Trinkets and treasure: China tames the US

[unhappycamper]

Trinkets and treasure: China tames the US
By Julian Delasantellis
Aug 31, 2007


August in Seattle sees the arrival of Seafair, the city's annual midsummer entertainment and cultural festival. A traditional part of Seafair has been the arrival of a number of US Navy warships for the "parade of ships" through Puget Sound, then to dock in Seattle for tours by the large numbers of local citizenry who wait to board the ships for hours under the hot sun - in contrast to everything you might have heard, it rains very infrequently in Seattle during midsummer.

The parade of ships for Seafair 2007 was not all that impressive; just a few smaller navy combat and support ships. All the big capital ships of the navy's Pacific fleet are currently in the Persian Gulf, steaming around in circles, waiting to bump into something with an Iranian flag on it so the American neo-conservatives can manufacture a casus belli for a future catastrophic war in Iran that will divert Americans' attention from the current catastrophic war in Iraq.

~snip~

You frequently see containerized cargo ships making their way down Puget Sound to the port facilities in Seattle, completing their two-week high-seas journey from the massive Hong Kong and Shenzhen port complexes in southern China.

Most of the time, as they complete these voyages in from the Pacific, they ride low in the water, right down to the waterline. On these ships, the thousands of containers visible on deck, and the many more you don't see under the decks (the largest container ship in the world, the Maersk Line's Emma Maersk, can hold more than 14,000 individual 20-foot container units) are chock full, with TVs, washing machines and appliances, tires, toys and trinkets; the full catalogue of rapidly depreciating disposables over which North America is sacrificing its treasure.

As the containerized cargo ships leave Seattle, or San Francisco, or Long Beach, San Diego, Vancouver, all the way north to the newly bustling port of Prince Rupert, British Columbia, the ships ride a lot higher in the water. Most of the cargo containers are empty; they're being sent back to China to be refilled.

~snip~

Real power now lies in those cargo ships forever steaming inexorably to the American heartland. In a couple of years, the United States will conclude its (by then) million-death, trillion-dollar misadventure in trying to subdue a few spits of green land between the Tigris and Euphrates. It will discover that, even if General David Petraeus' "surge" might have won the battle of al-Anbar, back home the US ruling elite has surrendered to China in the battle for the United States, without even firing a single shot.


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[starroute]

1. Have the Chinese been studying Asimov's Foundation series?

One of the earlier "Foundation" stories is a blueprint for how a militarily less-powerful, gadget-producing society can bring the remnant of a decaying empire to its knees.

Following that scenario, Act Two would be when an alarmed US government attempts to push back against Chinese imports and American consumers rise up in outrage to prevent it.

Act Three . . .

[HamdenRice]

2. One port official explained we export "California air"

Sorry, I don't remember where I read that, but this dock official used that expression as mordant humor a few years ago to explain the empty containers going back to Asia.

I remember the period when there was similar hysteria about the Japanese trade surpluses, back in the 1980s. Similar concerns were expressed about Saudi surpluses in the 70s, which were called petrodollars.

The big difference -- and it is both worrying and somewhat inexplicable -- is that the Saudis and the Japanese recycled their dollar surpluses back into the US. The Japanese in particular were very agressive in buying US assets -- from car factories in the mid west to the marquee office buildings in Manhattan to intellectual property assets in Hollywood (hence Sony Pictures). These investments balanced the trade deficits and showed that in a way such trade deficits are not important in a completely internationalized economy, such as ours.

The Chinese are not buying anything here except treasury bills. I suspect the main reason is that China itself is still very much a poor, developing country (just take a ride through the countryside of South China or Sichuan), and the rates of return within China therefore are much higher than they would be in mature economies such as the US or western Europe.

So they seem to be holding dollars as their "gold reserve" while lending out Yuan, backed by dollars, within their own country -- as well as in the poor but developing areas of Asia and Africa.

This seems unsustainable -- unless, for example, they began using dollars to purchase American capital goods for their investments in poor countries.