US & Japan Lose Economic Battles With China

The US continues to be embarrassed by Wikileaks.  Mannings was finally removed from his isolated torture chambers due to public pressure especially after the UN demanded to visit him, viewing him correctly as a political prisoner.  China, meanwhile, sails onwards despite difficulties, will soon overtake the US economy in overall size if not per capita.  China now has a $3 trillion FOREX reserve which is absolutely the biggest on earth.  And Russia and China are both working in tandem to replace the very lucrative international US arms market.  They are frankly much cheaper.


All of this ties together.  The US/Japan Asian power machine has now utterly and totally broken down thanks to the tsunami, earthquake and above all, nuclear power meltdown.  The tsunami hit poor areas which can be abandoned without too much fuss since most Japanese are moving relentlessly towards mainly one city: Tokyo.


Tokyo passively waits for its own destruction which is, like with LA, pretty inevitable over geological time of 300 years.  That is, every 300 years, geological events of huge import can cause immense levels of destruction.  Tokyo sits on a triple junction which is particularly bad since it features a major volcano, one of the big 20 on earth.  Just as Mt. Rainier and the triple junction of plates menaces Seattle with potential tsunamis and volcanic eruptions including the sudden melting of the glaciers on this volcano, Tokyo is built on flat lands, too, next to the ocean and right next door to a major volcano.


It would seem suicidal to concentrate 70% of the population of the Japanese people right there but this is what is happening today.  The interior spine of mountains that make up the majority of Japan’s landmass is being rapidly depopulated and one can see a number of dead villages or villages with only a handful of elderly eking a farm existence in these isolated hamlets.


From 2007:  YouTube – The Empty Homes of Yokosawa Village

Thanks to free trade, this process of abandonment is hard at work in the US only it is climate/political related: people are abandoning entire major cities in the cold north and moving towards the warm south.  In Japan, they are simply abandoning the concept of having families as well as their many industrial centers and villages.


Right now, at tremendous expense, the US is maintaining a prison village in Cuba which is extra-legal in nature so we could torture foreigners while not protecting them with our legal system.  This is our own ‘Gaza Strip’ only it doesn’t have women although it has had children imprisoned there.  Now, more WIKILEAKS: 7 SHOCKING GITMO REVELATIONS | The Raw Story



Suspects were nabbed and shipped to Gitmo because they wore cheap watches. A specific model of watch — a Casio style released in the 1980s — was suspected to be used as a timer by al-Qaeda operatives. People in Afghanistan were seized and sent to the detention facility because they were wearing the watches, but most have been quietly released because of a lack of evidence.


Just this week, the Taliban dug a tunnel that took over five months to complete and thus, freed their own people from a NATO-run prison.  British casualties in Afghanistan could soar when Taliban’s summer fighting season roars into action again…which is due entirely to the US and our allies fighting a dirty war.  Instead of earning the respect and fear of the peasants we are killing, we use cowardly methods of fighting.
The use of drone robot killing machines is particularly cowardly.  Since we are not fighting any armies or governments, we have to deal with the beliefs and thoughts of thousands and thousands of irritated natives.  We can’t win this by kidnapping various natives based on bizarre information like this business about a common watch which was possibly handed out by various warlords to all and sundry.


While the US continues its futile propaganda game of hammering China about its own political prisoners who are all Chinese, not foreign peasants kidnapped and dragged across half of the planet, the Chinese continue to focus on what really counts in the long run:  China to lead world economy.



In forecasts inserted quietly on its website in recent days, the International Monetary Fund has projected that, by 2016, China will overtake the US in real economic output – the first time in the modern era that any country has done so.


Economic historian Angus Maddison estimated that the Soviet Union at its peak produced only a third as many goods and services as the US; Japan’s economy at its peak was still less than half the size of the US economy.


China’s ascension has been startlingly different, in speed and size. If it grows at anything like the 10 per cent rate it has averaged since 1980, its economy will be far bigger than that of the US within a generation.


