Huntsman Cable: China & US Trade War Heating Up

I have talked at length before about the dangers of a U.S.-China trade war.

Now, former U.S. Ambassador to China and Presidential candidate John Huntsman weighs in.

From Wikileaks:

a. “Sino-U.S. ‘trade war’ is heating up again”

The Shanghai-based Shanghai Media Group (SMG) publication, China Business News: “The United States provoked a trade war again by imposing high anti-dumping duties on Chinese-made gift boxes and packaging ribbon.  This once again shows that 2010 is off to a difficult start for Sino-U.S. relations.  It also reflects that, because of the mid-term elections, Obama is eager to prove to the American voters that the U.S. Administration’s China policy is tough so as to restore his declining support rate. Yao Jian, the Ministry of Commerce spokesperson, issued a statement on February 1, saying that following the financial crisis American trade protectionism has risen.  China has become the biggest victim of the U.S.’s abusive implementation of trade remedy measures.

b. “The United States no longer sits still; it frequently uses evil tricks to force China to buy U.S. bonds”

The Shanghai-based Shanghai Media Group (SMG) publication, China Business News: “This time the quick change of the U.S. policy (toward China) has surprised quite a few people.  The U.S. has almost used all deterring means, besides military means, against China.  China must be clear on discovering what the U.S. goals are behind its tough stances against China.  In fact, a fierce competition between the currencies of big countries has just started.  A crucial move for the U.S. is to shift its crisis to other countries – by coercing China to buy U.S. treasury bonds with foreign exchange reserves and doing everything possible to prevent China’s foreign reserve from buying gold.

If we [China] use all of our foreign exchange reserves to buy U.S. Treasury bonds, then when someday the U.S. Federal Reserve suddenly announces that the original ten old U.S. dollars are now worth only one new U.S. dollar, and the new U.S. dollar is pegged to the gold – we will be dumbfounded.

Today when the United States is determined to beggar thy neighbor, shifting its crisis to China, the Chinese must be very clear what the key to victory is.  It is by no means to use new foreign exchange reserves to buy U.S. Treasury bonds.  The issues of Taiwan, Tibet, Xinjiang, trade and so on are all false tricks, while forcing China to buy U.S. bonds is the U.S.’s real intention.”

And considering that using military means to force China to continue to reinvest in treasuries is completely pointless it seems like America’s free lunch will soon be coming to an end. Most interestingly of all:

The nature of such behavior is a rogue lawyer’s behavior of ‘ripping off both sides’: taking advantage of cross-strait divergences, blackmailing the Taiwan people’s wealth by selling arms to Taiwan, and meanwhile coercing China to buy U.S. treasury bonds with foreign exchange reserves and extorting wealth from the mainland’s people.

No doubt, America’s divide-and-conquer tactics have been highly successful, and highly advantageous to America. The real question, of course, is how long will it be ’til both the Chinese and Taiwanese governments tire of sending their productive capital to America (either for treasuries, or weapons) so that Americans can have a free lunch? A dollar devaluation? War on the Korean peninsula? QE3? QE4? QE Gold?

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China’s Monetary Endgame

Last week we brought you a window into China’s geostrategic endgame: buying up as much of the world as it can get out of its dollars. Now thanks to Wikileaks we have an insight into where China is going monetarily: a gold-backed yuan.

From Wikileaks:

“According to China’s National Foreign Exchanges Administration China ‘s gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.”

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Wikileaks Strikes Back: Unredacted Cablegate Archive Unleashed

Whatever we all have to say about Wikileaks and Julian Assange, any lingering question marks about their credibility should be blown out of the water by the fact that they just unleashed a supervolcano of data — the entire unredacted Cablegate archive. Certainly, it seemed like they had run out of steam — ostensibly holding back information as a bargaining chip on Assange’s embattled head. From the Independent:

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