Tweet
Re: Pandemic threat-level market indicators
"I love having my own thread."
Bink - You deserve your own thread.
Meanwhile:
US' growing insecurity about China
The US is in danger of succumbing to increased isolationism in its quest to stem the growing power of China and the Asia region itself.
By Eric Teo Chu Cheow (16/08/06)
During a recent visit to Washington DC and New York, I gave a series of lectures at think tanks and held discussions at the State Department. I wanted to understand how the United States would view and react to an “emerging Asia” and a rising China. I was particularly interested in getting an update on the American appraisal of the “China threat.” What follows are my personal observations and conclusions.
What I found feeding on the US psyche is a growing sense of insecurity which the “China threat” and America’s declining presence and role in Asia inevitably feeds into. It is not only a post- 11 September security threat, but a “threat” emanating from Asia (which is not the “China threat” alone): America’s inherent fears of being bypassed, excluded or surpassed in Asia are building up. An “emerging Asia” increases America’s post- 11 September psychosis, exemplifying and exaggerating America’s own insecurity.
In brief, America is growing insecure about its future and role, especially in an emerging Asia, a tendency that could result in a new phase of inner absorption, if not increasing isolationism.
A lot of this is rooted in internal political dynamics. President George W Bush’s administration is plagued by scandals and low popularity ratings. Support for Bush’s Iraqi policy had plunged to an all-time low; more than 2,500 US military servicemen have so far died in Iraq. The emotional debate over immigration seems to be dividing US society as well. This autumn, the Republicans may lose control over the House of Representatives (though the Senate appears secure), making Bush a lame-duck president. This political insecurity has set the stage for a crisis of confidence in US politics.
But more important, especially within the context of domestic political insecurity, is the realization of US weakness and vulnerability in economic competitiveness and financial clout when compared to an emerging Asia, and especially, a rising China and India.
In fact, the “China threat” (which has been plaguing the US psyche over the last few years) has probably shifted from a pure military or security threat to an economic-cum-financial one. Even if the threat syndrome has not really declined, it has metamorphosed as the US public is increasingly concerned about the economic and financial impact of a rising China; the US trade deficit with China has mushroomed to US$200 billion, and Washington registers its largest trade deficit with Beijing.
Job losses and rising unemployment are hitting the US hard, especially in the lead-up to mid-term elections. With Congress hard pressed to protect US jobs, one could expect the “China threat” to be played up in the months ahead, especially when President Bush’s political clout is low. The emotional debate over amnesty for illegal workers in the US and their role within the economy and society has created a real political dilemma for the Bush administration.
The renminbi debate will intensify as trade disputes escalate and creeping forms of protectionism appear, as illustrated by the Unocal-CNOOC and Dubai Port sagas. The financial dimension is also epitomized by the growing concern over imbalances as Americans discuss China amassing some US$900 billion in foreign reserves, bypassing those of Japan; moreover, at least a quarter is believed to be “locked” into US Treasury bonds, a formidable weapon in confrontational times, especially when Americans need some US$2 billion a day to sustain their economy and spending. As one academic reminded me, “America’s financial security is at risk.”
A senior researcher at Brookings asserted that the US would lose out if and when China becomes the center of Asian trade, as this would result in huge losses for the US financial center: every financial transaction of US$100 in international currency trading in the US results today in at least a US$3 commission for US banks. According to him, if China should become the center of trade in Asia, financial services could shift from the United States, resulting in net job losses for its financial services sector and make a decisive dent in US GDP, of which financial services constitute some 22 percent.
The US business and financial community’s concern is based on this premise, especially when the twin deficits in the US have hit an all-time high and are likely to continue to rise. Meanwhile, concerns are growing over how the US is becoming more dependent on China’s “financial largesse” in terms of the latter’s expanding international financial clout and the US Treasuries that Beijing buys. US concerns are magnified by the bursting of the housing bubble and rumors of further interest rate hikes, thanks to the current weak dollar.
Washington’s economic and financial worries are now crystallized around the “China syndrome,” but jobs and employment issues constitute the real basis for this threat perception. This is symptomatic of the US loss of economic competitiveness vis-a-vis China and Asia. But despite growing concerns about isolationism, America needs Asian trade and economic cooperation and vice versa. The US must therefore overcome its own insecurities in the longer term, even though drastic structural adjustments will not be easy for Washington to implement.
http://www.isn.ethz.ch/news/sw/details.cfm?ID=16532
"I love having my own thread."
