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IntroductionIntroductionNews Release, October 25, 2012U.S.-China Chill Melts Down World Markets
NEW YORKGlobal stock exchanges were devastated this week by the worst collapse in history as a wave of panic selling followed the sun from Asia through Europe and back to Wall Street. The pandemonium was triggered by a Chinese government announcement that it would no longer finance the mounting budget and trade deficits of a "profligate United States" that "refuses to live within its means" and that "insists on scapegoating China for its own internal economic problems." Nor would China continue to try to prop up "an increasingly worthless dollar."
As the Chinese began dumping U.S. assets on Wall Street, both stock and bond prices plummeted. The panic soon spread to other exchanges around the world as gold soared to more than $1,000 an ounce and fear of a global depression deepened.
China's actions have been widely interpreted as harsh retaliation for U.S. congressional passage of stiff protectionist tariffs on a wide range of manufactured goods. With the presidential election less than a month away, both houses of Congress up for electoral grabs, and the U.S. economy stuck in reverse, Republicans and Democrats alike are pushing additional legislation addressing everything from the growing trade in Chinese counterfeit goods, illegal drugs, and ballistic missiles to the international spillover from China's mounting environmental pollution.
It's been a tough year for Sino-U.S. relations. In January, the U.S. ambassador to the United Nations stormed out in protest over "the repeated crass commercialuse" by China of its U.N. veto to "shield terrorist regimes such as Iran from diplomatic sanctions in exchange for oil." In March, China's president abruptly cancelled a state visit after the U.S. Treasury Department branded China a "currency manipulator." During an unusually hot August that raised collateral fears of global warming, the U.S. Pacific Fleet engaged in a tense, week-long standoff over Taiwan with China's recently acquired, and nuclear missile-equipped, blue water navy.
Meanwhile, domestic unrest in China continues to escalate as an increasingly restive population seeks greater income equality, more worker rights, improved health care, a cleaner environment, a halt to widespread government corruption, and an end to massive public works projects such as the Three Gorges Dam that have displaced millions of people without adequately compensating them. A recent report released by the U.S. Central Intelligence Agency has warned that should such domestic unrest reach a boiling point in China, the result may be "sharper military conflicts with the United States, Taiwan, and possibly even Japan as Chinese leaders seek to unify the now increasingly fractured nation against a 'common enemy.'"
The best of economic times for China are fast becoming the worst of times for the rest of us. China's "cowboy capitalism" and amoral foreign policies are triggering a whole range of economic, financial, environmental, political, and military tsunamis that threaten to engulf usas well as the Chinese people. The ever-growing dangers lay in a model of rapid, unsustainable economic growth, coupled with a wanton disregard for both human life and intellectual property. The myriad dangers from the Coming China Wars are realand increasingly personal. Consider these scenarios based on actual events:
Your father almost dies from a massive heart attack because the "Lipitor" prescription he filled on the Internet was laced with Chinese fakes. Your mother breaks her hip because the phony "Evista" medication she took for osteoporosis was nothing more than molded Chinese chalk. Your house gets robbed by a drug addict high on methamphetamines made from ephedra grass grown on Chinese state-run farms and transported to New York via Panama by Triad gangs.
You walk out of a Wal-Mart with a big smile and a large basket laden with cheap Chinese goods ranging from a fancy new laser printer and plasma TV to shirts, socks, and running shoes. Your smile quickly turns to a frown as your eyes begin to sting and lungs burn from the Asian "brown cloud" now visible on the horizon. It is 90-proof "Chinese chog"a particularly toxic atmospheric smog that has hitchhiked on the jet stream all the way from China's industrial heartland where everything in your basket was first manufactured.
Your bank balance drops precipitously as rising interest rates drive your adjustable rate monthly mortgage payment off the charts and as you shell out more than you ever dreamed to fill your gas tank. Your mortgage payments are being held hostage to China's currency-manipulation policies. You pay dearly at the pump because of the price-shocking effects of China's rapidly rising thirst for oil.
