Saturday :: Jul 23, 2005

Low Yuan, So Long

by Marie

Well, that was fast! The whining in the future will be the loudest from those smug liberals, moderates and conservatives that rushed in to protect Unocal from the Chinese. That elevated a business deal into a matter of national security. Chevron is laughing all the way to the bank (in Hong Kong, Geneva, Paris -- anywhere but the USA). (see Feng Shui Capitalism)

Billmon always lays out the broad economic ramifications of events like this better than anyone. Breaking the Peg (When I link to him, itís not as reference for something Iím going to repeat, rephrase or reiterate. It means ďhead over to the bar now and have a good stiff one.Ē He pours the good stuff, straight up, and without the mixers and stupid little umbrellas that I stick in what I serve.) Fortunately for us and the world, the Chinese havenít been gulping steroids as they developed their economic muscles. China will export things, not ideology and armies, throughout the world. Not for them to end up bankrupt after exploiting their slave labor for eighty years like the USSR. Nor do they want a Sino-American economic version of MADD. Theyíll flex those economic muscles just enough to let us know that they arenít wimps, but no need to go mano-a-mano against an opponent thatís mainlining economic junk. Particularly when its getting strung out and into fights to feed its habit.

China appreciates that they win bigger if they go slow. Slow enough that they donít wake up the paper tiger before itís too late. Unocal merely tested the waters, and confirmed that oil is one thing that Americans think they know something about and will protect at all costs. Unfortunately for China, theyíve built an industrialized economy based on oil. From bicycles to automobiles. Have they built any mass transit systems? Any alternative energy sources other than the massive hydropower project on the Yangtze? Did they correctly estimate how quickly they would move from energy independence to being yet another country dependent upon those with black gold?

China appears to be hedging its bets in the oil world. Signaling that they can do business with fundamentalist Muslim regimes with oil resources. They arenít hostile to repression or Islam. China isnít a Christian nation. Theyíll take the oil and not demand that it be cheap. America is merely a market for them and not an ally. They can see that the insurgents in Iraq are not on their last legs and desperate nor is al Qaeda. Recognize that the struggle is not merely a religious issue for those at the top. They donít touch the oil pumping infrastructure because they plan one day to control it.

I can respect how well China is playing the game. Too Too bad the game sucks and Iím not rooting for any of the contestants to win.

Marie :: 11:08 AM :: Comments (10) :: TrackBack (0) :: Digg It!