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Saturday, June 10, 2017

China-US Begin Delicate Dance

Originally Published January 24, 2009; Last Updated June 10, 2017; Last Republished June 10, 2017

China and United States begin the delicate domestic dance of figuring out how to synergistically propel each country''s economic growth without alienating one another.

On one level this is a "problem" all nations should have—mutual economic interdependence such that neither nation can effectively afford to alienate the other. Each must work with the other or both nations will suffer.

Economists for both China and the United States are excellent, but this is not fundamentally an economist''s problem nor can they do little more than crunch the data, develop and run the models, and provide economic forecasts.

This is about the kind of relationship China and the United States expect to develop and maintain over the next century. Get it right and each country will gloriously benefit—get it wrong and the result will be anything but harmonious.

It's not the time for trite and trivial accusations and counter-accusations about currency manipulation. It''s a time for candid, frank, transparent, honest, and broad ranging discussions about what each country requires from the other to ensure and assure our mutually beneficial friendship extends through the next half century and beyond.

Economists will play a role. Skilled leadership, politicians, and negotiators each capable of assuming nothing, exploring everything, and making tough transformational decisions will play an even greater role. Treat it as a short term rhetorical game for gain versus a long term candid, honest, frank, and transparent discussion between mutually respectful friends at your nation''s own risk!  

Res:

UPDATED 10/25/2016 Brookings, A Glass Half Full: The Rebalance, Reassurance, and Resolve in the U.S.-China Strategic Relationship

It's difficult to think of big power nations working hard together to complete a quality bilateral investment treaty as a relationship on a bad path. A multidimensional relationship that captivates, confounds, and challenges, sure4, but that's not bad!

UPDATED 06/18/2010 WH, Letter from the President to G-20 Leaders
"...I also want to underscore that market-determined exchange rates are essential to global economic vitality. The signals that flexible exchange rates send are necessary to support a strong and balanced global economy...."--President''s June 2010 G-20 Letter--
Blog:

UPDATED 02/26/2010 CFR, Reality Bites. A short light-hearted assessment of the current China-U.S. relationship that's maybe too close to the truth.

UPDATED 06/02/2009 WSJ, Full Text of Geithner's Speech at Peking University. Geithner''s former Mandarin teacher has a laugh at his expense. Presenting him with an earlier picture while hinting that more than learning Mandarin was afoot.

UPDATED 05/30/2009 ChinaDigitalTimes, All Eyes on U.S. Treasury Secretary Geithner's First Trip to China. Our young (47) Secretary of Treasury, a Mandarin speaker, heads to China for economic talks—be bold—the prescient vision of our first Secretary of Treasury, 34 years-old New Yorker Alexander Hamilton still awes modern minds.

Web:


UPDATED 06/10/2017 CSIS, Brzezinski: On Reconnecting Asia

Zbigniew Brzezinski died on May 26, 2017; his work continues at the Brzezinski Institute on Geostrategy 

Our nation must learn to understand future great power relationships as a participatory dance to enjoy and not a manipulatory threat to fear.


UPDATED 06/06/2017 UMNChinaCenter, Griffin Lecture 2017: James McGregor on "A Reset in U.S.-China Relations"


UPDATED 05/16/2017 CCTV, Belt and Road Initiative Helps Achieve UN 2030 Agenda for Sustainable Growth: UN Chief


UPDATED 04/13/2017 WSJ, China's Trillion-Dollar Bet on the Yuan


UPDATED 03/04/2017 Asia Society, The End of China's Economic Miracle? (Complete) and FT, The End of the Chinese Miracle

 

Continuing improvements and transition of China's economy (e.g. inefficiencies, freer currency, anti-corruption, environment pollution, indicators, import model etc.) requires tough decisions, hard work, and help from the United States et al., not miracles.

