[wvns] China clones Russia's top Jet Fighter
China clones & sells Russia's top Jet Fighter.
West is "selling China the rope with which to hang it"
Wednesday, December 22, 2010
China clones & sells Russia's top Jet Fighter. West is "selling China the rope with which to hang it"
(1) China clones & sells Russia's top Jet Fighter
(2) China challenges Boeing & Airbus with its own passenger planes
(3) West is selling China the rope with which to hang it
(4) Kevin Rudd (when PM) told US to "deploy force" if China could not be integrated
(5) American hedge fund manager says China in "enormous credit bubble"; aims to cash-in
(6) Russia & China abandon $ for bilateral trade. IMF's role as a tool of US imperialism - Paul Craig Roberts
(1) China clones & sells Russia's top Jet Fighter
http://online.wsj.com/article/SB10001424052748704679204575646472655698844.html
Wall Street Journal - Jeremy Page
December 5, 2010
China clones and sells Russian fighter jets
Jeremy Page The Wall Street Journal December 06, 2010 6:52PM
A YEAR after the collapse of the Soviet Union, a cash-strapped Kremlin began selling China a chunk of its vast military arsenal.
The sale included the pride of the Russian air force, the Sukhoi-27 fighter jet.
For the next 15 years, Russia was China's biggest arms supplier, providing $US20 billion ($20.13bn) to $US30 billion of fighters, destroyers, submarines, tanks and missiles. It even sold Beijing a licence to make the Su-27 fighter jet - with imported Russian parts.
Today, Russia's military bonanza is over, and China's is just beginning.
After decades of importing and reverse-engineering Russian arms, China has reached a tipping point: It now can produce many of its own advanced weapons - including high-tech fighter jets like the Su-27 - and is on the verge of building an aircraft carrier.
Not only have Chinese engineers cloned the prized Su-27's avionics and radar but they are fitting it with the last piece in the technological puzzle, a Chinese jet engine.
In the past two years, Beijing hasn't placed a major order from Moscow.
Now, China is starting to export much of this weaponry, undercutting Russia in the developing world, and potentially altering the military balance in several of the world's flash points.
This epochal turnaround was palpable in the Russian pavilion at November's Airshow China in the southern city of Zhuhai. Russia used to be the star of this show, wowing visitors with its "Russian Knights" aerobatic team, showing off fighters, helicopters and cargo planes, and sealing multibillion dollar deals on the sidelines.
This year, it didn't bring a single real aircraft - only a handful of plastic miniatures, tended by a few dozen bored sales staff.
China, by contrast, laid on its biggest commercial display of military technology - almost all based on Russian know-how.
The star guests were the "Sherdils," a Pakistani aerobatic team flying fighter jets that are Russian in origin but are now being produced by Pakistan and China.
"We used to be the senior partner in this relationship - now we're the junior one," said Ruslan Pukhov, of the Russian Defence Ministry's Public Advisory Council, a civilian advisory body to the military.
Russia's predicament mirrors that of many foreign companies as China starts to compete in global markets with advanced trains, power-generating equipment and other civilian products based on technology obtained from the West.
In this case, there is an additional security dimension, however: China is developing weapons systems, including aircraft carriers and carrier-based fighters, that could threaten Taiwan and test US control of the Western Pacific.
Chinese exports of fighters and other advanced weapons also threaten to alter the military balance in South Asia, Sudan and Iran.
China's military muscle still lags far behind that of the US, by far the world's largest weapons manufacturer and exporter. China accounted for 2 per cent of global arms transfers between 2005-2009, putting it in ninth place among exporters, according to the Stockholm International Peace Research Institute.
But no other Asian country has sought to project military power - and had the indigenous capability to do so - since Japan's defeat in 1945.
China's rapid mastery of Russian technology raises questions about US cooperation with the civilian faces of Chinese arms makers.
The Aviation Industry Corporation, China's state aerospace company, builds fighters, for instance. But it is also making a new passenger jet with help from General Electric Company and other US aerospace companies. A GE official says the company has partnered with foreign engine manufacturers for decades "with elaborate protections built in place" that have preserved the company's intellectual property.
