China PLA officers urge economic punch against U.S.

Discussion in 'China' started by 1.44, Feb 10, 2010.

  1. 1.44

    1.44 Member of The Month SEPTEMBER 2009 Senior Member

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    China PLA officers urge economic punch against U.S.

    Senior Chinese military officers have proposed that their country boost defence spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.

    The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

    The interviews with Major Generals Zhu Chenghu and Luo Yuan and Senior Colonel Ke Chunqiao appeared in the issue published on Monday.

    The People's Liberation Army (PLA) plays no role in setting policy for China's foreign exchange holdings. Officials in charge of that area have given no sign of any moves to sell U.S. Treasury bonds over the weapons sales, a move that could alarm markets and damage the value of China's own holdings.

    While far from representing fixed government policy, the open demands for retaliation by the PLA officers underscored the domestic pressures on Beijing to deliver on its threats to punish the Obama administration over the arms sales.

    "Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counter-punches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease," said Luo Yuan, a researcher at the Academy of Military Sciences.

    "Just like two people rowing a boat, if the United States first throws the strokes into chaos, then so must we."

    Luo said Beijing could "attack by oblique means and stealthy feints" to make its point in Washington.

    "For example, we could sanction them using economic means, such as dumping some U.S. government bonds," Luo said.

    The warnings from the PLA come after weeks of strains between Washington and Beijing, who have also been at odds over Internet controls and hacking, trade and currency quarrels, and President Barack Obama's planned meeting with the Dalai Lama, the exiled Tibetan leader reviled by China as a "separatist."

    MILITARY SPENDING BOOST

    Chinese has blasted the United States over the planned $6.4 billion arms package for Taiwan unveiled in late January, saying it will sanction U.S. firms that sell weapons to the self-ruled island that Beijing considers a breakaway province of China.

    China is likely to unveil its official military budget for 2010 next month, when the Communist Party-controlled national parliament meets for its annual session.

    The PLA officers suggested that budget should mirror China's ire towards Washington.

    "Clearly propose that due to the threat in the Taiwan Sea, we are increasing military spending," said Luo.

    Last year, the government set the official military budget at 480.7 billion yuan ($70.4 billion), a 14.9 percent rise on the one in 2008, continuing a nearly unbroken succession of double-digit increases over more than two decades.

    The fresh U.S. arms sales threatened Chinese military installations on the mainland coast facing Taiwan, and "this gives us no choice but to increase defence spending and adjust (military) deployments," said Zhu Chenghu, a major general at China's National Defence University in Beijing.

    In 2005, Zhu stirred controversy by suggesting China could use nuclear weapons if the United States intervened militarily in a conflict over Taiwan.

    The United States switched official recognition from Taiwan to China in 1979. But the Taiwan Relations Act, passed the same year, guarantees Taiwan a continued supply of defensive weapons.

    China has the world's biggest pile of foreign currency reserves, much of it held in U.S. treasury debt. China held $798.9 billion in U.S. Treasuries at end-October.

    But any attempt to use that stake against Washington would probably maul the value of China's own dollar-denominated assets.

    China has condemned previous arms sales, but has taken little action in response to them. But Luo said the country's growing strength meant that time has passed.

    "China's attitude and actions over U.S. weapons sales to Taiwan will be increasingly tough," the magazine cited him as saying. "That is inevitable with rising national strength."

    http://in.news.yahoo.com/137/20100209/760/twl-china-pla-officers-urge-economic-pun.html
     
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  3. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Since this will hurt USA so badly and teach us a nasty lesson why don't you do it instead of making idle threats,after all you guys are the new superpower on the scene do it and show the world the lesson you taught USA; and are ready to teach others.
     
  4. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Hell, this is a win-win for France. If China sanctions Boeing and Raytheon, that just means more orders for Airbus and Thales. [​IMG]
     
  5. ajtr

    ajtr Veteran Member Veteran Member

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    Its win-win for everyone.but i do see west getting all ganged up against china in support of usa after Copenhagen climate summit.I see another cold war in making.

    Dealing with a More Assertive China

     
  6. ajtr

    ajtr Veteran Member Veteran Member

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    China’s hawks demand cold war on the US

     
  7. ajtr

    ajtr Veteran Member Veteran Member

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    Let the fight begin

     
  8. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    China looks to be seeking a trade war they can't win. If they start taking punative actions against US trade interests it isn't Obama they have to worry about, but US business lobbies. There are more than a few major US industries that would love to see more tariffs placed on Chinese goods. There is also a strong protectionist sentiment that politicians can use for their own advantage. China thinks they have a strong enough economy that they can play a tit for tat but the facts say otherwise. 70% of Chinese real growth is reliant on export surplus since they only have 37% consumer spending, they have already lost a third of that surplus and had to spend $2 trillion last year to meet their target growth. If they screw up what little surplus they have their economic collapse will not be far behind. Don't even mention selling bonds, that would help US exports and destroy China's FOREX value. Look at what happens to countries that play "Cold War" with the West, USSR is gone and North Korea the failed state. Even those that just played it with the US, like Iran, are in a sorry shape.
     