The Coming China Wars is not just a story about how China's emergence as the world's "factory floor" is affecting you and your pocketbook. The story is far larger than any one of us or any single country. This book takes a tough, hard look at the eight major China Wars already well underway:1. The Not-So-Swashbuckling Piracy Wars
Following a centuries-old tradition of skullduggery in the South China Seas, China has become the world's largest pirate nation. China's modern buccaneers, with the strong support of their government, are not just stealing software and Hollywood movies on DVDs. They are blatantly counterfeiting virtually the entire alphabet of goodsfrom air conditioners, automobiles, and brake pads to razors, refrigerators, and the world's most recognizable pharmaceuticals such as Lipitor, Norvasc, and Viagra.
In the process, these pirates are posing grave health risks to hundreds of millions of people. They are also destroying all semblance of global intellectual property law protections vitally needed to spur innovation.2. The 21st Century Opium Wars
With an unholy triangle of Triad gangsters, international smugglers, and corrupt Communist Party officials as cartel kingpins, China has emerged as one of the world's biggest dope dealers. Most despicably, China is not just the world's "factory floor" for legitimate goods but also for the so-called precursor chemicals used to produce all four of the world's major hard drugs: cocaine, heroin, methamphetamine, and Ecstasy.
China has also retained its historical role as a major transit area for opium from the Golden Triangle, and it is rapidly emerging as a highly efficient production center for Ecstasy and speed. Not coincidentally, Chinese criminal syndicates are awash in illicit cash, and China's banking system is becoming an important hub for global money laundering.3. The Air Pollution and Global Warming Wars
With claim to 16 of the world's 20 dirtiest cities in the World Bank's environmental Hall of Shame, China has been dubiously crowned as the most polluted nation on Earth. As a result of its rapid industrialization and lax environmental controls, China's prodigious toxic emissions are now spewing well beyond its environmentally porous borders.
Storms regularly rise up from China's Inner Mongolian desert steppes and blanket Korea and Japan with tons upon tons of toxics-laden dust. Chinese chog regularly hitchhikes along the jet stream, only to descend thousands of miles away in big cities such as Los Angeles and Vancouver and to despoil visibility in pristine towns such as Aspen. With its belching coal plants and rapidly multiplying automobile fleet, China will soon eclipse the United States as the single largest contributor to global warming.4. The "Blood for Oil" Wars
With its economy rocketing, China has emerged as the world's second largest petroleum consumer behind only the United States. Astonishingly, China now accounts for almost half the growth in global oil demand and is the primary catalyst for an oil market hurtling toward $100 a barrel.
To lock down its petroleum suppliesand lock the rest of the world outChina has adopted a reprehensible foreign policy based on President Hu Jintao's amoral mantra of "just business, no political conditions." It has shipped ballistic missiles and transferred nuclear weapons technologies to the radical Iranian regime, used its diplomatic veto in the United Nations to sanction genocide in the Sudan, and facilitated the looting of public treasuries by dictators in oil- and mineral-rich African countries from Angola to Zimbabwe.
This unconscionable blood for oil diplomacy has resulted in the slaughter of millions, the impoverishment of millions more, and a rapid spike in nuclear proliferation in both the Middle East and Asia.5. The New Imperialist Wars
In a supreme historical irony, one of imperialism's worst former victims has become the 21st century's most relentlessly imperialistic nation. From Brazil, Cuba, and Venezuela to Equatorial Guinea and the Ivory Coast, China dangles lavish, low-interest loans and sophisticated weapons systems as bait. It then uses its "weapons of mass construction"a huge army of engineers and laborersto build everything from roads and dams to parliament buildings and palaces.
After these unwitting countries are driven ever deeper into China's debt, China's imperialistic quid pro quo is the rapid extraction of the country's raw materialsBolivian tin, Chilean copper, Cuban nickel, Congolese cobalt, gold from Sierra Leone, Rwandan tungsten, and the vast mineral wealth of South Africa.