There are also implications for US weapons programs. Last year the Pentagon decided to cut funding for the F-22 - currently the most advanced fighter deployed in the world - partly on the grounds that China wouldn't have many similar aircraft for at least 15 years.
But then General He Weirong, deputy head of China's Air Force, announced that Chinese versions of such jets were about to undergo test flights, and would be deployed in "eight or 10 years".
The Defence Intelligence Agency now says it will take China "about 10 years" to deploy stealth fighters in "meaningful numbers".
For Moscow and Beijing, meanwhile, a dispute over the intellectual property rights to such weaponry is testing their efforts to overcome a long historical rivalry and build a new era of friendly ties.
"We didn't pay enough attention to our intellectual property in the past," said a Russian defence official. "Now China is even competing with us on the international market."
Few things illustrate this more clearly than the J-11B, a Chinese fighter that Russian officials allege is a direct copy of the Su-27, a one-seat fighter that was developed by the Soviets through the 1970s and 1980s as a match for the US F-15 and F-16. ...
"When the licence was sold, everyone knew they would do this. It was just a risk that was taken," said Vassily Kashin, a Russian expert on the Chinese military. "At that time it was a question of survival."
The J-11B looked almost identical to the Su-27, but China said it was 90 per cent indigenous and included more advanced Chinese avionics and radars. Only the engine was still Russian, China said.
Now it is being fitted with a Chinese engine as well, according to Zhang Xinguo, deputy president of AVIC, which includes Shenyang Aircraft. ...
In private, however, Russian officials say they worry that China is about to start mass producing and exporting advanced fighters - without Russian help. ...
(2) China challenges Boeing & Airbus with its own passenger planes
China Wins First Orders for Plane, Breaking Airbus-Boeing Grip
By Bloomberg News - Tue Nov 16 05:37:19 GMT 2010
Commercial Aircraft Corp. of China announced its first 100 C919 passenger-plane orders, breaking Airbus SAS and Boeing Co.'s stranglehold on the world's second- largest market for new aircraft.
General Electric Co.'s leasing arm and China's big three domestic airlines are among the customers for the narrowbody plane, state-controlled Comac said in a statement issued at the Zhuhai air show in southern China today. It didn't say how many aircraft each customer ordered.
Comac has a full-sized model of the front section of the plane on display at the show as it challenges Boeing and Airbus's grip on a domestic plane market that could be worth $480 billion through 2029, according to Boeing. The Chinese planemaker expects to sell more than 2,000 C919s worldwide over 20 years competing against Boeing and Airbus's most popular jets.
"The aircraft is of national importance," said Harry Chen, a Shenzhen-based analyst at Guotai Junan Securities Co. "But, as it's only on the drawing board so far, we still have to see how fuel-efficient and less expensive it really is."
The C919's Chinese customers include Air China Ltd., China Southern Airlines Co., China Eastern Airlines Corp., HNA Group Co. and CDB Leasing Co., according to the statement. The model, which has 166 seats in its standard version, competes with Boeing's 737 and the Airbus A320.
GECAS Order
GE Capital Aviation Services Ltd., the world's largest plane lessor, also announced an order for as many as 25 China- made ARJ21 regional aircraft at the last Zhuhai air show in 2008, as GE seeks to boost sales in the world's fastest growing major economy. The 70-seat ARJ21, China's first regional jet, is due to make its maiden exhibition flight at this week's show.
China first announced plans for the C919 in 2008 to help develop a globally competitive aerospace industry and pare its reliance on imports. The nation will trail only the U.S. in plane orders over the next 20 years, according to Boeing.
"There's certainly enough pie locally to keep Comac and their partners busy for a long time," said Derek Sadubin, chief operating officer at industry consultants, Centre for Asia- Pacific Aviation in Sydney. "It does remain to be seen whether the aircraft does sell overseas."