As I explained in the past, free trade benefits China and is creating a massive deficit problem for the US.  The US has become addicted to cheap foreign goods even as this is killing US jobs.  Here, we fight over the crumbs and attack each other, desperate to drive down everyone’s wages even as international trade does this in spades.
The Afghanis are fighting off ‘free trade’ in ernest, too.  They know this is an armed struggle over who controls their borders, culture and nativist industries.  The US hopes that China would split up into warring factions is a failed policy since China is going UP, not DOWN like the US.  If the GDP grows, even if there is inflation, even if there is labor unrest, this is all signs of life, not death like we see in Japan.
Japan isn’t fighting back even as Nature hammers Japan relentlessly.  The lack of fury over events there is a bad sign.  The US media celebrates this hopeless, helplessness as a great thing we ought to admire.  I happen to side with Chinese workers and intellectuals who fight back quite vigorously and show irritation and energetic anger at the pace of change.
Obama ran on the ‘change’ platform and as the left realizes that he really meant ‘changeling’, is still unable to be roused sufficiently to fight for real change.  Recently, Obama was questioned in public about Mannings and Wikileaks where he defended his indefensible support for torture, Gitmo, murder assassin drones and expanding wars.  This was received with anger which is a good sign of health.

In China, the government is allowing various experts to openly talk about money and in particular, the dragon’s egg stashed in a deep Cave of Wealth, the FOREX holdings of China, the greatest on earth, by far and away:  Banker: China should reduce FX reserves –



China should reduce its excessive foreign exchange reserves and further diversify its holdings, Tang Shuangning, chairman of China Everbright Group, said on Saturday.


The amount of foreign exchange reserves should be restricted to between $800 billion to $1.3 trillion, Tang told a forum in Beijing, saying that the current reserve amount is too high.


China’s foreign exchange reserves increased by $197.4 billion in the first three months of this year to $3.04 trillion by the end of March.



Three trillion in foreign holdings!  Wow!  It grows by leaps and bounds.  China is now so great, they basically control all currency relative values on earth.  This is tremendous power indeed.  If, say, they finally decide to dump all this loot back into the flow of finances in world trade, woe to the EU and Japan!  And above all, the US is totally, completely screwed.


By simply stopping this accumulation, this changes the value of the dollar in ways we can’t control.  The previous mega-changes in currency values via the Bretton Woods negotiation systems was all about US control of other people’s currencies.  But the situation China is in is the exact opposite.


In this case, China has 100% of the power and all we can do is either beg for China to continue holding or accumulating or…we print money and dare China to screw us up eternally by suddenly dumping all these dollars on world markets.  China, by allowing these comments to appear in their own media are showing us that they are getting closer and closer to doing this.


Here is yet another story in Chinese media about dumping $2 trillion in world currency holdings:  China should cap forex reserves at 1.3 trillion U.S. dollars: China banker.  When we couple this with the news that the S&P cut the US credit ratings, we now see the other shoe drop:  S&P cuts Japanese auto outlook to negative



Most Japanese auto companies are producing about half what they had initially planned, the rating agency said. S&P sees them returning to full production by around October.


This will hammer Japan tremendously and will boomerang on the client state, the US.  This auto export business is nearly all about the US/Japan relations and the loss of jobs here and in Japan will be mirrored in the Chinese sector as China will fill the void.  This is the nature of voids!
China makes Japanese cars!  If Japan can’t export from Japan to the US, they will…export from CHINA to the US.  This will worsen BOTH the US and Japan’s balance of trade with each other and China at the same time and on top of that, the Japanese rich elites will want to do this to save themselves.

Already, there is all sorts of insidious signs of a great shift coming between Japan and China due to all of the messes:  Industries left short-handed after foreign workers flee Japan following nuke accident – The Mainichi Daily News



Japan’s sewing industry, which had accepted more than 40,000 trainees from China, saw them returning to their country in droves in the wake of the nuclear crisis. The Japan Textile Federation says about 30,000 Chinese trainees remain in their home country. Each company in the industry is required to keep the number of Chinese trainees below about 20 percent of its total workforce, but if the current situation were to continue, the industry as a whole would likely be forced to cut production drastically.


If the sewing industry were to fall into stagnation, the entire textile industry, including clothing, yarn and dyeing sectors, would suffer serious damage. “While production is being shifted abroad, the domestic industry in Japan has been able to survive by making high-quality and high-value-added products. But the industry could fall apart due to the earthquake disaster and the nuclear accident,” says the Japan Textile Federation.


