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Tesla's CEO Accidentally Reveals a Big Secret
Investors have been desperate to learn where Elon Musk plans to get his future lithium supply.
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| We're Losing the War with China | ||||||
| By Jason Simpkins | Friday, October 30, 2015 | ||||||
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The United States continues to insist that there's plenty of room at the top, that we're eager to welcome China as a
partner.
China says much the same thing, even though it's grown more forceful in pressing its claims and expanding its
influence. Beijing says China is concerned only with its own defense — not challenging the United States militarily.
However, if you look at what's actually happening, it looks like both countries are lying through their teeth.
In fact, a war with China isn't just inevitable — it's already taking place.
We're currently battling China on two fronts: First, there's the traditional military conflict. And second, there's the
decades-long economic battle.
How's it going?
Not well.
Military Clash
The main reason I'm bringing this up is because earlier this week, the U.S. infuriated Beijing by sailing a guided
missile destroyer into what China considers its territory.
The USS Lassen passed within 12 miles of an artificial island in the Spratly archipelago. This area has been a
major point of contention for more than a year now.
You see, China has claimed virtually all of the South China Sea as its own, ignoring the claims of its smaller
neighbors — Vietnam, the Philippines, Malaysia, and Brunei — and trampling the maritime boundaries established by the UN.
The area is important for two reasons:
Recently, China has advanced its claim by creating more artificial islands. In just two years, China has expanded these
islands by 2,000 acres. It's also outfitting them with harbors, airstrips, military barracks, and even drilling for oil.
However, the United States and others refuse to accept China's claims. They continue to treat the islands and the water
around them as international. And that's bringing them into direct contact with the Chinese military.
Over
the summer, a U.S. spy plane, the P-8A Poseidon surveillance jet, flew
over the Spratlys. It filmed early warning
radar, military barracks, a lookout tower, and a runway long enough to
handle every aircraft in the Chinese military on an expanded Fiery Cross
Reef.
In doing so, it blatantly ignored eight warnings from the Chinese military to vacate the area.
In response, China lodged a formal
complaint, with a spokeswoman saying: "China's will to maintain
sovereignty and
territorial integrity is as solid as a rock. We urge the U.S. to make
corrections, keep their rationality and stop any provocative actions."
The USS Lassen is the latest intrusion. And again, China is displeased.
"If the United States continues with
these kinds of dangerous, provocative acts, there could well be a
seriously
pressing situation between frontline forces from both sides on the sea
and in the air, or even a minor incident that sparks war," warned
Chinese Navy
chief Admiral Wu Shengli.
Communist media mouthpieces are blaring, too.
"If the United States' bottom line is that China is to halt activities, then a US-China war is inevitable in the South
China Sea," read a recent editorial in China's Global Times. "We do not want a military conflict with the United States, but if it were to
come, we have to accept it."
And after the latest incident, the paper suggested:
For its part, the U.S. remains defiant.
“The U.S. has conducted naval operations in the South China Sea in recent days and will conduct similar
operations in the future,” Defense Secretary Ashton Carter said.
Vice President Joe Biden even commented on the issue directly during his commencement speech at the U.S. Naval
Academy:
If a military conflict breaks out between the U.S. and China, it's going to happen here.
But again, the war with China goes far beyond traditional forces.
We've been engaged in an economic war for decades.
Economic Warfare
As you well know, China shrewdly built its economic machine, making itself into the world's manufacturing center.
It used low wages and a lack of basic worker rights to siphon jobs from the West. At the same time, it accumulated a
huge pile of foreign currency reserves, much of it U.S. debt.
We were dreadfully slow in acknowledging and appreciating the amount of leverage this has given them.
China's economy is already larger than that of the United States.
But that's not all.
Here's an overview of China's other economic achievements:
The Rise of the Renminbi:
Over the past few years, China has signed nearly 2 trillion RMB worth
of currency swap deals with 24 countries and regions. This allows China
to trade with its neighbors without exchanging local currencies for
dollars.
The dollar's role as the universal trade currency is in jeopardy — along
with it dollar primacy.
Furthermore, IMF officials have reportedly told China that the yuan is almost certain to join its basket of reserve
currencies, the SDR, in 2016. This, too, will expand the role of the yuan in global trade at the expense of the U.S. dollar.
The Global Gold Hub:
Shanghai is supplanting London as the world's global gold trading
hub. With
the collapse of the London gold fix, China has sought to make the
state-backed Shanghai Gold Exchange (SGE) the new center of gold trading
and price
fixing. This certainly makes sense, since Asia accounts for about
two-thirds of global gold consumption.
China alone accounts for 28% of global gold usage. And this year, consumption, which totaled 973.6 metric tons last
year, could reach a record high. The country's gold reserves totaled 1,708.5 tonnes at the end of September.
Also, earlier this year, China launched
the “Silk Road Gold Fund” — one of the largest gold
funds the world's ever seen at $16 billion. The fund will take stakes in
gold miners and gold mining projects all over Asia, the Mid-East, and
Europe.
World Bank Rival: Last
year, leaders from the five BRICS countries, led by China, established
the Asia
Infrastructure Investment Bank (AIIB). To start, the AIIB could lend up
to $175 billion for infrastructure projects in the region, taking
lending
(and leverage) away from the World Bank and the Asian Development Bank.
It's not just the BRICS, either. Despite explicit U.S. objections, the United Kingdom, France, Germany, Canada,
Australia, South Korea, and others have all agreed to join. Japan has been the lone holdout.
Cyber Espionage: China has been hacking the U.S. government and Western corporations for years. And it
continues to do so despite a newly minted accord reached during President Xi Jinping's September visit.
The accord between Presidents Obama and Xi was agreed to on Sept. 25. Yet cyber-security provider CrowdStrike said it
detected Chinese hacking attacks on Sept. 29, Sept. 30, Oct. 3, Oct. 4, Oct. 8, Oct. 9, Oct. 13, Oct. 15, and Oct. 16.
The attacks were aimed at U.S.
technology and pharmaceuticals companies, "where the primary benefit of
the intrusions
seems clearly aligned to facilitate theft of intellectual property and
trade secrets, rather than to conduct traditional national
security-related
intelligence collection."
World War III
When you look at the history of U.S.-China relations, as well as the historical relations between other superpowers
— both established and ascendant — conflict seems inevitable.
In the past 10 years, China’s economy has grown four times larger, while its military spending has tripled.
There's no question that China's ambitious economic development has undermined U.S. interests. And it will continue to
do so.
China's rise has also imbued more confidence in its government, as the United States struggles more and more to
impress its order upon the world.
Russia has emerged as China's closest ally, further fanning the flames of anti-West sentiment and encouraging China to
take initiative.
In short, we're at war with China. And it's not going well.
Get paid,
Jason Simpkins
Jason
Simpkins is a seven-year veteran of the financial publishing industry,
where he's served as a reporter, analyst,
investment strategist and prognosticator. He's written more than 1,000
articles pertaining to personal finance and macroeconomics. Simpkins
also
served as the chief investment analyst for a trading service that
focused exclusively on high-flying energy stocks. For more on Jason,
check out his
editor's page.
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