Foreign Reserves Archives – In Praise of China

Category Archives: Foreign Reserves

China’s Scientific Development

The Scientific Development Concept in China

An Essay in Political Philosophy, by William Hooper.

The Scientific Development Concept, or Scientific Development Perspective, is the current official guiding socio-economic philosophy of the Communist Party Of China. It was ratified into the CPC’s constitution in October 2007 under the leadership of President Hu Jintao. Key ideas include:

  1. A post-ideological vision of technocratic scientific government driven by pragmatism, analysis, experimentation and empirical validation.
  2. De-politicised, low public profile, collective, expert decision making. Efficient corruption free policy.
  3. A coordinated and interventionist approach to policymaking as opposed to laissez-faire.
  4. Policy targeting wide social gains in utility, not just economic growth – eg also addressing inequality and environmental damage.
  5. Maintenance of broad popular support for government based primarily on performance not democratic participation.
  6. Active participation in government and transparency at the elite academic level.
  7. A more passive role for the masses including a much greater emphasis on paternal guidance compared to modern Western Democracy. Increasing press freedoms and policy making participation at the popular level as society develops.
  8. Compared to Western Democracy, a greater focus on China’a evolution, on contentment in the future rather than the present.

One recent author, writing about China, Jeffrey N. Wasserstrom, argues that it is more helpful to think in terms of Aldous Huxley’s Brave New World than George Orwell’s 1984 – “Orwell emphasises the role of fear in keeping people in line, while Huxley pays more attention to how needs and desires are created, manipulated and satisfied”. Yet this statement sounds too cynical, this article will reveal the Scientific Development Concept to be a genuinely idealistic vision of paternalistic government.

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China Attacks the USA

China Attacks the USA on All Fronts.

Try to see it from the hegemon’s point of view: While Russia confronts the USA head-on, China is attacking on almost every other front, simultaneously. China’s attacks look like neutral, ‘commonsense’ or ‘competitive’ moves. All nice and friendly:

  • Like Shanghai’s new gold exchange. Shanghai forbids naked shorting; all sales are for physical delivery. Perfectly sensible, right? Well, it drives a wedge between the price of ‘paper’ (naked short) gold on US’ Comex and physical gold. This thwarts the world’s biggest paper gold shorter, the US Treasury, which has been using trillions in naked shorts to rig the market since the US failed to deliver gold that Germany had lodged with it for safe keeping.
  • China’s offering Turkey financing and IP with their antimissile defense system. Turkey will be half out of NATO if it goes through with the deal – as it is threatening to do. Turkey is NATO’s Eastern wing.
  • Then there’s the renminbi, which is internationalizing 10 times faster than anyone predicted. China’s controlling the world’s desire to diversify their reserves by bulking up on renminbi.
  •  If the past 50 years are a guide, the next financial crisis is due within 36 months.

You’ve got to feel sympathy for the hegemon, don’t you? I certainly do. My income is entirely tied to the $US. Maybe it’s time we thought of cooperating with the Chinese government, instead of treating it as an enemy. Maybe it’s too late.

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The (almost) $2.5 trillionaire …

The (almost) $2.5 trillionaire …

Brad Setser, that inimitable researcher, says:

The world’s sovereign wealth funds almost certainly have less money than is commonly thought. And China almost certainly has even more money than is commonly thought — or at least more money than is commonly reported.

That is the conclusion I have reached after spending a fair amount of time looking at China’s data, and nearly as much time trying to understand the (incomplete) data from the Gulf. The data from China’s 2008 net international investment position — English data through 2007 here — certainly didn’t prompt me to change my mind.

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China, Accounting, the Infrastructure Investment Bank.

If you ever wondered why the US ‘pivoted’ to Asia, it’s for the same reason as it attempted to destabilize Russia: to defend the dollar. Both countries have announced their intention to de-dollarize the world and, from this snippet and the article from which it’s taken, you can see how quickly and comprehensively they’re moving:

General Li Zuocheng

General Li Zuocheng

Last month, Beijing inaugurated the Asian Infrastructure Investment Bank (AIIB), a direct challenger to the Asian Development Bank, which is based in Manila and sponsored mainly by the US and Japan. Neither country was invited to join the AIIB. Nor was India. China’s finance minister Lou Jiwei notes that Beijing’s own China Development Bank already ‘is far bigger than the ADB and World Bank combined’. AIIB is touted as a multilateral ‘Asian-led’ agency. But much, if not most, of the funding will be Chinese. As one researcher said: ‘Now China has the ability to show the real money’.

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