Comac is working with overseas suppliers on the C919, including CFM International Inc., a venture between General Electric Co. and Safran SA that has won a $10 billion engine contract. Other suppliers include Honeywell International Inc., United Technologies Corp. and Parker Hannifin Corp.
China's economic growth has stoked demand for aircraft and boosted its importance in the global aviation market. Air China, China Southern and China Eastern are all among the world's four largest carriers by market value. China Southern is Asia's biggest by passenger numbers.
Airbus Order
The nation is due to receive 112 aircraft from Airbus this year, or 22 percent of the Toulouse, France-based planemaker's total production, Ascend said this month. It will take 71 planes from Boeing, or 15 percent of output, according to the London- based aviation data company.
Airbus this month announced an order for 102 planes from China, including 50 A320s. The planemaker will assemble half of the single-aisle planes at a plant in Tianjin, China, its only production line outside of Europe. Chicago-based Boeing has won 737 orders this year from Air China, Okay Airways Co. and China Southern's Xiamen Airlines.
"We welcome all competition," Jim Simon, Boeing's vice- president for China commercial-airplane sales, said at the show. "It makes the industry better, frankly, because it makes us sharper at our game."
Bombardier, Embraer
Boeing and Airbus also face other new competitors in the single-aisle segment, the largest part of the global plane market. Bombardier Inc. is due to begin deliveries of its CSeries planes, which sit up to 149 passengers, in 2013. Empresa Brasileira de Aeronautica SA, known as Embraer, has also said that it's considering plans to build a similar-sized aircraft.
"We were born into competition 40 years ago, and now we're number one," Airbus's China head Laurence Barron said at a show press conference. "Frankly we're used to it."
China had 1,259 commercial aircraft at the end of 2008, according to the nation's aviation regulator. In 1980, it had a fleet of about 140 commercial planes, mostly seating less than 50 passengers, under the management of the air force.
The country may need 4,330 new large passenger planes through 2029, as rising incomes and economic growth boost air travel, according to Boeing. China's airline passenger numbers rose 18 percent from a year earlier in the first nine months to 200.7 million, according to the Civil Aviation Administration of China.
The global single-aisle jet market may be worth $1.68 trillion over 20 years, according to estimates by Boeing.
--Liza Lin and Wing-Gar Cheng. With assistance from Irene Shen in Shanghai. Editors: Neil Denslow, Michael Tighe
To contact the reporter on this story: Liza Lin in Shanghai at llin15@bloomberg.net
To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net
(3) West is selling China the rope with which to hang it
From: chris lenczner <chrispaul@netpci.com> Date: 21.12.2010 01:31 PM
Chinese Chess
By Irwin M. Stelzer
DEC 18, 2010
http://www.weeklystandard.com/blogs/chinese-chess_523513.html?nopager=1
The Chinese are playing grandmaster chess against an amateur America that can't see beyond the second move. In a bipartisan display of geopolitical obtuseness, America continues its historic trade policy: It's free trade, except occasional lapses into protectionism when a whinging constituent must be placated, with a reliance on the World Trade Organization to settle disputes (and believing it has won something of significance when the WTO sides with it in a dispute over such a key product as cheap tires). Occasional public complaints about China's persistent undervaluation of the renminbi, but refusal to declare the regime a currency manipulator. And conferences, conferences, conferences. All very 20th century.
China is doing a very different thing. The Communist regime sees trade policy as merely one weapon in a war aimed at overtaking the United States as the world's preeminent economic and, by extension, military power. The undervaluation of the renminbi is a necessary means of keeping China's export machine running at full tilt so as to create jobs for the millions who are moving from the country to the nation's cities. Lacking democratic legitimacy, the regime's principal claim to the loyalty, or at least the submission of its people, is its ability to provide jobs and a rising standard of living, doubly important in this period of transition to a new generation of leaders in 2012. Americans chortle: that mercantilist program of subsidizing exports cannot be sustained forever, as the inflow of dollars will sooner or later trigger inflation. Right: indeed, that is already happening, and forcing the regime to adopt a variety of measures to curb credit and inflation.
