these allies have at least as many disputes among themselves as they do with China, further undermining the cohesion of any grouping. Most importantly, these allies do a whopping volume of business with China.

At worst, all that China can inflict on America is the sting of losing distant (and seldom thought about) imperial possessions. All of this aligns America’s resolve with the prediction of abstract theory.

Of course, I need not remind the reader that China is on a wholly different economic plane from the former Soviet Union. Where the Soviet Union maintained an ideological passion, China substitutes a studious pragmatism that suffuses all aspects of its worldview – including the management of its economic affairs. Whereas the Soviet Union proudly walled itself off from the world outside its clique, China found the humility to adopt economic principles and ways of doing business from historical enemies. This enthusiasm for foreign ideas has caused some chagrin among Western observers, who charge that it extends to intellectual property and trade secrets as well. The outcome of this economic prescience is the fact, noted previously, that China’s economy is now more than 25% larger than America’s when measured on a purchasing power parity basis. This is something the Soviet Union had never come close to achieving.

I need not dwell overmuch on China’s resolve in East Asia. What are distant matters of normative principle and imperial self-conceit to America are very proximate matters of survival to China. That is all that need be said on this count.

To summarize, America maintained enduring advantages over the Soviet Union, in both resolve and capability, that it does not and cannot hold against China. This should put paid to any comparison between China and the USSR as competitors to America. Crucially, these advantages America enjoyed allowed it to obfuscate the fundamental mercuriality of its security guarantees. China is America’s only opponent with which a contest of strength will be reduced to a contest of wills, and when will is the decisive test, America might be found wanting.

Nothing I wrote above is news to these allies’ strategic analysts. This is the principal reason the American foreign policy establishment (unkindly, though not inaccurately, termed the “blob”) is so anxious to constantly, and very publicly, rhetorically remind its allies of its (purportedly) unwavering commitment to their security. Why it must formulate credulity-straining farces like the “domino theory.” Why it must always style itself as a defender of “human rights” and “democracy.” Why “isolationism” is such a heretical word, uttered in public only to be vehemently denounced. Why Donald Trump’s banal and mild criticisms of America’s foreign commitments rouses such a vitriolic reaction. It is America’s desperate charade to convince others, and itself most of all, that it is committed when it has no real reason to be.

These observations do not entail a sudden realignment of America’s allies the moment China’s relative power passes some threshold. States are not rational actors constantly calculating power balances and seamlessly shifting allegiances like perfectly oiled weather vanes. There are costs to such shifts, reputational costs to being seen as perfidious, not to mention more tangible costs exacted by the jilted former security guarantor. There is also the simple inertia of the elites within a state, who are very comfortable with the present arrangements - thank you very much - and very willfully see no good reason to change them.

But it does entail that crises have a far greater potential to cause enduring realignments in such situations than they would otherwise. Just as shifting tectonic plates might imperceptibly fracture a mountain that appears to all as sturdy and enduring as it ever did... until one pebble skitters down the mountain in just the right way to cause a landslide.

[To be continued.]
 

ZeEa5KPul

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Not really Part III, but perhaps an addendum to the above

[The Strategic Utility of Frozen Conflicts]

I've been giving some thought to the Taiwan issue, its ultimate resolution, and how it fits into China's broader strategic and historical objectives. I'd first like to briefly comment on how I define those objectives: one is China removing the last vestige of the Century of Humiliation and reclaiming its final lost territory, Taiwan, and the other is the military expulsion of the United States from Asia and establishing China as its undisputed hegemon. While those goals overlap, they are logically distinct and thus I initially thought they could be considered in isolation, especially since the former is more readily achievable than the latter in the near future. However, I've come to the realization that separating those goals is erroneous.

To see why, I have to discuss how I thought China would approach war, and I will admit that my previous thoughts on the matter were somewhat naive. I thought that the only arbiter of whether China would go to war would be how it weighed its chances of victory and at what cost victory would come, and while that clearly is a very important consideration, it's far from the whole story. I hadn't considered what one might call the "narrative" part of a war; wars must be, for want of a better term, saleable to history.