UPDATED 03/01/2017 Reuters, U.S., China Discuss 'mutually beneficial' Economic Relationship
UPDATED 01/17/2017 WEF, Davos 2017 - Opening Plenary with Xi Jinping President of the Peoples Republic of China and FP, Xi Jinping, Head of World’s Largest Communist Party, Champions Global Trade


The President of the Peoples Republic of China and leader of the Communist Party of China defending the liberal world trade regimen against the astonishing illiberal assertions of the prospective president of the United States! (e.g. praising Britain's EU exit and its weakening currency; threatening punitive tariffs; threatening to scrap multilateral trade agreements etc.)  You cannot make this stuff up!!
"Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war." --President Peoples Republic of China, Xi, Jinping, Davos 2017--
UPDATED 01/14/2017 CGTV, Exclusive interview: US Ambassador to China Max Baucus on President Xi attending Davos


One suspects President Xi et al. will quickly learn how to correctly filter an increasingly noisy U.S.-China relationship, which will produce a surprisingly familiar signal.

UPDATED 12/06/2016 SCMP, China’s borrowing costs surge, sending economy into cycle of implicit monetary tightening and Moody's, Moody's & CCXI 2017 China Credit Outlook Conference assesses challenge of maintaining growth while implementing reform

 
 

It's difficult to delicately dance with a dance partner behaving like a bull[y] in a bullfighting arena charging at red capes! A skillful matador(s) will be required to [re]tire the bull[y] without getting gored or harming the bull[y].

UPDATED 11/21/2016 CCTV, Presidents Xi and Obama to meet in Peru and President Obama Holds a Bilateral Meeting with President Xi of China

 

Thank you President Obama for your global leadership during the past eight years. Watching your titular successor, to date, dance with one leg and arm is a tragicomedy, which trivialize confidence in nations' cooperative relationships.

UPDATED 11/10/2016 Reuters, Beijing says EU's proposed reforms against Chinese exports disappointing
UPDATED 11/08/2016 PaulsonInstitute, Jeff Bader & Dennis Wilder: “How Should the New President Deal With China?” and CAP, Recalibrating U.S.-China Relations in Southeast Asia (pdf)

 

Premier Li's recent westward journey points our "[not so] new" President towards many fruitful opportunities to advance our cooperative bilateral relationship with China.

UPDATED 11/03/2016 Reuters, Exchange Rate USCNY and ChinaDaily, Premier Li to start 8-day trip to Central Asia and East Europe
UPDATED 10/21/2016 Xinhua, Premier Li expects early conclusion of China-U.S. investment treaty negotiations 
UPDATED 10/01/2016 CCTV, Obama Stresses Need for Coordinated Action Following G20 and IMF, Lagarde Urges Action to Deliver on G20’s Hangzhou Commitments

 

"The G20 also welcomed the inclusion of the Renminbi into the SDR (Special Drawing Right) currency basket as of October 1st--an important milestone that will help strengthen the international monetary system as well as China's role in the global economy." --IMF, Managing Director Christine Lagarde--

 

Overcharged geopolitical environments are antithetical to global stability and predictability, regardless of what's in the IMF SDR currency basket.

UPDATED 09/06/2016 RT, G20 in China: Performance and fireworks on 1st day of summit and CCTV, President Xi Jinping gives the opening speech of G20 Summit in Hangzhou and Wikipedia, 2016 G20 Hangzhou summit

 

Translation, Xi Jinping message G20 Summit 2016, China (pdf)

UPDATED 08/15/2016 US SEC investigates Alibaba over accounting

Finally, our global economic and financial regulators are beginning to view "exceptional" (some might say ridiculous or bu*&sh!t) reporting of corporate financial and economic activity as a reason for close and transparent investigation instead of awe or envy!


Delicate dancing requires partners to follow the same step, lest one or both get hurt.