But largely irrelevant in the longer term on which the Chinese are focused. By the time the Chinese decide they will have to allow the renminbi to appreciate, they will have accomplished two long-standing objectives. First, their vaults will be stuffed with an even larger hoard of American IOUs, enough to give them an important influence over U.S. foreign policy. "How do you deal toughly with your banker?" asked Hillary Clinton of the then-prime minister of Australia, Kevin Rudd, at a luncheon last year. His answer is not recorded.
It is true that if the Chinese start to dump U.S. Treasuries and dollars, the value of their own piles of dollar-denominated assets would decline. But if the broader geopolitical objective were served, that would merely be a cost to consider as part of the military budget.
Second, by then the Chinese will have copied enough American and Western technology to be in less need of an undervalued renminbi—they will have made-in-China products that can dominate world markets even if their currency approximates its market value. The camels that trod the old Silk Road laden with spices and porcelain will have been replaced with air and sea freighters hauling solar panels and all sorts of goods based on copied technologies and purloined intellectual property. To cite just one example, the high-speed trains that China is now selling worldwide are based on technology brought to China by French, German and Japanese companies.
Every deal to tap the vast Chinese market comes with a requirement that they turn over their technology to the Chinese: nuclear plants, green energy products, autos will be made by American companies in China –until the Chinese complete construction of their copycat plants. The initial orders satisfy the American executives, their eyes focused on the next quarterly report. The Chinese, their eyes focused on 2020 and beyond, know that the technology in hand, they can duplicate the factories and techniques needed to dispense with the American capitalists. Westinghouse Electric recently turned over 75,000 documents to its Chinese customers as the initial part of the technology transfer to which it agreed as part of a deal to sell four nuclear plants to China. Nothing seems to have changed since Lenin observed, "The capitalists will sell us the rope with which we will hang them."
Consider, also, solar panels, a product that demonstrates the difference between Chinese and American attitudes. The Chinese agree with President Obama about one thing: solar panels are an increasingly important product and source of jobs. The main raw material is polysilicon, and when its price soared the Chinese made it a national priority to replace foreign supply sources. Government money was marshaled and, more important, the permitting process was short-circuited so that plants could go from ground-breaking to full production in a bit over a year; in the West that is a multi-year process. Result: China controls half the world market for solar-power equipment. In a demonstration of what many now take to be the superiority of state over market capitalism, the Chinese created this and other industries from scratch—and quickly.
There is worse. While Barack Obama and American supporters of free trade are congratulating themselves on negotiating a trade deal that will enable American carmakers to sell a few more cars to South Korea, the Chinese are establishing themselves in Africa, South America and the Middle East so as to lock up supplies of minerals, oil and food. The regime has already demonstrated that these moves on the world's chess board are about more than money and trade balances. Offend them with some move on the world chessboard that does not suit them, and they ban the export of rare-earth minerals crucial to the manufacture of myriad products. Their control over the world's supply—reports are that they control 95 percent of available supplies and are buying up undeveloped resources in Africa—is in part due to their willingness to bear the high environmental cost associated with the processing of these minerals in order to reap the benefits of control over the manufacturing output of Japanese and Western countries. American liberals and greens prefer a more pristine environment.
Still another problem is the difference in attitudes towards foreign investment. American policy discourages foreign investment by attempting to raise taxes on foreign earnings. Meanwhile China, having already invested massively in resource rich African countries such as Sudan, is turning its attention to Latin America. In Argentina alone China's state-owned and subsidized companies have invested in oil and gas properties: copper, gold, silver and lithium mines; lands for soya production; and in port development to facilitate the large-scale shipment of these resources to China.
Then, of course there is India, a giant democratic country growing at a pace equal to or faster than China's, and now the prize in the 21st century version of the Great Game. Barack Obama and an enormous trade delegation visited India and returned to trumpet success in working out trade deals worth an estimated $10 billion. This week Wen Jiabao, China's premier, played one-upmanship and booked $16 billion in deals, financed by China's banks, and announced he would open China's markets to Indian goods as part of a plan to double trade between the countries to $100 billion annually by 2015.