Consider the wars America fought after it emerged victorious from the Cold War - every single one was waged against pitifully weak opponents, yet all were accompanied by grandiose narratives that bordered on the comical like "the responsibility to protect." America could have flicked countries like Serbia, Iraq, etc. off the map without regaling us with its paeans to Freedom and Democracy™ and how it was going to save the world from being swallowed up by Milosevic and Saddam.

The point isn't to poke fun at the US's hamfisted lies, it's to point out that the US had to lie. Even against such feeble enemies and at such minimal costs to itself, it still had to sell its wars. There's no reason to believe the same doesn't hold true for China. It's only soulless nationalists like Yours Truly who view war as simply one of many instruments of statecraft and the decision to go to war as reducing to a clinical cost-benefit analysis; most people don't share that sangfroid and that's probably for the best. For most, the decision to support or oppose war is a deeply emotional one based on national honour, culture, pride, fear, anger, righteousness, and what have you. Nobody ever gave "because we can win" as a reason to go to war, even though it's by far and away the best reason. There are always stories and myths involved.

Once again, China is no different - a war to reunify Taiwan would be deeply emotionally resonant in China, whereas a war to expel the US from Japan and South Korea wouldn't be, even though I believe a good argument can be made for the latter being far more strategically important. How to resolve this conundrum? Well, the solution lies in the title of this piece: defer any war with Taiwan until China is powerful enough to broaden the scope of the conflict to one of serving the latter goal (America's expulsion) primarily and the former goal (reunification) secondarily. This would allow China to advance its cold national interest under the umbrella of an emotive "righteous" war.

Following this logic, my previous thinking that China should decisively resolve the Taiwan issue the moment it attains the military capability to do so is a deeply misguided one. China would gain Taiwan, but it would lose the appreciating asset that is the frozen conflict. If after this China pursued its goal to expel the US, that would smack of a war of aggression against Japan and Korea. Even the most sympathetic supporter would be forced to admit that this was a war China chose to fight after it had unified and righted the wrongs inflicted on it. However, an identical campaign waged against Japan and Korea in the context of a reunification war against Taiwan would at the very least be controversial; it would be easy to argue that these steps are necessary to defeat US intervention in support of Taiwanese separatists. That at the end of it the US would be gone from the region, well... that's a bonus.

If the US took China seriously enough to work through a similar analysis, how would it respond? Counterintuitively, the best move would be to push Taiwan into declaring independence and then leaving it high and dry. This would have the twin benefit of nullifying China's future pretexts and give the US a face-saving way out of having to defend Taiwan. If any ally looks at the US in horror, it can simply say "I said I'd help them if they didn't do anything crazy. They did something crazy, so they're on their own." In the best spirit of "be careful what you wish for", we should not want this outcome, or any political settlement with Taiwan, before China is ready to play for all the marbles.

So here's hoping the present situation remains exactly as it is now. No war, no political settlement, no declarations of independence, no resolution of any kind. Just a conflict placed in the freezer as China pumps out warship after warship.
 

BMEWS

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So here me out, a lot of Trump supports think Trump is paying the long game, that is seemingly buffonary is actually intentional and that he is play 11D Chess.... Even those on Biden side have questioned Trumps COVID response and some have expressed that it truly seems like Trump is intentionally trying to make the COVID situation as bad as it can get in the US.

Trump is intentionally allowing the COVID numbers in the US to grow out of control, intentionally not reporting the true numbers and asking the government to fudge the number downwards, and pressuring other nations to open up to America and allow flights back again… This has the direct affect of unleashing (and prolonging) COVID into the rest of the world even once they have it well contained...

So what is the end game here? Even if Trump wasn't playing 11D Chess and even if he truly was nothing more than incompetent, I find it hard to believe the DoD/CIA/NSA would just let him continue down this path if it weren't for a larger more important totality of overarching grand goal....

I believe this is the final act of the Great Harvesting that has been going on for decades...

Let me explain:

Ever since August 15, 1971, the US has gradually stopped its real economy and moved into a virtual economy. It has become an “empty” economy state. Today’s US Gross Domestic Product (GDP) has reached US$22 trillion, but only $6 trillion is from the real economy.

By issuing debt, the US brings a large amount of Dollars from overseas back to the US’s three big markets: the commodity market, the Treasury Bills market, and the stock market. The US repeats this cycle to make money: printing money, exporting money overseas, and bringing money back. The US has thus become a financial empire.