UPDATED 06/27/2016 Annual Meeting of the New Champions, Tianjin, People's Republic of China


UPDATED 06/26/2016 YoutubeFT, The end of the Chinese miracle


UPDATED 06/20/2016 YouTubeCCTV, China, Poland to Lift Ties to Comprehensive Strategic Partnership


UPDATED 06/14/2016 Reuters, Chinese state-owned companies face greater scrutiny of EU deals after ruling
UPDATED 05/10/2016 WilsonCenter, Why does not China directly increase RMB usage in International Trade? (中文
UPDATED 04/29/2016 Time, The Dispute About the South China Sea Is Also a Dispute About History and America’s Role and Reuters, China denies request for Hong Kong visit by U.S. carrier group: Pentagon

Those crewing the aircraft carrier John C. Stennis must serve 18,600 meals per day—those crewing Beijing must serve 1.357 billion!

It's important to continue asking...

UPDATED 04/07/2016 NYT, Obama Faces a Tough Balancing Act Over South China Sea and WilsonCenter, The Month in U.S.-China Relations 中美关系一个月(March 2016)

China's tangential bullying in the South and East China Sea has been a self-defeating and self-extinguishing exercise, which should not distract or impede either nation from military and non-military cooperation.

UPDATED 03/05/2016 Reuters, China aims to maintain growth pace, fend off unemployment in five-year plan A reserve currency must repeatedly and transparently dance with all partners during global economic downturns. Private dances with yourself or limited partners is a comparatively simple, if incomparable dress rehearsal.

UPDATED 12/03/2015 CSIS, The RMB Joins the SDR: Historic Inch-stone in Global Financial System and Econ, Maiden voyage [can it float?]

UPDATED 06/02/2015 AFP, Bernanke blames Congress as China flexes economic muscles
UPDATED 01/24/2014 ICIJ, Leaked Records Reveal Offshore Holdings of China’s Elite and China - China censors reports about elite's hidden funds and CDT, ICIJ Discloses 37,000+ Names of Offshore Clients

Suppose that stability (or harmony) requires governance by consensus, an informed citizenry and a transparent government.

Opaque governments implicitly suppose stability (or harmony) requires censorship and secrecy, often blaming transparency and others for any eventual instability that invariably ensues.

Government leaders (or surrogates) secretly and opaquely sending large sums of money out of their country seems like indicia of instability (not unlike an insider trader). Subsequent censorship of information disclosing such secret transfers coupled with military aggression, exaggerated nationalism and repression of dissidents seems like a baleful omen of an accelerating instability.

Ironically, increasing the instability, which censorship and secrecy seeks to avoid!

UPDATED 06/02/2013 NYT, U.S. and China Agree to Hold Regular Talks on Hacking

Unsupported hyperbolic statements by well-meaning Chinese and American generals are distinctly unhelpful and unlikely to motivate an improved bilateral relationship.


UPDATED 12/27/2012 Reuters, China is the elephant in the situation room Includes a link to the Global Trends 2030: Alternative Worlds report (pdf)

UPDATED 10/28/2012 NYT, The Wen Family Empire
UPDATED 10/11/2012 Reuters, IMF cuts China, India, Emerging Asia Growth Forecasts

Of more concern than a China that rises is a China that fails to rise—only slightly less concerning is that some seemly prefer confrontation over cooperation and coercion over competitive or comparative advantage.

UPDATED 08/11/2012 Reuters, China data signals economy may need urgent policy action
UPDATED 05/21/2012 Reuters, Exclusive U.S. lets China bypass Wall Street for Treasury Orders

UPDATED 05/09/2012 Reuters, Analysis: Turning point emerges for Chinese central bank's market operations

UPDATED 05/03/2012 ThomsonReuters, Auditor watchdog in China talks - spokeswoman

UPDATED 04/06/2012 Brookings, Addressing U.S.-China Strategic Distrust

A paper aiming to reduce the probability that China and the United States jointly produce a tragi-comedy, which plays on our global stage to critical condemnation.

Both nations have a responsibility to jointly produce a modern opera, which plays on the global stage to critical acclaim (hint: it will likely have both Chinese and American characteristics).