Even more important are two additional factors, one economic, the other military. Beijing has its eye on the dollar. Not the jiggles in its value, although it complains about the threat QE2 poses to the value of the dollar and therefore to its dollar-denominated holdings. But on replacing the dollar as the world's currency of choice. Countries can now invoice and settle trade deals in renminbi, which more and more will do as China gradually makes the currency more easily convertible. Economists at HSBC are guessing that within three to five years half of China's trade with developing countries—that trade accounts for 55 percent of all of China's trade—will be in renminbi, compared with 3 percent at present. No need for dollars.
Then there is the military consequence of all of this. China is becoming increasingly aggressive in asserting its territorial claims to the Senkaku Islands, now controlled by Japan, and to territories claimed by Vietnam and others in the South China Sea. It is building submarines and aircraft carriers and modernizing its navy, cyber-warfare capability, missiles, and anti-satellite weaponry. No surprise that Australia and other nations in the Asia-Pacific region are reviewing their policy of relying on America as a force capable of imposing stability on their region.
But there is good news, news that trumps all of these problems. Lawrence of Arabia, at least according to the David Lean film, countered Arab belief in inevitability with the retort, "Nothing is written." So it is in the Sino-U.S. jockeying for supremacy. America remains the source of most of the world's innovations and the home of most of its great entrepreneurs; unlike China, America is blessed with a relatively young population; bright Chinese still prefer to be educated at great American universities, and the American Dream remains a magnet for risk-takers looking for an opportunity to move up in the world; the American military is still the most potent in the world; and this nation is blessed with an abundance of natural resources. There is time to fix things: "The Chinese currency is still a long way from replacing the U.S. dollar as the world's reserve currency," writes Chi Lo, CEO of HFT Investment Management in Hong Kong. All that is missing are sensible policies. And it truly is not written that we will continue to pursue the self-destructive policies of recent years.
(4) Kevin Rudd (when PM) told US to "deploy force" if China could not be integrated
Kevin Rudd's plan to contain Beijing
Paul Maley, National security correspondent The Australian December 05, 2010 10:00PM
KEVIN Rudd warned the US the world must be prepared to "deploy force" if China could not be integrated into the international system.
And he said his vision for an Asia Pacific Community was primarily an attempt to contain Chinese influence.
In what amounts to the first substantive mentions of Australia in the WikiLeaks cache of leaked foreign cables, the then prime minister also said he argued in Beijing for a "small a" autonomy deal for Tibet and promised "special operations and counter-insurgency" support for the Pakistani government in its fight against extremists.
As Attorney-General Robert McClelland brushed aside allegations by WikiLeaks founder Julian Assange that the Gillard government had abandoned the wanted Australian, the government was in lockdown over the disclosures, which are likely to cause embarrassment in Beijing, Canberra and Washington.
They represent the first of reportedly more than 1400 mentions of Australia among the 251,000 cables leaked to WikiLeaks - about 1000 of which are believed to have been dispatched directly from the US embassy in Canberra.
For months, authorities in Canberra have been bracing for the leaks, which Mr McClelland has warned could compromise national security.
Written by a US diplomat on March 28 last year, a confidential cable details a 75-minute lunch meeting in Washington involving US Secretary of State Hillary Clinton, Mr Rudd and a coterie of senior advisers and officials, including Australia's ambassador to Washington, Dennis Richardson, and national security adviser Duncan Lewis.
Written four days after the meeting, the account suggests Mr Rudd took a hawkish view on China's ascendancy in the Asia region, warning of the need to contain China with force if necessary, and to use his proposed Asia Pacific Community as a means of curbing its growing influence and prevent the emergence of a "Chinese Monroe Doctrine". The Monroe Doctrine was the 19th-century US policy designed to prevent further European expansion in the Americas.
The cable also suggests Mrs Clinton was keen to pump Mr Rudd for advice on how to manage Beijing's growing economic clout, which she said was causing "deep anxiety" in Washington.