The US threw away our entire textile industry.  Japan clung to its own but used various tricks like the fiction of ‘trainees’ to keep wages down while keeping it at home.  Now, they will have to move to China.  The Chinese know this which is why the government is keeping these fake students home now.  They will probably be already discussing moving production to China…
Due to rising production which was triggered by inflation in previous years has led to excess goods in the food sector and so paradoxically, right after complaints about food being too expensive, it is now much cheaper.  This, in turn, distresses farmers since overproduction creates this Vegetable price slump which hurts Chinese farmers:


According to data from the Ministry of Commerce (MOC), the average prices for 18 types of vegetables plunged 9.8 percent between April 11-17 than the previous week.


In addition, average prices for 19 types of vegetables in 286 wholesale markets across the country fell 11.4 percent last week, according to the Ministry of Agriculture (MOA)….Guo Hongwei, an official in charge of market operations at the Shandong Provincial Department of Commerce, says the key to dealing with sharp price fluctuations is to encourage farmers to sell their produce in a more collective way.


“For vegetable farming, the risks of sharp price fluctuations will be increased if producers sell their vegetables separately,” Guo said.


Hoarding of produce by wholesale dealers and speculative investors excessively boosted vegetable prices last winter, causing farmers to expand their sown area for vegetables on a much lar

ger scale this year, according to market insiders.


Hoarding and speculation (like we see in gold and silver commodity markets) happens when there is excess credit in various sectors of an economy.  The US and Japan have been creating international credits all over the place, supposedly to stimulate their own economies but instead, this credit moved very rapidly towards where there is dynamic forces at work, namely, China!  Why would it move to stagnant economies?
This is one reason why China has a $3 trillion FOREX reserves!  The quantative easing of the Bank of Japan and the Federal Reserve barely spent an hour in their home states before shifting rapidly towards the gravitational pool in China.  China’s inflation is very attractive to this money which seeks to ‘grow’ and can’t ‘grow’ in depressed economies like Japan.
The US hopes to keep on dominating the military markets of the world but our gold-plated Pentagon goods are too expensive so everyone is turning to China and Russia who is now testing 90 new types of weapon in 2011


Nearly 90 types of new weaponry will be tested in 2011, Russian Defense Ministry said on Monday….Some 350 missile launches have been conducted from Kapustin Yar last year in the interests of Russian, Algerian, Azerbaijani, Belarussian, Vietnamese, Venezuelan and Myanmar armed forces, the ministry said.





The bulk work was done with the cooperation of China that helped Pakistan in almost all the defence production, overhauling and rebuilding. The foundation of Pakistan Aeronautical Complex, Kamra was laid. Here a very modest beginning was made when the light Swedish aircraft (Mashak) was launched as a basic trainer to meet the needs of PAF and Pakistan Army. From assembly to manufacture and enhancement this aircraft became the training bed for a full fledged fighter aircraft production….


…On the drawing boards of F 6 Rebuild Factory, newer aircraft designs were developed that were given computer simulation for design tests. First a Super Saber that was to be developed on the frame of MIG 21 or F-7 fighter bomber but due to some technical snags, it was called off. Then with a little gap and new thought process, a brand new design was developed with active participation of China the end product was JF 17 that exceeded all the performance parameter envelop by significant margins. This aircraft was designed, built, tested and inducted in the PAF in a record time.  JF 17 is a close match to F 16 with a huge price difference.


China appears here yet again!  The US has been spending precious resources both diplomatic and economical, to butcher annoying peasants all over  Pakistan to the point, they hate us royally and not the way Kate loves the Prince.  China is CHEAP and that goes a long, long ways.  And China isn’t trying to balance India with Pakistan, China is siding directly with Pakistan since India is a top rival in steel, shipping, and production in many ways.
So, if China’s help for Pakistan irritates India, all the better!  The US wants to control both India and Pakistan only we are not killing Indians we are killing Pakistanis.  So we lost the vital ‘hearts and minds’ factor.
Last of all, the revolutions sweeping Muslim countries continues:  Saudi women press for right to vote.  About time!  I hope they get political power!  The US holds up this noxious, medieval, worse than the Taliban-royal family in Saudi Arabia.  While whining about how cruel the Taliban are to their own women.  This is typical US hypocrisy and the brave people of Syria are fighting with their own despot but so should the people of Saudi Arabia.  Good luck to the women!  I hope they succeed.
In general, I support people struggling for civil and political rights.  I hope to see more, not less of this.