UPDATED 04/04/2012 Reuters, RPT-UPDATE 1-China's Wen says bank monopoly must be broken up-state media

UPDATED 03/19/2012 CCTV, China Development Forum 2012 and IMF, China Development Forum 2012, Guest Speech by Christine Lagarde, IMF Managing Director

 
UPDATED 03/18/2012 Reuters, China to reform, grow economy, IMF eyes freer yuan
UPDATED 03/01/2012 NYT, A Call for Beijing to Loosen Its Grip on the Economic Reins and
WB, China 2030: Building a Modern, Harmonious, and Creative High-Income Society

UPDATED 02/21/2012 USCC, Hearing on Chinese State-Owned and State-Controlled Enterprises

It's unclear whether the state owned-controlled-sponsored enterprise(s) can or will predominated global competition?

Most of the hearing witnesses seem to generally focus on a variant of the theme that China is coupling currency controls and state owned-controlled-sponsored enterprises to subsidize domestic and foreign markets.

But how is China's global subsidy of the consumer harmful? Perhaps this is what hearing witness Paul T. Saulski was getting at by stating:
"I will end by pointing out that, although these policies do benefit state-owned enterprises and industries vis-à-vis their foreign competitors, these policies do not come without significant cost to the Chinese economy."
Of course a nation's choice of models (economic, financial, legal and production)  is independent of the requirement that all these models and all actors must operate in a globally transparent and accountable environment.

Discovering your collateral debt obligation3 is worthless must not await a sovereign default; discovering medical grade silicon substitutes must not await implant rupture; discovering a metal was not heat treated must not await a crash; discovering an active ingredient substitution must not await the harm or death of a patient; etc.

The good news is that on this anniversary of the Nixon-Kissinger trip to China we're still discussing how best to further open our nations.

UPDATED 02/16/2012 NYT, Europe Steps Up Talks With China on Its Market Status

Today's open economics means your dance is significantly influenced, if not determined by the dance(s) of others—the chaos of stopping the music and then competing for chairs is no longer desirable, if it ever was.

Our future economic models must ensure the music does not stop or when it does that there is a seat for every ass.

UPDATED 02/14/2012 Reuters, Obama, China's Xi to tread cautiously in White House talks and Reuters, Obama friendly but firm with China heir apparent



UPDATED 10/02/2010 Reuters, Wen says some in Congress politicize trade gap. China''s Wen is correct on politicizing trade and that we are not going to restart production of the low-value added items imported from China:
"...Many of the Chinese exports to the United States are no longer produced in the U.S., and I don''t believe that the United States will restart the production of those products -- products which are at the low end of the value-added chain....."--Reuters quoting China Premier Wen Jiabao--
Our current leadership is now struggling to create the high-value-added replacement jobs—unfortunately the low-value-added jobs were lost faster than the high-value-added jobs were created. Blaming China will not create the replacement high-value-added jobs.

UPDATED 10/01/2010 Reuters, UPDATE 1-US, China not headed for currency war- Geithner and CFR, Confronting the China-U.S. Economic Imbalance .

Blaming China should not substitute for focusing on America, including support for our citizens and residents negatively impacted by our transition toward increased global cooperative competition. All nations must avoid the politically expedient tendency to characterized other peer nations as engaging in inimical behavior; instead they must cooperate to ensure stable competition in our increasingly global economic and financial systems.

UPDATED 09/24/2010 Reuters, Obama asks Wen for more action on yuan.
UPDATED 09/08/2010 Reuters, China-U.S. ties improving, Hu tells White House team. Encore! UPDATED 07/15/2010 AsiaTimes, All ''AmeriChina'' cards on table.
UPDATED 06/19/2010 Xinhua, China decides to further reform RMB exchange rate regime and Xinhua, Obama says China''s currency move "a constructive step" and NYT, China Signals a Gradual Rise in Value of Its Currency.
"...We welcome China''s decision to increase the flexibility of its exchange rate,...Vigorous implementation would make a positive contribution to strong and balanced global growth. We look forward to continuing our work with China in the G20 and bilaterally to strengthen the recovery,..."--Xinhua quoting U.S. Treasury Secretary Geithner--.
UPDATED 04/04/2010 Reuters, China tries to cool yuan dispute with U.S..
UPDATED 03/18/2010 NYT, U.S. to Delay Chinese Currency Report.

