Monday, June 6, 2011

The Kings of the East

I can recall when Hal Lindsey came out with "The Late Great Planet Earth" in 1970, he described how we should expect to see China rise as a world power based upon the biblical descriptions given in the book of Revelation of the "Kings of the East", and at that time the idea seemed preposterous to critics. You don't hear these critics anymore, as this serves as one more example of the literal nature of prophecy. Today we see several news items relating to various actions by China - all of which involve their growth as a world power:

Yuan expected to become major world currency

Chinese policy makers are moving toward the internationalization of the yuan, amid growing worries about the country’s exposure to the fiscal woes of the United States and the U.S. dollar’s role as the global reserve currency.

China, he said, has two goals in moving to increase the international use of the yuan, which is also known as the renminbi.

The first would be to decrease the country’s reliance on the U.S. dollar, which he suggested should no longer be considered a safe haven following the near-collapse of the American financial system in 2008. The second goal would be to stabilize the international financial system by creating another major currency where investors could put their money in times of crisis.

So what would be the outcome of this restructuring of the global economy?

Just as important to many Chinese is the sense that making the yuan into a major international currency is the next step in confirming the country’s new status as an economic and diplomatic power.

But a world in which the yuan is a major trading currency would necessarily look quite different from the one dominated by the U.S. dollar, forcing both the United States and China to confront the imbalances in their domestic economies.

The process has already started:

China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills

China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.

Since October, however, China has also started to divest from longer-term U.S. Treasury securities. Thus, as reported by the Treasury Department, China’s ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March.

The U.S. has become dependent upon China's buying up American debt via Treasury securities. This is a worrisome development, one that has been feared for years. The ramifications of this will be known in short order.

China is also flexing their military muscles:

China Irritates Neighbors as Tensions Rise in South China Sea

Tensions in the South China Sea over territorial disputes are rising once again with China clashing with Vietnam and the Philippines recently.

Dean Cheng, an Asia defense analyst at the Heritage Foundation in Washington says while China may not be shooting anyone, it's actions are provocative and put lives in danger. “[China] seem[s] to be engaging in a broad-based push to lay claim to the entire region and they don’t seem to care whose toes they are stepping on," he said.

The South China Sea is a major shipping lane and is believed to be rich in oil and gas reserves. It is claimed by several countries including Brunei, Malaysia, China, the Philippines, and Vietnam.

Heritage Foundation analyst Dean Cheng says the recent uptick in tensions may be a sign Beijing is testing the waters with Vietnam or the United States.

Cheng says the increase in tensions could also be related to China's upcoming leadership transition in 2012. Chinese President Hu Jintao steps down from office next year and Cheng says it could be that the incoming government and outgoing government feel they have no choice but to take a stand and make a point that this is China's territory.

India has taken notice of these developments:

India beefs up China front with UAVs, copters to monitor PLA

NEW DELHI: India is now deploying spy drones or UAVs (unmanned aerial vehicles) and light observation helicopters along the borders with China to keep a hawk-eye on the stepped-up activities of People's Liberation A

The construction of over 5,500 "permanent defences and bunkers" along the borders is now being speeded

"Sukhoi-30MKI fighters are already being based in IAF airbases like Tezpur and Chabua. Army Aviation bases in Assam are also now being upgraded, with seven helicopters and four Israeli Searcher-II UAVs already been deployed there," a defence ministry source said.

The Army is also pushing for a mountain strike corps after having raised two new mountain infantry divisions.

...all these plans are meant to strategically counter China's massive build-up of military infrastructure all along the 4,057-km Line of Actual Control (LAC) over the last two decades.

China's rapidly-expanding footprint in infrastructure projects in Pakistan-occupied-Kashmir, in the backdrop of the Beijing-Islamabad military nexus which targets India, has served to further heighten concerns in the defence establishment here.

The Kings of the East are making their presence known in the world, just as we would expect and right on schedule.

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