Mrs Clinton is quoted as asking Mr Rudd, "How do you deal toughly with your banker?"
Mr Rudd goes on to describe himself as a "brutal realist" on the issue of China and argues for a "multilateral engagement with bilateral vigour".
"(Which would integrate) China effectively into the international community and (allow) it to demonstrate greater responsibility, all while also preparing to deploy force if everything goes wrong," the cable quotes Mr Rudd as saying.
Mr Rudd, a Mandarin speaker, said Australia's intelligence community kept a "close watch" on China's military modernisation. "(He) indicated the forthcoming Australian Defence white paper's focus on naval capability is a response to China's growing ability to project force," the cable said.
And, in a remark likely to cause offence in Beijing, Mr Rudd said Chinese President Hu Jiantao "is no Jiang Zemin" - a reference to Mr Hu's predecessor.
The cable also reveals Mr Rudd had suggested to Chinese leaders they consider "a small 'a' autonomy deal with the Dalai Lama", the exiled Tibetan spiritual leader. Mr Rudd said such a proposal would have "little prospect of success", but counselled: "The best chance would be if someone of the Secretary's stature had 'a quiet conversation' with the Politburo Standing Committee member responsible for Tibet sometime after the furor (sic) over the 50th anniversary of the Dalai Lama's exile subsides". Elsewhere Mr Rudd said China was "paranoid" on the question of Tibet and Taiwan, the latter regarded by Beijing as a rogue province.
In one of the most intriguing sections of the cable, Mr Rudd shines new light on the logic behind his much-derided proposal for an Asia-Pacific Community by 2020.
"Noting Russia's interest in being included in Asian regional architecture, Rudd explained the thinking behind his Asia-Pacific Community initiative mostly as an effort to ensure Chinese dominance of the East Asia Summit did not result in a 'Chinese Monroe Doctrine' and an Asia without the US."
Mr Rudd compliments US President Barack Obama's decision to deliver a video addressed directly to Iran's people as a "creative play". He laments, with Mrs Clinton, Pakistan's "obsessive focus" on India, saying it came at the expense of Pakistan's lawless Western Frontier with Afghanistan which serves as a sanctuary for Islamic militants. He goes on to note that coalition gains in Afghanistan would be to nought if Pakistan were allowed to fail.
"Rudd indicated Australia was willing and able to help, especially in special operations and counter-insurgency areas, as soon as Pakistan was willing to accept help," the cable said. "But argued the necessary economic development assistance and capacity-building in Pakistan's security forces could only happen once the elites came to recognise the problem."
Yesterday, veteran diplomat Richard Woolcott, charged with setting up the APC, expressed surprise at the contents of the cable, which he noted was an American interpretation of the conversation, not Mr Rudd's. "It was never explained to me in those terms," he said. "Rudd said to me on several occasions that one of the objectives was to engage China."
A spokeswoman for Julia Gillard said last night: "The government has made it clear we won't be providing commentary on individual cables."
Yesterday, Mr McClelland said Mr Assange, who is wanted for questioning in Sweden on rape allegations and is being investigated by the Australian Federal Police over the leaks, was entitled to the same protections as any other Australian. "This includes the right to return to Australia and also to receive consular assistance while he is overseas, if that is requested," a spokesman said.
The comments followed remarks by Mr Assange, who is thought to be in London in hiding following an Interpol alert issued by Sweden, that Australia was "actively working to assist the US government in its attacks on myself and our people".
Comments on this story
Peter of Perth Posted at 2:43 PM Today
So why did he relax overseas ownership laws to allow thousands of Chinese to buy up houses. This forced locals out of the market with price rises, the Chinese then sold them off making huge profits and causing price s to fall with the glut. I used to see bus loads of them in my home town (Mandurah WA) just pointing to the houses as the agents ticked them off.