China representatives are scheduled to discuss currency manipulation and balance of trade issues with senators ahead of a vote on whether the Yuan is being artificially undervalued against the dollar. Many think the current Yuan:Dollar ratio of 6.83:1 is 25-40 percent undervalued. It seems preferable for China to develop the non-authoritarian institutions required for a stable civil society as opposed to pursuing unsustainable growth policy that distort or destabilize the global economy in pursuit of the same.

UPDATED 03/15/2010 CFR, Confronting the China-U.S. Economic Imbalance.
UPDATED 03/09/2010 CFR, China''s Exchange Rate Policy: The Heat Is On.
UPDATED 02/05/2010 Economist, By fits and starts.

Mostly fits right now. Unfortunately China leaders like our leaders will tend toward stoking the nationalism rhetoric. The rhetoric can be dangerous because it substitutes emotional appeasement for doing the heavy lifting required for long-term sustainable solutions. Many times leaders of a nation cynically use nationalism believing they can control the passions. But such passions are difficult to control once stoked. Citizens in both China and America must condemn any effort by our leaders to substitute nationalism for the hard work of ensuring sustainable global growth. Protectionism or terminating dialogue or inflammatory rhetoric regardless of the differences or disagreements are nationalistic and impede sustainable global growth.

UPDATED 02/04/2010 BBC, China hits back at US over trade

More imbalances left behind by the previous administration. A policy of creating growth using the mantra "markets clear everything" has created titanic imbalances and disasters. Balanced growth is preferred growth because it''s sustainable growth.

 
Caution: How will our current administration determine and communicate that it is: ensuring a level playing field for fair trade; and not protecting inefficient domestic industries lacking innovation? Our president has signaled he will oppose protectionism while ensuring a level playing field for competition, but data and information must accompany the words. Understandably China is left to assert subjective statements like "At the moment...the level of the yuan [sic] is close to reasonable and balanced." The reply is simple and direct...well then let''s float your currency and more objectively test your statement. Many think the Yuan is still 30-40 percent undervalued making our goods relatively more expensive for the Chinese consumer, among other things.

UPDATED 01/15/2010 NYT, Murray: US Senators Urge China Action on Currency. A nation shifting from an export to import model must lawfully or unlawfully build its intellectual property assets—unfortunately most nations, and China is no exception, engage both lawful and unlawful channels (the recent Google-China incident is about this in spades) for increasing their intellectual property assets. Authoritarian regimes will tend toward unlawful channels simply because their governing model is in conflict with the freedoms necessary for lawful generation of cutting-edge intellectual property assets. However our leader are shortsighted not to recognize the untenability (from China''s perspective) of asserting that China floats its currency and abandon its efforts to lawfully increase its intellectual property assets. Our leaders are also shortsighted to place all their focus on the necessity of prying open China''s markets to the exclusion of developing, protecting, and securing our next generation intellectual property assets. We simply do not want to be in the position of competing with an authoritarian China using an export model to exploit an infinite supply of low-cost labor! Hopefully, our forthcoming Google incident demarche will implicitly (if not explicitly) make clear to China and other American companies we have no such intention of doing so.

UPDATED 07/26/2009
UPI, Chinese delegation in Washington for talks.