Many people think that imperialism stopped after the U.K. became weak. Actually, the US has conducted a hidden imperialism through the US Dollar and has made other countries its financial colony. Today, many countries, including China, have their own sovereignty, Constitution, and government, but they are dependent on the US Dollar. Their products are measured in Dollars and they have to hand over their material wealth to the US in exchange for the US Dollar.

If we acknowledge that there is a US Dollar index cycle and the Americans use this cycle to harvest from other countries, then we can conclude that the next harvesting time for the Americans would be from none other than China. Why? Because China had obtained the largest amount of investment from the world. The size of China’s economy was no longer the size of a single country; it was even bigger than the whole of Latin America and about the same size as the rest of East Asia’s economy.

Why does the US economy rely so desperately on capital flowing back to its market? It is because, since 1971, the US has given up producing real products. They called the real economy’s low-end or low-value- creating manufacturing industries garbage industries or sunset industries and transferred them to developing countries, especially China. Besides the high-end industries, such as IBM and Microsoft, that it kept, 70 percent of its people moved to finance and financial services industries. The US has completely become a hollow state which has little real economy to offer investors a big return.

The Americans have no choice but to open the door of the virtual economy, which is its three big markets. It wants to get the money from the world into these three markets so that it can make money. Then it can use that money to harvest other countries.

The Americans only have this one way to survive now. This is the US’s national survival strategy. The US needs a large amount of capital flowing back to sustain its daily life and its economy. If any country blocks that capital flow, it is the enemy of the US


In 1979, after flooding the world with US Dollars for nearly 10 years, the Americans decided to reverse the process. The US Dollar index started climbing in 1979. Dollars flew back to the US and other regions received fewer Dollars. Latin America’s economy boomed due to an ample supply of Dollar investment, but this suddenly stopped as its investments dried up.

Argentina, which once had its per capita GDP among the ranks of the developed countries, was then the first to drop into a recession. Unfortunately, then Argentine President Galtieri, who came to power through a military coup, chose to use a war to solve the problem. He turned his eyes toward the Malvinas Islands (which the British called the Falkland Islands), which are 400 miles away from Argentina. These islands had been under British rule for over 100 years. Galtieri decided to take them back.

Of course, he couldn’t take on a war without the US’s blessing. He sent an intermediary to inquire about the US’s opinion. US President Reagan answered it lightly: it was between you and the U.K.; the US had no position and would stay neutral. Galtieri took it as acquiescence by the US He started the war and took over the islands with ease. The Argentinians were crazy.

However, then U.K. Prime Minister Margaret Thatcher claimed that they would absolutely not accept it and forced the US to speak out. Reagan tore off his neutral mask, issuing a statement to blame Argentina for the invasion and to stand by the U.K. The British dispatched a task force with an aircraft carrier, travelling 8,000 miles, to take the Malvinas Islands back.

The US did not start the war, but it did not let a crisis go to waste. At the same time, the US Dollar appreciated and international capital flew back to the US just as the US had wished. When the Malvinas Islands War started, investors around the world concluded that a regional crisis had started in Latin America and the Latin American investment environment would deteriorate. So investors withdrew their capital from there. The Federal Reserve, at the same time, announced an increase in interest rates, which further accelerated the withdrawal of capital from Latin America as well as the appreciation of the Dollar.

The Latin American economy dropped to the bottom. The capital leaving there went to the US’s three big markets. It gave the US the first bull market since the Dollar had been unpegged from gold. The US Dollar index jumped from 60 to 120, a 100 percent increase.

The Americans didn’t stop after making big money from their bull market. Some took the money they just made and went back to Latin America to buy the good assets whose prices had just fallen to the ground. The US harvested handsomely from Latin America’s economy.

If this had happened only once, it could be argued as a small probability event. As it has occurred repeatedly, it indicates an intended pattern.
 

BMEWS

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In 1986, the US had just completed its first cycle of having a weak Dollar for ten years followed by six years of a strong Dollar. The US Dollar index started to decline again. Ten years later, in 1997, the Dollar index started climbing. This time, the strong Dollar also lasted for six years.

During the second ten-year weak US Dollar stage, US Dollars went mainly to Asia. What was the hottest investment concept in the 1980s? It was the “Asian Tigers.” Many people thought it was due to Asians’ hard work and how smart they were. Actually the big reason was the ample investment of US Dollars.