(5) American hedge fund manager says China in "enormous credit bubble"; aims to cash-in
Hedge fund manager Mark Hart bets on China as the next 'enormous credit bubble' to burst
Mark Hart, an American hedge fund manager who has made millions predicting the crises in US sub-prime market and European debt, has launched a fund to bet on the imminent implosion of China.
By Louise Armitstead
29 Nov 2010
Mr Hart, who runs Corriente Advisors from Fort Worth Texas, has told potential investors in a presentation that China is in the "late stages of an enormous credit bubble".
When this bursts, the financier said he expects an "economic fall-out" that will be as "extraordinary as China's economic out-performance over the last decade".
Asking for a minimum $1m (£640,000) stake, Corriente said it will use sovereign and corporate credit default swaps, interest rate and foreign exchange options to cash-in on the collapse.
Mr Hart, who launched a record performing sub-prime fund as early as 2006 and, in 2007, a fund that bet on a European debt crisis, told investors: "Complacency among market participants regarding China is eerily similar to the complacency exhibited prior to the United States sub-prime crisis and European sovereign debt crisis."
In the presentation, which amounts to a devastating attack on the prevailing belief that China is an engine for growth, the financier argues that "inappropriately low interest rates and an artificially suppressed exchange rate" have created dangerous bubbles in sectors including:
Raw materials: Corriente says China has consumed just 65pc of the cement it has produced in the past five years, after exports. The country is currently outputting more steel than the next seven largest producers combined – it now has 200m tons of excess capacity, more that the EU and Japan's total production so far this year.
Property construction: Corriente reckons there is currently an excess of 3.3bn square meters of floor space in the country – yet 200m square metres of new space is being constructed each year.
Property prices: The average price-to-rent ratio of China's eight key cities is 39.4 times – this figure was 22.8 times in America just before its housing crisis. Corriente argues: "Lacking alternative investment options, Chinese corporates, households and government entities have invested excess liquidity in the property markets, driving home prices to unsustainable levels." The result is that the property is out of reach for the majority of ordinary Chinese.
Banking: As with the credit crisis in the West, the banks' exposure to the infrastructure credit bubbles isn't obvious because the debt is held in Local Investment Companies – shell entities which borrow from Chinese banks and invest in fixed assets.
Mr Hart reckons that "bad loans will equal 98pc of total bank equity if LIC owned, non-cashflow producing assets are recognised as non-performing.
As a final blow, Mr Hart says that the market belief that the Chinese government has "ample resources" to bail out its banks is flawed.
Corriente's analysis of the ratio of China government debt to GDP comes out at 107pc – five times higher than official published numbers. The hedge fund says this number uses "conservative assumptions" and the real figure could be as high as 200pc.
The result is that, rather than being the "key engine for global growth", China is an "enormous tail-risk."
He is so convinced by his arguments that he has warned investors that the fund, called the China Opportunity Master Fund, is prepared to "burn" 20pc of their cash each year until his theories are proved.
(6) Russia & China abandon $ for bilateral trade. IMF's role as a tool of US imperialism - Paul Craig Roberts
http://www.globalresearch.ca/index.php?context=va&aid=22150
The Stench of US Economic Decay: Russia and China Dump the US Dollar
by Dr. Paul Craig Roberts
Global Research, November 29, 2010
On Thanksgiving eve the English language China Daily and People's Daily Online reported that Russia and China have concluded an agreement to abandon the use of the US dollar in their bilateral trade and to use their own currencies in its place. The Russians and Chinese said that they had taken this step in order to insulate their economies from the risks that have undermined their confidence in the US dollar as a world reserve currency.
This is big news, especially for the news dead Thanksgiving holiday period, but I did not see it reported on Bloomberg, CNN, New York Times or anywhere in the US print or TV media. The ostrich's head remains in the sand.
Previously, China concluded the same agreement with Brazil.
As China has a large and growing supply of dollars from trade surpluses with which to conduct trade, China is signaling that she prefers Russian rubles and Brazilian reals to more US dollars.
The American financial press finds solace in the episodes when sovereign debt scares in the EU send the dollar up against the euro and UK pound. But these currency movements are just measures of financial players shorting troubled EU-denominated debt. They are not a measure of dollar strength.
