11-02-2009, 07:08 AM
There is a consensus among the world's central banks (inept as they may often be) that a big piece of the Chinese global financial clout is based on their grossly undervalued currency. An undervalued currency boosts exports by keeping their cost in foreign currencies artificially low. The problem with forcing China to reform this economic distortion is the fact that they hold so much of our Treasury paper that all they have to do is mention that they might sell off some of it and near panic sets in. They probably do not want to push us too far, though, because if our economic problems get much worse, they will face serious social and political unrest at home due to the resulting fall in employment. China has been pushing their own stimulus programs and low interest rates in an effort to keep the workers busy in the current world recession. Anything that threatens the status quo will not be tolerated by the oligarchs, so I don't really expect much to change any time soon.
Most experts agree that the Chinese military is currently oriented to defending its borders, maintaining domestic order (especially in the non-Han provinces,) and dealing with an often recalcitrant and heavily armed Taiwan. While they do have ICBMs, massive ground forces, and a semi-respectable air force, their navy (especially in terms of aircraft carriers, submarines, and missile boats) is not yet at a superpower level. Projecting their power much beyond the Taiwan Straits would be difficult at present. It's just a matter of time, though. We need to get our financial house in order, or it might not matter how powerful their military is.
Most experts agree that the Chinese military is currently oriented to defending its borders, maintaining domestic order (especially in the non-Han provinces,) and dealing with an often recalcitrant and heavily armed Taiwan. While they do have ICBMs, massive ground forces, and a semi-respectable air force, their navy (especially in terms of aircraft carriers, submarines, and missile boats) is not yet at a superpower level. Projecting their power much beyond the Taiwan Straits would be difficult at present. It's just a matter of time, though. We need to get our financial house in order, or it might not matter how powerful their military is.