When the Asian economy started to prosper, the Americans felt it was time to harvest. Thus, in 1997, after ten years of a weak Dollar, the Americans reduced the money supply to Asia and created a strong Dollar. Many Asian companies and industries faced an insufficient money supply. The area showed signs of being on the verge of a recession and a financial crisis. This mirrored what happened in Latin America in 1979.

A last straw was needed to break the camel’s back. What was that straw? It was a regional crisis. Should there be a war like the Argentines had? Not necessarily. War is not the only way to create a regional crisis.

We saw that an American financial investor named Soros took his Quantum Fund, as well as over one hundred other hedge funds in the world, and started a short selling attack on Asia’s weakest economy, Thailand. They attacked Thailand’s currency, the Thai Baht, by short selling for a week. This created the Baht crisis. Then it spread south to Malaysia, Singapore, Indonesia, and the Philippines. Then it moved north to Taiwan, Hong Kong, Japan, South Korea, and even Russia. Thus the East Asia financial crisis fully exploded.

The camel’s back was broken. The world’s investors concluded that the Asian investment environment had gone south and withdrew their money. The US Federal Reserve promptly blew the horn and increased the Dollar’s interest rate. The capital coming out of Asia flew to the US’s three big markets, creating the second big bull market in the US It was a mirror image of Latin America.

When the Americans made ample money, they followed the same approach they did in Latin America: they took the money that they made from the Asian financial crisis back to Asia to buy Asia’s good assets which, by then, were at their bottom price. The Asian economy had no capacity to fight back.

The only lucky survivor in this crisis was China.

It was as precise as the tide; the US Dollar was strong for six years. Then, in 2002, it started getting weak. Following the same pattern, it stayed weak for ten years. In 2012, the Americans started to prepare to make it strong. They used the same approach: create a regional crisis for other people.

Therefore, we suddenly saw several events happening in relation to China and US allies at that time: the dispute over the Senkaku/Diaoyu Islands with Japan, and the dispute over Scarborough Shoal with the Philippines. All these happened during this period. These might not appear to have much to do with the US Dollar index, but was it really that case? Why did it happen exactly in the tenth year of the US Dollar being weak?

The US could wait a little bit more, because it played with too much fire in its own mortgage market earlier and got itself into a financial crisis in 2008. The US could afford to delay it’s scheduled Dollar hike a bit.

If we acknowledge that there is a US Dollar index cycle and the Americans use this cycle to harvest from other countries, then we can conclude that the next harvesting time for the Americans would be from none other than China. Why? Because China had obtained the largest amount of investment from the world. The size of China’s economy was no longer the size of a single country; it was even bigger than the whole of Latin America and about the same size as the rest of East Asia’s economy.

This also explains the US’s Pivot To Asia foreign and military policy change in 2012, which was really a “Pivot to China”. This also explains the sudden onslaught of negative media, in the US and all of its allies such as S. Korea, Japan, NATO, etc., against China since the Pivot To Asia. The Americans were conditioning their population for conflict by portraying China in a negative light, and moving their military to surround China.

Since 2012, incidents have kept popping up around China, including the confrontation over China’s 981 oil rigs with Vietnam and Hong Kong’s “Occupy Central” event. Can they still be viewed as simply accidental? “Occupy Central” was openly supported and funded by the NED (National Endowment for Democracy), a US NGO which is just the public arm for CIA operations. The US has had its hands in toppling many governments around the world since the 1960s. To fully explore this topic would take an entire book, altogether.

Hong Kong authorities in May 2014 heard that an “Occupy Central” movement was being planned and could take place by end of the month. However, it didn’t happen in May, June, July, or August.

What happened? What were they waiting for?

Let’s look at another time table: the US Federal Reserve’s exit from the Quantitative Easing (QE) policy a.k.a printing money. The US said it would stop QE at the beginning of 2014. But it stayed with the QE policy in April, May, June, July, and August. As long as it was in QE, it kept overprinting Dollars and the Dollar‘s price couldn’t go up. Thus, Hong Kong’s “Occupy Central” should not happen either.

