America's strategic equation is getting even more unfavorable.
December 20, 2010

Europe, China's New Beachhead

Steve McCann
10 Comments

China has made plain their displeasure with the monetary and fiscal policies which threaten to further devalue the dollar and undermine the value of the U.S. debt held by Beijing. However, as the United States is the largest importer of Chinese goods by a significant margin, and with the ever-present need to maintain a high economic growth rate to employ hundreds of millions, the ability of the Chinese to pull the plug on the U.S. and its insatiable need to finance its debt is limited.

The Chinese must keep on financing a good part of the U.S. debt in order to keep the country afloat so it can continue to buy Chinese goods. The solution to this dilemma is to open new markets and greatly reduce the dependence of the U.S. for Chinese manufactured goods.

This process is well underway in Europe as reported in Der Speigel. The lead from the article:

China is seizing on Europe's debt problems to expand its influence on the continent with large-scale investments and purchases of government bonds issued by highly-indebted states. The strategy could push Europe into the same financial dependency on China that is posing a dilemma for the U.S.


China, in a not so subtle extortion, is dangling the carrot of buying the debt of those countries such as Greece, Portugal, and Italy in exchange for expanding trade with China. By pledging to help these debt stricken countries it is ultimately boosting its own industry. Further, this activity greatly boosts China's political influence throughout the continent in order to mute criticism and potential actions against China's artificially low exchange rate. This will allow China to keep their exports cheap into the euro zone thus killing domestic manufacturing.

Many of these debt ridden countries are falling in line to beg assistance from China; they are becoming more willing to sleep with the tiger in the hope that it will not devour them.

The final upshot of this strategy and China's recent worldwide push to acquire and monopolize various sources of raw materials throughout the world is to isolate the United States. Further, by diminishing its dependence on exports to the U.S., China hopes to be in a position to dictate terms and have leverage over U.S. policies as a result of holding so much American debt.

Only a concerted effort by the United States to re-industrialize its economy, dramatically reduce the annual deficit and ultimately the debt as well as promote domestic consumption can this strategy by the Chinese be thwarted as chances of their European tactics succeeding are extremely high.

http://www.americanthinker.com/blog/201 ... hhead.html