The dollar's role as world reserve currency is one of the main instruments of American financial hegemony. We haven't been told how much damage Wall Street fraud has inflicted on EU financial institutions, but the EU countries no longer need the US dollar for trade between themselves as they share a common currency. Once the OPEC countries cease to hold the dollars that they are paid for oil, dollar hegemony will have faded away.
Another instrument of American financial hegemony is the IMF. Whenever a country cannot make good on its debts and pay back the American banks, in steps the IMF with an austerity package that squeezes the country's population with higher taxes and cuts in education, medical and income support programs until the bankers get their money back.
This is now happening to Ireland and is likely to spread to Portugal, Spain, and perhaps even to France. After the American-caused financial crisis, the IMF's role as a tool of US imperialism is less and less acceptable. The point could come when governments can no longer sell out their people for the sake of the American banks.
There are other signs that some countries are tiring of America's irresponsible use of power. Turkey's civilian governments have long been under the thumb of the American influenced Turkish military. However, recently the civilian government moved against two top generals and an admiral suspected of involvement in planning a coup. The civilian government further asserted itself when the prime minister announced on Thanksgiving day that Turkey is prepared to react to any Israeli offensive against Lebanon. Here is an American NATO ally freeing itself from American suzerainty exercised through the Turkish military. Who knows, Germany could be next.
Meanwhile in America the sheeple remain content with, or blind to, their role as sheep to be slaughtered to feed the rich. The Obama administration has managed to come up with a Deficit Commission whose members want to pay for the multi-trillion dollar wars that are enriching the military/security complex and the multi-trillion dollar bailouts of the financial system by reducing annual cost-of-living increases for Social Security, raising the retirement age to 69, ending the mortgage interest deduction, ending the tax deduction for employer-provided health insurance, imposing a 6.5% federal sales tax, while cutting the top tax rate for the rich.
Even the Federal Reserve's low interest rates are aimed at helping the banksters.
The low interest rates deprive retirees and those living on their savings of interest income. The low interest rates have also deprived corporate pensions of funding. To fill the gap corporations are issuing billions of dollars in corporate bonds in order to fund their pensions. Corporate debt is increasing, but not plant and equipment that would produce earnings to service the debt. As the economy worsens, servicing the additional debt will be a problem.
In addition, America's elderly are finding that fewer and fewer doctors will accept them as patients as a 23% cut looms in the already low Medicare payments to doctors.
The American government only has resources for wars of aggression, police state intrusions, and bailouts of rich banksters. The American citizen has become a mere subject to be bled for the ruling oligarchies.
The police state attitude of the TSA toward airline travelers is a clear indication that Americans are no longer citizens with rights but subjects without rights. Perhaps the day will come when oppressed Americans will take to the streets like the French, the Greeks, the Irish, and the British.
Peter Myers, 381 Goodwood Rd, Childers Qld 4660, Australia ph +61 7 41262296 [in Australia: 07 41262296]
http://mailstar.net/index.html I use (by choice) the old Mac OS; being incompatible, it cannot run Windows viruses or transmit them to you.
Never respond to emails offering pornography ("see my photo") or sex; never click on links they provide. Intelligence agencies may be using them to lure and trap dissidents (for possessing child pornography, or sex with a minor). They'd rather discredit you that way, than prosecute you for revealing some inconvenient truth. Mordecai Vanunu was lured by a "honey trap", after which he was jailed for 18 years (11 solitary); and he never even got the honey. Don't try to fight the government with guns - that just gives them an excuse for getting rid of you. Your most potent weapon is information - that's what Big Brother is really scared of.
Filters (ostensibly to trap porn) may be used to censor this newsletter. If my bulletins do not arrive, check your Spam, Junk & Trash folders; if not there, ask your Internet Provider about their filters. Failing that - and if your mail to me keeps bouncing - please ring me: this helps beat sabotage. To unsubscribe, reply with "unsubscribe" in the subject line; allow 1 day.
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