At the end of September, the Federal Reserve announced the US would stop it’s QE. The Dollar started going up. Then Hong Kong’s “Occupy Central” almost immediately broke out in early October.

The Senkaku/Diaoyu dispute, Scarborough Shoal, the 981 rigs, and Hong Kong’s “Occupy Central” movement were actually all bombs. The successful explosion of any one of them would lead to a regional crisis or a worsened investment environment around China. That would force the withdrawal of a large amount of investment from this region, which would then return to the US

Perhaps the Chinese knew something was awry, because they did not take the bait. All of these situations were defused and none escalated to the point of international conflict.

As of today, the last straw to break the camel’s back has yet to occur and the Camel is still standing. Therefore, the Federal Reserve couldn’t blow its horn to increase the interest rate, either. The Americans realized that it was hard for them to harvest China, so they looked for an alternative.

Where else did they target? Ukraine, the connection between the EU and Russia. Of course there were some problems under Ukraine President Yanukovych’s administration, but the reason that the Americans picked it was not simply because of his problem. They had three goals: teach a lesson to Yanukovych who didn’t listen to the US, prevent the EU from getting too close to Russia, and create a bad investment environment in Europe.

Thus, a “color revolution,” took place, which the Ukrainians themselves appeared to have led. The US achieved its goal unexpectedly: Russian President Putin took over Crimea. Though the Americans did not plan it, it gave the Americans better reasons to pressure the EU and Japan to join the US in sanctioning Russia, adding more pressure to the EU’s economy.

Why did the Americans do this? People tend to analyze it from the geo-political angle, but rarely the capital angle. After the Ukraine crisis, statistics showed over US$1 trillion in capital left Europe. The US got what it wanted: if it couldn’t get Dollars out of China, it would get Dollars out of Europe.

However, the next step didn’t occur as the Americans planned. The capital out of Europe didn’t go to the US Instead, it went to Hong Kong.
 

BMEWS

Junior Member
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One reason was that the global investors preferred China, which claimed the world’s number one economic growth rate, despite the fact that its economy started to cool down. The other reason was that China announced that it would implement the Shanghai-Hong Kong Stock Connect. Investors over the world wanted to get a handsome return through the Shanghai-Hong Kong Stock Connect.

In the past, Western capital was cautious about entering China’s stock market. A key reason was China’s strict foreign currency control: you can come in freely but you can’t get out at will. After the Shanghai-Hong Kong Stock Connect, they could invest in Shanghai’s market from Hong Kong and leave immediately after making a profit. Therefore, over US$1 trillion stayed in Hong Kong.

This is why the hand behind “Occupy Central” has kept planning a comeback and has not wanted to stop. The Americans need to create a regional crisis for China, to get the money back to the US The US tried one more time in Hong Kong: the 2019 riots.

What started out as a protest over an extradition bill proposed by Hong Kong lawmakers, quickly exploded into an international incident. NED, again, has publicly supported the 2019 Hong Kong Riots.

Riot leader Joshua Wong testified before the US congress. Joshua Wong and high profile opposition leaders Anson Chan and Martin Lee were seen speaking to Julie Eadeh, the US Consulate General in Hong Kong. Opposition leader Jimmy Lai has even met with the Vice President, the second highest position in the US government, Mike Pence. Hong Kong youth were waiving American flags and asking Donald Trump to rescue them. Some protesters voiced desire to be an independent nation. Videos can be seen of the rioters violently attacking other Hong Kong citizens and police, anyone from mainland China, destroying public infrastructure such as subway stations and roads, and faking their injuries for photographers.

Why was there so much attention put on Hong Kong globally, especially when in 2019 riots raged on in France, Iraq, Afghanistan, etc. with much more death?

(Hong Kong has had two confirmed deaths. One was a rioter who fell off a narrow bridge connecting two parking structures while wandering alone, and a man who was killed after being hit with a brick thrown by a rioter).

Why were the rioters so irrationally violent, destructive, and politically provocative over an extradition bill? The US was baiting Beijing to intervene, but once again Beijing did not take the bait.

Last year during the HK riots it was expected that the riots would spill over into mainland China causing uprising and destabilization of all of China, when that didn’t happen and when the Chinese didn’t kowtow to Plaza Accord 2.0; the only other option left was/is to destabilize and harvest the rest of the entire world instead!
 

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