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Filed under .money matters, Free Trade

15 responses to “US & Japan Lose Economic Battles With China

  1. Alex Yam

    The Japanese are basically short sighted idiots, they had multiple golden opportunities to lead Asia and benefit from a strong East vs. strong West scenario, the location of Japan makes it the perfect shield for Asia, that means if they played their cards right they either A) Act like a spoilt child and constantly complain to both East and West and ask for anything they want and both East and West would provide it, or B) Become the hero of Asia by becoming the front line of the East vs. West battle and get even more support from Asia. But instead the Japanese wholeheartedly chose to be used by someone from the other side of the earth.

    Instead of choosing to become a respectable Asia leader they chose to become a skin infection of Asia.

    A stupid traitor deserve no sympathy, the earth has spoken.

  2. Tom


    I don’t think Asia would have readily accepted Japan as their leader in the past few generations due to the event of WW2…

  3. Alex Yam


    The Japanese made their mistakes long before WW2

  4. t.p. tom

    c 1930 JP Yen 4:us$, 1945 300+:$1,
    west, jp wewnt off g o l d. Axis, Rus
    early on banned radio, g o l d, side arms.
    . Prof. Kot.
    Lee Cough “west borrows to pay interest only
    cant pay prin. S .a.m.’s total pub p v t
    debts= $188t trillion twelve zero on
    gdp $14/t/yr.”

  5. Interesting that Russia and China are now able to outcompete us on the armaments market. I wonder how long before we’re buying armaments from THEM? Because our military manufacturing is basically all we have left!

  6. emsnews

    Arms sales is a HUGE part of what remains of our manufacturing exports. Not to mention, domestic production.

  7. Aussie

    @ Elaine
    Re: US & Japan Lose Economic Battles With China
    …The US has been spending precious resources both diplomatic and economical, to butcher annoying peasants all over Pakistan to the point,…

    Again, you are spot on every point…but it gets worse for the US.


    Asia is reintegrating because of China’s vision and wealth as it was before the West Colonial Empire prevailed in the 16th century.
    Before the 17th Century Asia was more advanced and wealthier than the West.
    Integration is thru trade and infrastructure including hi speed rail and road from Singapore to China to Europe via South East and Central Asia as well as South Asia.

    The US is blind to how Asia is integrating and will be irrelevant because it is pursuing costly wars it cannot win.

    Within a generation, the US will find its firms at a competitive disadvantage in a part of the world that will constitute a huge chunk of the global economy. It will miss opportunities to work in new ways with China, India, Japan, and South Korea.
    It will be marginalized from Central Asia entirely.
    It will be a bystander to the economic and strategic dynamics that are quickly reshaping the region.


    China’s 12th Five Year Plan (FYP) (2011-2015) will build on its success to date and make it relatively immune to US inept economic policies and the USD hegemony.

    China must achieve two transformations. First, it must take the economically and socially ‘balanced’ model of high-income Western societies as a benchmark. The second transformation has set a target for reduction in carbon intensity by 17 per cent, and an increase in the share in consumption of renewable energy options. This is in the broader context of China’s 2020 goal of reducing carbon emissions by 40–45 per cent.

    China sports distinct advantages in the move to a low carbon growth model. The transition cost will be lower for China than for advanced economies, as it is not locked into a high carbon model to the same extent. It also does not face a competitive disadvantage relative to advanced economies in ‘green’ industries. Green technology levels are relatively similar in the developed and developing worlds.

    China has a dynamic economy, and it has the opportunity to continue to feed growth with new renewable energy industries.

    China’s transformation for an export focus to a domestic market focus economy means it will run down its USD3trillion trade surplus causing global interest rates to rise and USD collapse because bilateral trade between China and customers will use not use USD.
    It follows that London and New York stock exchange will shrink because Asia will recycle their wealth thru their own financial centers.

    Furthermore, China has created new trade opportunities by its loan and investment policies to grow economies in Central Asia, Africa, Middle East and Latin America to complement weak demand from debt laden US, EU and UK economies.

    China will note the lessons of its 4,000 year history and the demise of the overstretched US empire by ensuring its prosperity not thru military prowess but thru Global Trade where its partners remain wealthy enough to buy its increasingly hi tech products and services.

    Its military prowess will be defensive and sufficient to protect its interests from a predatory west because its soft power will follow Sun Tzu principles.