UPDATED 07/27/2009 Reuters, Obama calls for deeper U.S.-Chinese ties. Vice Premier Wang, Secretary of State Clinton, and Treasury Secretary Geithner at U.S.-China Strategic and Economic Dialogue in Washington July 27, 2009.
"...The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world,..."--President Obama--
UPDATED 07/21/2009 Time, China''s Plans for Replacing the Dollar.
UPDATED 06/02/2009 Xinhua, U.S. treasury chief embarks on China visit, shaping ties in Obama era
UPDATED 06/02/2009 NYT, In China, Geithner Backs Cooperation.
UPDATED 05/22/2009 UPI, China fails to win status from EU. China still striving for "market economy" status from EU

This is a huge issue and one not easily solved by China''s leaders. China''s leaders would like to achieve market status because it eliminates "price imputation" on a host of trade related issues. In a "planned economy" (as opposed to market economy) prices are not objectively and reliably determined (central planning sets prices)—so in some trade related circumstances market economies will calculate an approximate market price and impute it to China''s goods. ...Of course if you are trying to build confidence in your currency it is helpful to subject that currency to market forces ("float").

If over time the currency maintains its value investors gain confidence. If on the other hand you peg your currency at a predetermined value and intervene in the currency markets to maintain that value investors have no simple way of objectively determining if the currency value reflects its true value or a "manipulated value".

But if China "floats" its currency its true market value may cause unintended or undesirable (from the perspective of China''s leadership) consequences. For example it may cause an outflow of currency from China''s banks; it may cause export prices to rise making them less competitive internationally; it may increase the cost of vital infrastructure projects; etc.

It''s no easy task to float your currency while simultaneously avoiding all undesirable consequences—just ask our secretary of Treasury, Timothy Geithner! In case you think its simple or black-white consider whether it's better to have hedge fund managers and currency speculators manipulating your currency or your nation's central bankers?

UPDATED 05/22/2009 UPI, Pelosi, U.S. delegation to visit China [May 24-31, 2009]. Whether you agree or disagree with China''s leaders many most acknowledge and credit their Herculean efforts to transform China; reduce its crippling poverty; and place it on a path of global participation (sometimes it''s easy to forget China is a developing nation). Our leaders will do well to assume China''s leaders have objectively studied and thoroughly understand most of the critical problems confronting China—demonstrating that same understanding and communicating how America can play a constructive and accommodating role in solving those problems will be most welcomed. ...And who knows what together we can accomplish?

UPDATED 05/17/2009 NYT, The China Puzzle. It is not often we read an article, even in the NYT, that aims at educating the reader—David Leonhard has accomplished this in a infinitesimal incremental way—kudos! It''s not that our trade imbalance with China is per se the problem—it''s what our policymakers for the previous eight years did with China''s loaned foreign exchange surplus that is an enormous problem—they consumed it instead of investing and now have nothing to show for it, except rusting military hardware, scrap metal, and a cheap DVD player with a MTBF of 200 to 400 hours! Competing with China in the low to medium skilled labor market is not something America wants to accomplish—whether and why we need to are different and most unfortunate questions our policymakers are currently asking and debating among themselves and others? Ironically, China, a communist country with socialist and egalitarian aspirations currently has one of the world''s most unequal income distributions. China has annual average urban income of  ¥3,411 and rural income of  ¥1,2442 (note the imbalance between rural and urban).

UPDATED 04/25/2009 Reuters, Geithner urges global effort to tamp crisis
"We must set ourselves on a path so that one country, or group of countries, does not consume in excess while another set of countries produces in excess,"--Reuters, quoting Geithner--
UPDATED 04/18/2009 BBC, China looks to its own consumers and VOA, China Announces $10 Billion Asian Infrastructure Investment. Global demand is insufficient to support China''s export model forcing it to look to domestic demand. Switching from an export model, if that''s what China''s fourth and fifth generation leadership plan, will be as challenging as it is potentially beneficial.
"But Mr. Wen stressed the importance of confidence among world leaders, calling it "more valuable than gold" and said that hope was also important, like a "beacon.""--VOA quoting China''s Premier at Boao Forum--
Confidence in world leadership is even more important—leadership capable of credible, continuous interaction for shared sustainable global growth—not princes, oligarchs and cowboys who stand on the sidelines issuing threats, preconditions, and demands—substituting militarization, belligerence, and bullying for credible confident leadership. UPDATED 04/01/2009 Xinhua, China, U.S. to build positive, cooperative and comprehensive relationship in 21st century. UPDATED 03/13/2009 Reuters, China expresses worry over its U.S. assets.
"I would like, through you, to once again request America to maintain their creditworthiness, keep their promise and guarantee the safety of Chinese assets,"--China''s Premier Wen Jiabao--
We''re a little concerned too—but, our Secretary of State likely has it about right—thanks for your directness—if there''s anything Paul Volcker has demonstrated a dislike for it''s inflation.