As the despotic puppets running China's "new colonies" transfer billions in bribes to their Swiss bank accounts, the peasants these despots rule over slide ever deeper into poverty.6. The Damnable Dam and Water Wars
China is the dam-happiest place on Earth. With far too little water, far too much of that water horribly polluted, and the once-mighty Yellow River running dry for more than 200 days a year, China is facing a severe water crisis that already pits angry farmers against encroaching industrialists, millions of displaced "peasants with pitchforks" against corrupt government officials, and downstream versus upstream provinces.
This is also a fierce diplomatic battle being waged between upstream and downstream countries. Upstream, China is constructing a phalanx of mega-dams on the Mekong River despite the strong protests of the downstream countries of Cambodia, Laos, Thailand, and Vietnam. These damsincluding one that will be more than 100 stories tall and the tallest in the worldnow threaten the food supply, transit routes, and livelihoods of more than 50 million people living in the Lower Mekong River Basin. Already, the Mekong has recorded its lowest levels ever and has flowed close to rock bottom near the end of its journey in Vietnam.
Precisely because of these many and varied economically driven conflicts, we and our children are destined to fight a complex and highly interrelated series of wars with China on many, many fronts. As you will see in the chapters that follow, a reckless and ruthless Chinese government is directly to blame for many of these Coming China Wars. However, it is also disturbingly true that China's hyper-growth is causing the world's most populous nation to spin out of the control of its leaders.
As China's economy continues to grow at unprecedented rates, the "strange bedfellow" combination of a totally unrestrained free market capitalism operating under a harshly repressive totalitarian umbrella is becoming more and more like a political and social Molotov cocktail rather than an exemplary economic model for the rest of the world. That is precisely why the greatest danger to the world community may be China's coming "wars from within." These wars from within may be triggered by any number of internal ticking economic and demographic time bombs that threaten to bring on that which the Chinese people fear most"chaos" or luan.7. China's Wars from Within
Over the past decade, the number of protests and riots in China has risen to nearly 100,000 annually. This is hardly surprising to any astute China watcher. People are being pushed beyond tolerance as the Chinese countryside becomes a slave labor camp and dumping ground for every imaginable pollutant.
The rural peasantry is being sucked dry by wastrel government tax collectors. Corrupt local government officials seize land on behalf of developers, pocket the monies that are supposed to compensate villagers, and then enlist local gangsters to quell protests.
In the big cities, unpaid construction workers leap to their deaths in protest of wages that go callously unpaid. Meanwhile, on China's Western prairies, ethnic separatist tensions continue to smolder over the ongoing "Hanification" of the mostly Muslim population on the Western frontier.8. China's Ticking Time Bombs
China is rapidly grayinggetting old faster than it is getting rich. China is now facing a pension crisis that will make solving the unfunded social security liabilities of equally graying countries such as the United States, Japan, and Germany look like strolls through the park.
China is also a nation getting increasingly sick. Environmental pollution serves as a deadly catalyst for an explosion of myriad cancers and an epidemic of respiratory and heart diseases. This rapid rise in ill health is coming precisely when China's once-vaunted public health-care system has totally unraveled.
Adding to these extreme pressures is an HIV/AIDS epidemic that may soon become the worst in the world. This epidemic began with the most scurrilous HIV/AIDS blood donor scandal on the planet. It is being rapidly fueled by rampant intravenous drug use, a late-blooming 1960s-style sexual revolution, and the explosive reemergence of China's once-infamous flesh trade.
The radical remedies and reforms that will be required to avoid the chaos, casualties, and hardships of the Coming China Warsboth within China and beyond its borderswill never occur unless we gain a much better understanding of the basic economic forces driving these political, financial, social, energy, and environmental conflicts. My abiding hope, particularly for the children, is that a better understanding of the complexities of the economic origins of the Coming China Wars will help lead to their peaceful resolution. Cultivating such an understandingand calling China and the rest of the world to actionare the ultimate goals of this book. The fictional News Release from the year 2012 leading off this Introduction is just one glimpse of a future that we all should urgently seek to avoid.
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