    Sadly, we in the west have lost the plot by forgetting our lost advantage from a vibrant producing economy benefiting a large middle class and meritocracy by achievement instead of networking prowess and inherited privilege.
    Our people have been dumbed down thru consumer and public relations exposure as well as shot termism.

  8. @Aussie Its military prowess will be defensive and sufficient to protect its interests from a predatory west because its soft power will follow Sun Tzu principles.

    The US military prowess on the other hand seems to be based on the doctrine “We can kick yer ass!” a natural evolution of “Walk softly and carry a big stick.” I wonder how the US will react once it realizes that it’s been ju-jitsued?

  9. DeVaul

    Well, not to rain on everyone’s parade, but some country “forgot” the lessons of Sun Tzu’s “Art of War” for a period of about 400 years. I expect it to happen again, but I will not be around to see it.

    Any empire that rises will eventually fall.

  10. Clueless

    @ De Vaul: Hear ye, hear ye! For all the bells and whistles about China, most forget that to get where it is today required a military dictatorship.

    Military dictatorship: a semantic for Empire and Emperors. If one reads and learns from history, one realizes that eventually all empires end in ruin — bar none.

    While Sun Tzu is good copy, enlightened thinking cannot be sustained in a world of greed and power hungry jack asses. Absolute power corrupts absolutely, and Evil has devoured itself in every age. It is just a matter of time.

    Old corruption is reinvented by new idealists who turn into what they replaced, only to be replaced by progeny of their actions. And so it goes…

  11. Aussie

    @ De Vaul
    Re: ..Any empire that rises will eventually fall…

    You are right because China’s 4,000 written history is your witness.

    At some point a future China will become complacent and believe their ascendancy is a natural right.
    Then that future generation will repeat the BS of Washington

  12. DeVaul

    Yeah, it’s a strange phenomenom, isn’t it?

    China’s leaders pride themselves on reading “The Rise and Fall of Empires” and learning its lessons, yet we already know the outcome, don’t we?

    It’s in the second part of the title: “…Fall of Empires”.

    I’m probably going to spend the rest of the day thinking about why we do not (to my knowledge) have a single example of a successful empire. Not one.

    I mean, with that kind of track record, why even bother?

  13. Aussie

    @ DeVaul

    Re: Yeah, it’s a strange phenomenom, isn’t it?…
    …I mean, with that kind of track record, why even bother?…

    I suggest that everything has a life cycle from birth to death as will happen to our universe.

    The Chinese dynastic empires did not rely on foreign conquests to fund growth as the Western history reveals.
    Furthermore, the Chinese adopted the Confusion ideology as the basis for educating their Mandarins responsible for running their empires.

    Chinese political society is based on the Confucian concept that responsible individual behavior prescribed in the analects is the basis for a healthy and stable society rather than laws in our society.

    I suggest Chinese decay is not much different than our experience because the Mandarins became sclerotic robots following the rules mindlessly.
    Their Emperor and power elite became rapacious and insular.

    Not much different than Washington today after all.

    It seems human nature is the cause of empires rising from vigour and its decline thru hubris and plain stupidity.

    I guess that is why people created Gods as an inspiration to become better people.
    Then we fail because from Jesus Christ on the cross teaching universal values was followed by the inquisition and the rape of Inca and Aztec civilization.
    Islam taught good universal values thru the prophet Mohammad and thru Abraham and Jesus then came up with Terror and keeping women behind veils etc.

    At the end it is again human strengths and failures driving the script?

  14. emsnews

    China was invaded by foreigners (MANCHUS) for example and like the Mongols, the Manchus looted the country leaving it much, much poorer.

    The present administrators are not foreigners, they are Han Chinese. I see a different outcome because of this.

  15. DeVaul

    Well, the Han Chinese invaded the place at some point, and their lower level comrades are looting the joint right now — much to the anger of the peasant classes.

    I expect the looting to continue, as it did in America, so long as the standard of living rises in general for the average person, until it can no longer rise, at which point the looting will spread to the top and accelerate while the standard of living of the average person drops like a rock.

    Then someone will invade the place in order to make it “better”.

    I suspect we carry an “empire gene” which is activated during periods of overcrowding. It does not seem to activate in sparsely populated areas or timeperiods. Instead, some kind of “tribal gene” activates until we overpopulate the place again.

    We are either existing as hunter gatherers or in the process of building an empire. I cannot think of any other state we are in, but maybe someone else can.

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