UPDATED 03/05/2009 NYT, China Outlines Ambitious Plan for Stimulus The parallel economic efforts of both nations has been impressive—wonder what could be achieved with transparent cooperative and coordinated economic efforts? China starts parliament session amid global crisis, calls for confidence to combat downturn Reuters, China silent on extra stimulus, stands by growth aim

UPDATED 03/01/2009 Xinhuanet En, Premier: Regression in Sino-U.S. relations not in line with historical tide. China''s Premier Wen Jiabao conducts a two hour intra-China online chat.
"He [Wen] said it has been proved by 30 years of Sino-U.S. relations that both will benefit from cooperation and both will be hurt by bitter fights."--Xinhua, reporting chat--
Hopefully, soon both Chinese and American leaders will be conducting unrestricted, uncensored routine reciprocal cross-culture online chats with the netizens of the others nation.

UPDATED 01/30/2009 AP, Obama addresses global trade imbalances with Hu Xinhuanet En, China''s Hu holds phone talks with Obama over ties

UPDATED 01/28/2009 UK Guardian, China pins blame for financial crisis on America
[America enabled] "...an excessive expansion of financial institutions in blind pursuit of profit, lack of self discipline among financial institutions and ratings agencies..."--China''s Politburo, Wen Jiabao--
Point taken—perhaps the illusion of profits is a better descriptor—the net profits and wealth remain to be studied and determined. Only the speculators (cowboys) benefit from engaging in the harmful practices aimed at creating and profiting from artificial differential swings in the market, most recently from 12,000 to 8,000. The rest of us benefit from sustainable stable linear growth, but then most of us aren''t walking the halls of Congress purchasing the enabling "cowboy policies" from members of Congress (it''s called corruption in China and everywhere else, we call it campaign contributions). In fact if or when we all begin acting like the "cowboys" our system will no longer function and will collapse—in just eight years the "cowboys" have produced a warning disaster! Hopefully, together we''ll study and learn from this warning and avoid triggering another.

UPDATED 01/24/2009 AP, Under Obama, US-China ties may face shaky start WP, Geithner Says China Manipulates Its Currency AP, China dismisses US remark on currency manipulation

-----notes-----

1. China''s Yuan is pegged against a weighted composite of international currencies, but China''s domestic currency is the Renminbi (see Wikipedia, Currency Signs for other country''s currency symbols).

2. Loren Brandt and Thomas Rawski, China''s Great Economic Transformation, 2008 page 729 et seq. (Dwayne Benjamin, Loren Brandt et al. Income Inequality during China''s Economic Transition)—published in Loren Brandt and Thomas Rawski, China''s Economic Transformation, 2008 Figures are for 2001 data. China''s 2008 HDI PPP GDP per capita based on 2006 U.S. dollars is $4,682.

3. UPDATED 03/17/2021 The SEC has recently release a report containing a series of notional histograms for the Security Based Swap known as a Credit Default Swap (CDS), which frequently insure a Collateral Debt Obligation (CDO).

There is an intense debate over what threshold should trigger swap dealer regulation—high threshold to exempt many dealers or a low threshold to exempt few dealers.

The egregious use of CDOs and CDS by our cannibal capitalists has been well described and documented (e.g. Reuters, Forget Greg Smith. For Goldman expose, read Hudson CDO ruling).

4. An exclusive emphasis on conflict and confrontation risks fully apperceiving a complex cultural dance between China's leadership and its mass of people. (CSIS, China Reality Check: Chinese Public Opinion and the Durability of Chinese Communist Party Rule and CSIS, Reconnecting Asia: Launch)


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