Weekend Reading (Even Though the Weekend is Half Over)....

I know, I know - it's already Saturday night and I'm just putting out my weekend reading recommendations.  Sorry. I have been out of town and just catching up now on my blogging. I've just picked up two books for the weekend and am looking forward to reading both of them them.  First, I grabbed a copy of  Deng-Xiaoping and the Transformation of China by Ezra Vogel.  It is, as they say, a hefty tome (928 pages) and I suspect I'll need the better part of the week to get through it (if I'm lucky being the slow reader that I am).  But Vogel has done such outstanding work on modern China over his long and distinguished career that it seems to be a very valuable read and important contribution to understanding how China has gotten where it is today.  This may be one of Vogel's finest works and although I am only about 100 pages into it, it is very impressive in its breath and sweep of history and of the man.

It can very much be argued that Deng was the man who propelled China into modernity and away from the nightmare of the Cultural Revolution and the Cult of Mao (it seems centuries ago now, doesn't it when you stop and look at China today).   He will always have on his hands the crushing oppression of Tianamen Square -- an action that will live in infamy.  A complex man with a very unique background (having lived and been educated in Paris for most of the 1920's), this book looks like a very interesting reevaluation of his life and times.

The other book I grabbed (onto my Kindle) is Tom Friedman and Michael Mandelbaum's analysis of the future of the United States entitled That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back.  The title says it all -- the authors argue (who is there to argue back?) that the United States has fallen behind the rest of the world in our competitive capabilities.  I recently read Mandelbaum's other recent book and one of our first weekend-reading recommendations (The Frugal-Superpower: Americas Leadership in a Cash-Strapped Era) and found it enlightening and right on the mark.  Both Friedman from his many columns and Mandelbaum understand the United States has spent far beyond its means, lost sight of the extraordinarily fast-changing global marketplace and somehow lost our competitive edge. My suspicion is their book will essentially launch a boomlet of similar books, especially as we get closer to the 2012 presidential elections.

If any of you read either of these books, I am eager to hear your thoughts on them.  Hope you find these recommendations helpful!

China or the United States? China Demands Neighbors Choose Their Friend

In yesterday's Financial Times, Gideon Rachman has a superb column outlining the great challenge of Asia Pacific today: Do you ally yourself with China or the United States?  Rachman sites a recent editorial in People's Daily that fired a shot across the bow of a number of AsiaPac countries currently militarily allied with the United States, calling them out for  “think(ing) as long as they can balance China with the help of US military power, they are free to do whatever they want."

South China Sea (map courtesy of Financial Times)

Rachman sites a recent statement by Japan and the Philippines which pledged to enhance maritime security measures and cooperation, especially in the resource-rich South China Sea - an area which Secretary of State Hillary Clinton cited in a statement earlier this year as an area of " national interest" to the US (much to the annoyance of Beijing).


The significance of China's statement -- which, being published in the People's Daily must be considered official policy -- is Beijing is willing to take greater advantage of the US's economic weakness and challenge the US for supremacy in greater Asia Pacific.  The irony of all this is, of course, the fact that China's purchasing of US Treasury bonds and notes effectively is funding the development and operations of the US military - a fact not lost on Beijing.

The larger question going forward is does Washington - the Obama Administration and to a lesser degree, Congress -- understand the enormous geopolitical shift that is in play here with Bejing's challenge, our fiscal crisis dragging on and the wavering confidence our allies in the region have in the US's commitment to them?

Bluntly speaking, we do not think so.  Aside from Secretary Clinton's statement and the consistent statements and actions from the Pacific Fleet, the White House and Congress seem to pay little or no attention to the region or the implications of China's intentions and statements.  We would have expected to hear at least some reference to all this in the current congressional debate over punitive China currency legislation.  But we are not.

With more than one third of all shipping globally traversing through the South China Sea, it is easy to see why China has their own security concerns to tend to.  But that does not excuse essentially threatening their neighbors into submission or demanding they decide who they will be friends with - the US or them - going forward.  If the Chinese want to be constructive -- and more importantly, show their leadership in AsiaPac -- then they should launch a new, fresh set of multi-national negotiations to reach a diplomatic resolution to the Sea.  Otherwise, they are herding the region down a path that will not end well for anyone.