Bink - You deserve your own thread.
Meanwhile:
US' growing insecurity about China
The US is in danger of succumbing to increased isolationism in its quest to stem the growing power of China and the Asia region itself.
By Eric Teo Chu Cheow (16/08/06)
During a recent visit to Washington DC and New York, I gave a series of lectures at think tanks and held discussions at the State Department. I wanted to understand how the United States would view and react to an “emerging Asia” and a rising China. I was particularly interested in getting an update on the American appraisal of the “China threat.” What follows are my personal observations and conclusions.
What I found feeding on the US psyche is a growing sense of insecurity which the “China threat” and America’s declining presence and role in Asia inevitably feeds into. It is not only a post- 11 September security threat, but a “threat” emanating from Asia (which is not the “China threat” alone): America’s inherent fears of being bypassed, excluded or surpassed in Asia are building up. An “emerging Asia” increases America’s post- 11 September psychosis, exemplifying and exaggerating America’s own insecurity.
In brief, America is growing insecure about its future and role, especially in an emerging Asia, a tendency that could result in a new phase of inner absorption, if not increasing isolationism.
A lot of this is rooted in internal political dynamics. President George W Bush’s administration is plagued by scandals and low popularity ratings. Support for Bush’s Iraqi policy had plunged to an all-time low; more than 2,500 US military servicemen have so far died in Iraq. The emotional debate over immigration seems to be dividing US society as well. This autumn, the Republicans may lose control over the House of Representatives (though the Senate appears secure), making Bush a lame-duck president. This political insecurity has set the stage for a crisis of confidence in US politics.
But more important, especially within the context of domestic political insecurity, is the realization of US weakness and vulnerability in economic competitiveness and financial clout when compared to an emerging Asia, and especially, a rising China and India.
In fact, the “China threat” (which has been plaguing the US psyche over the last few years) has probably shifted from a pure military or security threat to an economic-cum-financial one. Even if the threat syndrome has not really declined, it has metamorphosed as the US public is increasingly concerned about the economic and financial impact of a rising China; the US trade deficit with China has mushroomed to US$200 billion, and Washington registers its largest trade deficit with Beijing.
Job losses and rising unemployment are hitting the US hard, especially in the lead-up to mid-term elections. With Congress hard pressed to protect US jobs, one could expect the “China threat” to be played up in the months ahead, especially when President Bush’s political clout is low. The emotional debate over amnesty for illegal workers in the US and their role within the economy and society has created a real political dilemma for the Bush administration.
The renminbi debate will intensify as trade disputes escalate and creeping forms of protectionism appear, as illustrated by the Unocal-CNOOC and Dubai Port sagas. The financial dimension is also epitomized by the growing concern over imbalances as Americans discuss China amassing some US$900 billion in foreign reserves, bypassing those of Japan; moreover, at least a quarter is believed to be “locked” into US Treasury bonds, a formidable weapon in confrontational times, especially when Americans need some US$2 billion a day to sustain their economy and spending. As one academic reminded me, “America’s financial security is at risk.”
A senior researcher at Brookings asserted that the US would lose out if and when China becomes the center of Asian trade, as this would result in huge losses for the US financial center: every financial transaction of US$100 in international currency trading in the US results today in at least a US$3 commission for US banks. According to him, if China should become the center of trade in Asia, financial services could shift from the United States, resulting in net job losses for its financial services sector and make a decisive dent in US GDP, of which financial services constitute some 22 percent.
The US business and financial community’s concern is based on this premise, especially when the twin deficits in the US have hit an all-time high and are likely to continue to rise. Meanwhile, concerns are growing over how the US is becoming more dependent on China’s “financial largesse” in terms of the latter’s expanding international financial clout and the US Treasuries that Beijing buys. US concerns are magnified by the bursting of the housing bubble and rumors of further interest rate hikes, thanks to the current weak dollar.
Washington’s economic and financial worries are now crystallized around the “China syndrome,” but jobs and employment issues constitute the real basis for this threat perception. This is symptomatic of the US loss of economic competitiveness vis-a-vis China and Asia. But despite growing concerns about isolationism, America needs Asian trade and economic cooperation and vice versa. The US must therefore overcome its own insecurities in the longer term, even though drastic structural adjustments will not be easy for Washington to implement.
http://www.isn.ethz.ch/news/sw/details.cfm?ID=16532
yet ?
Comment