  9. amoy

    amoy Senior Member Senior Member

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    this is incorrect, roughly one third of GDP counts on export i/o 70%. That's why China turns to spur domestic consumption and fixed asset investment (infrastructure) for growth. Separately posted was the news on 'minimum wage' increase in Jiangsu province recently to
    as part of 'social security system' improvement to encourage spending.

    China sees initial results in boosting domestic consumption



     
  10. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    lately I feel Chinese have auqried one ability from there deeper then mountain and taller then ocean friends ................................. wet dreams
     
  11. ajtr

    ajtr Veteran Member Veteran Member

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    China Dumps US Asset Backeds and Corporates '

     
  12. ajtr

    ajtr Veteran Member Veteran Member

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    Even wet dreams can be realized into reality if pursued with single mindedness.....right?
     
  13. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    But you didn't listen to what I said. I said 70% of real GROWTH counts on exports. The Chinese consumption has decreased every year for the last decade where China has become exceedingly reliant on exports for growth. The financial crises saw a 1/3rd drop in export surplus so Chinese Banques had to lend out $1.4 trillion in bad loans to boost the economy along with $550 billion in stimulus spending. Increasing the minimum wage only increases inflation. To fight this the Cenral Banque had to buy up more FOREX, mostly US dollars which is decreasing the profitability of the Central Banque. The social security improvements the CCP plans aren't even a drop in the bucket to make Chinese consumers feel safe enough to spend more and save less. Spending $126 billion over 10 years on universal healthcare for a population of 1.4 billion is a joke.
     
  14. nitesh

    nitesh Mob Control Manager Stars and Ambassadors

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    Well there is a logic behind using the word wet right?
     
  15. amoy

    amoy Senior Member Senior Member

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    Don't see where u derive 'decreased consumption' from - at least not for people around me! China auto sales up 17% in first half year_reliance on export is decreasing in fact. the peak is long gone.

    your economic knowledge amazed me! Bad loans ? how can u conclude they're bad at the very beginning of lending out? any supporting data? increasing the minimum wage is a token not to allow underpaying workers who're relative disadvantaged. and in reality most wages are to be far higher than MININUM. again how does it lead to 'inflation' assumption?


    Buy more FOREX? I'm confused. Explain pls when China already has the largest foreign reserve mostly USD in the world.

    anyway wish u a happy Tiger year!
     
  16. haike

    haike New Member

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    It can't be serious until China's indigenous commercial jet roll out in maybe 5~10 years. Some symbolic sanction is possible. And it's not meaningless to do so.
     
  17. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Where have you been? We have talked up and down about how subsidised Chinese auto sales are. With a $4000 rebate and 50% tax incentive the cars are practically free. That is no indication of Chinese consumer spending when they spend less on a car than I do for a cheesburger. Most people buying these cars are hardly driving them based on petrol consumption. The loss of trade surplus in China is made up with nearly $2 trillion in stimulus and banque lending.

    10 trillion RMB lent out in 12 months, half going to the asset market. The effects of half the bad loans are in all the empty residential and commercial space in China that lies empty because no one can afford the rents. The other half went to state owned business to increase production and provincial governments to stimulate short-term jobs. This has lead to excess capacity in all sectors of the Chinese economy. When China reigns in the stimulus and wreckless lending, it will fall like a house of cards. Asset bubbles will burst, industrial output will plummet. Trillions of dollars in non-performing loans will be on the books.

    2010 is expected to break 2009's record lending. The more money you lend the more money supply there is. This increases inflation.

    http://www.marketwatch.com/story/chinese-bank-lending-inflation-grow-in-january-2010-02-10

    Your housing prices are out of control.

    China controls inflation with her FOREX since she doesn't have a free-floating currency. It is pegged to the USD so China must buy more FOREX to back the value of the RMB. If she tries dumping her FOREX, the value of the yuan will collapse and inflation will skyrocket.

    Good luck, you and all of China will need it.
     
  18. nimo_cn

    nimo_cn Senior Member Senior Member

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    Hmm, good to come back! Since i was away for Chinese New Year holiday, DFI has changed a lot. Great to see these changes. The only problem they cause is that i have to reset my profile, not easy to find the picture i used as my avatar!

    One thing haven't changed is that China is still a hot topic here. It seems that China still needs to do a better job to stay low.
     

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