More Geopolitical Tectonic Shifts: Majority of Americans Think Asia More Important Than Europe

The German Marshall Fund  (GMF) has released an extraordinary new survey showing for the first time that Americans now see Asia as more important to our their "national interests" than Europe.  Overall, 51 percent of US respondents said Asia more important.  Conversely, 52 percent of EU respondents said the US was most important to them while only 37 percent thought Asia was most important to Europe.

We are surprised the GMF survey has not gained wider attention and discussion.  For a nation that is predominately European in heritage to make this shift is very significant -- and does not speak well of Europe's future (or should we qualify that to "the European Unions future"?) and we would dare extrapolate this to include the future of NATO.

Why this sea change in public views? We believe it is simple: It is driven by the massive scale of economic realities -- manufacturing capabilities along with booming demographics (let's face it, Europeans are too scared and selfish to have children; Asians broadly see children as a blessing).   But we would also argue the US sees the EU broadly ineffective politically and militarily (it would be good to see what Americans - many who served in the military and were based in Europe - think about the future of Europe).

A couple of important points emerged in the survey:

The next generation of Americans have very different -- and more positive -- views of China than their parents. 59 percent of Americans between the age of 18-24 have a positive view of China as compared with only 33 percent of Americans between the age of  45-54 (we have to ask: Is this more reflection of hope for China's future vs. Experience with China in business and politics as opposed to youth vs. older folks?);

• Among Europeans who are living through the EU fiscal (and political) crisis, only 50 percent want to see a decrease in spending and implementation of austerity measures (how do they think this nightmare is going to be fixed?);
• Perhaps most damning of all, only 40 percent of those living in the Eurozone think the Euro has been good for them and their country.
• A majority of Turks who participated in the survey have negative views of the US and Europe.  And a plurality of Turks (43 percent vs. 33 percent) believe their Arab neighbor states are more important to their longer term economic and security interests than Europe (and while they think membership with the EU would be good, they seem to understand it is never going to happen).

The survey gives strong insights into where our world has already gone (but we have to admit, it is tough to see through the smoke and debris of the global economic meltdown and the ongoing political crisis' in Washington, Brussels, Berlin, Athens and Paris).

The GMF's Transatlantic Trends survey was conducted by TNS Opinion between May 25 and June 17, 2011, in the United States, Turkey, and 12 European Union member states: Bulgaria, France, Germany, Italy, the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden, and the United Kingdom.

Let's Make a Deal! How Much for the Colliseum?

As we Tweeted yesterday about Greece, maybe they should sell themselves to China to get out of their yawning fiscal crisis.  Tongue was in cheek, of course, but I've seen several other commentaries/Tweets suggesting something similar for Greece - and now for Italy. 

All snide comments and jokes aside, we have to stop, take a deep breath and take note of the time warp in which China has come to dominate the world.  Yes, they are dominating and we need to acknowledge this fact: In Africa (for minerals and natural resources), in South America (for the same), throughout the rest of Asia (to the discomfort of India, Japan, Australia, South Korea, Vietnam and others) and in the United States. 

Again, yes -- we must acknowledge this fact.  Whether it is exports to the US, owning our US Treasury's and GSE debt, hacking the living hell out of our corporations and US government websites and sizing up ways in which to dominate us on the next battlefield.  The economic growth China has experienced and continues to experience is stunning (see the chart below as a great overview - biggest surprise: How slowly India is moving up the list).

Where is the push back from the Obama Administration?  Where is the grand plan to deal with ultimate result of twenty years of globalization?  there is none.  And this is beyond worrying.   It is life altering and we must acknowledge it.  The world has literally turned upside down.  And we suspect it will continue turning over and over again.





Source: The Economist

 

China Offers to Buy Greek Debt

Chinese Premier Wen Jiabou and Greek Prime Minister George Papandreou

Brilliant foreign policy.  Brilliant economic policy.  And there is nothing the U.S. or the EU can do to counter this (or want to do).  The message to the rest of the world?  China is a superpower, both economically and politically.  Soon, militariliy, too.
http://english.aljazeera.net/business/2010/10/2010102195730121409.html