Financial, Economic and Social Mood Update (June 1, 2019)
Before proceeding to this month’s number one topic (China), I would like to say that the American policy of a global trade war must not be allowed to continue. The combined worldwide cost of this insanity now stands at USD $33 TRILLION. It is opposed internationally as well as by the leadership of the American business community. The broader US equity market is flirting with a corrective bear market – it is down by a cumulative 12 percent in 8 months. The European parliamentary election of last weekend confirms a disturbing long term trend since Europe commenced popular elections in 1979 – the main political groupings of Christian Democrats, Social Democrats (socialists), Free Democrats (liberals) and even the “new” left (communists) have seen their fortunes plummet. The 2 groups which have gained since 1979 are the Greens (the environmentalists) but especially the far right wing (up from just 3 percent of the popular vote to an astounding 24 percent of the popular vote). The far right wing plays upon issues such as immigration, fear, trade wars, old nationalism and divisiveness, but they offer no constructive alternatives for the future. The mainstream parties of the postwar period (especially the Christian Democrats, Social Democrats and Liberals) need to address these fears of the electorate, and in order to do so they need to backtrack on the centralization of power in Brussels and Strasbourg. They need to direct today’s European Union (EU) to become more like the European Free Trade Association (EFTA) – much like the EU used to be decades ago.
CHINA
An ongoing and very current topic in my monthly blog has been the subject of the evolving and changing balance of power in the world – in other words, the decline of the former colonial powers (North America, Europe and Japan) and the rise of much of the rest of the world, in particular of Asia. The potential “leaders” of the future are to be found in the 5 BRICS nations, of whom 3 have “stepped up to the plate” so to speak – these being China, India and Russia (in that order). The next group of up-and-coming countries belong to the so-called “Next 11” group, but they will not be the topic of this month’s blog.
The largest power of our emerging times is the People’s Republic of China (PRC), the largest country on earth in terms of both human population and in terms of GDP or economic output. Clear evidence of this is seen in the BRI (Belt and Road Initiative) infrastructure project, which is by far the most massive economic project in human history. The sum of investment is now up to a projected USD $21 TRILLION, which includes 29 international organizations and 126 countries spanning 4 continents and Oceania. The only regions not yet on board are North America and Australia.
One might think of these emerging changes as a toppling of the “old order” of rule by the so-called industrialized regions of North America, Europe and Japan, but in a sense, it is a return to a much older order of a pre-colonial world in which countries such as China and India were among the largest, the richest and the most advanced. The order we know today reached its peak before the outbreak of World War One in July of 1914. At that time, almost the entire world was either under the direct rule or the influence of North America (the USA), Europe and Japan. World Wars One and Two (1914-1945) were something of a civil war (or mutual suicide) among the industrialized countries of the world. Colonialism was a phenomenon executed by the industrialized countries upon the rest of the world – in truth a horrific phenomenon in which the industrialized countries of today deliberately impoverished the rest of the world through unfair trade, the destruction of native industries and through the deliberate manipulation of currency exchange rates. The net result of this deliberate manipulation of currency exchange rates was to devalue the currencies in use by the rest of the world by nothing less than 1,000 fold compared to today.
If the effects of colonialism were not bad enough, the powers-that-be in the industrialized countries continue to effect a campaign of slander (misinformation, disinformation and outright character assassination) against the emerging leadership in the rest of the world. A very clear case in point is the largely Western campaign of slander against Mainland China. China is repeatedly demonized for things which she has never done, things which the industrialized countries have in fact done to China and to most of the rest of the world. I speak here of economic oppression, financial manipulation and geo-political or military intervention. The “aggressor” states are not in the rest of the world, but in the declining so-called industrialized world. The colonial powers in 1914 included the USA, Japan, the UK (England), France, the Netherlands, Belgium, Italy, Denmark, Sweden, Spain, Portugal, Russia and Germany. The Ottoman Empire (Turkey) was then in decline and Austria-Hungary (Austria) was actually a dual monarchy which was headed in the direction of becoming a “triple monarchy” which would have defused much of the instability in the Balkans – something which would have eliminated the initial excuse for the plunge into World War One in 1914.
The fact of the matter is that China today is the best positioned country to take the global lead, and that most of the countries in the world finally accept this fact and this reality. Furthermore, it is not and need not be seen as something threatening or bad. China simply does not have an historical track record of global oppression which compares to anything already done by countries in North America (the USA), Europe or by Japan. Today’s China traces her political roots to the Communist revolution of 1949, but has benefited from pragmatic rule since 1976 which has produced the largest economy on earth and both a larger middle class and more private ownership than in the USA, Europe or Japan.
From 1912-1949 all of China was known as the “Republic of China” which is still the official name of so-called “Nationalist China” on the island of Taiwan. The Chinese revolution of 1912 overthrew a long tradition of Chinese monarchy which went back literally thousands of years in time. The so-called “Nationalist Party” of 1912 was actually very socialist in ideology, subscribing to ideas such as universal minimum income (universal welfare) and the redistribution of wealth. When one sees history in this light, one can see that the differences between Mainland China (the People’s Republic of China or the PRC) and Nationalist China (Taiwan) are not as great as we have been led to believe.
The most recent Chinese monarchy was the Manchu Dynasty which ruled all of China from 1644 until 1912. The Imperial Manchu family and the Manchu people come from a region in northern China known as “Manchuria.” They are a relatively small ethnic group apart from the vast majority Han Chinese who comprise something almost 92 percent of the Mainland Chinese population (70 percent of the population of Mainland China today speaks the majority Mandarin Chinese language). The Manchus are closely related to both the Koreans and the Japanese, which explains why modern day China and Japan continue to be so interested in both North and South Korea.
The next topic which deserves our attention is the status of democracy in modern day China. Democracy need not and should “parrot” what exists in the USA and the West, but needs to be understood under its own unique terms in the many different cultures which exist all over the world.
Mainland China, or the People’s Republic of China (PRC) is led by legislative a “Standing Committee” of 175 individuals, 121 or 69 percent of whom are members of the Communist Party of China (CPC). The main and lower body of China’s legislature is the National People’s Congress, which has 2,980 members – 2,119 or 71 percent of whom are members of the Communist Party of China (CPC). 23 percent of these 2,980 legislators are female and 14 percent are members of ethnic minorities. Modern China includes 23 Provinces (including the island of Taiwan), 5 Autonomous Regions, 4 Municipalities and finally 2 Special Administrative Regions (these being Hong Kong and Macao). One can now see that modern day China is not quite the “one party state” which the so-called mainstream media has led us to believe that it is.
