Summary: This series of posts provides excerpts from a recent speech by Qiao Liang, a Major General in the People’s Liberation Army. These give a glimpse into the thinking of China’s elites, unlike the US-centric perspective provided by our news media. In part 3 he gives his big picture view of the decade’s global geopolitics. As in part 2, he sees the US as a ruthless hegemon in decline — fighting to maintain its control over the world by containing its greatest rival: China. There’s enough truth in this to worry everybody; these struggles often end badly.
Speech by Qiao Liang (ไน่ฏ): part three
Major General in the People’s Liberation Army
Given at a study forum of the Chinese Communist Party, April 2015
Reported and translated by Chinascope
Reposted with their generous permission
C. Now, It Is Time to Harvest China
It was as precise as the tide; the U.S. dollar was strong for six years. Then, in 2002, it started getting weak. Following the same pattern, it stayed weak for ten years. In 2012, the Americans started to prepare to make it strong. They used the same approach: create a regional crisis for other people.
Therefore, we saw that several events happened in relation to China: the Cheonan sinking event {2010}, the dispute over the Senkaku Islands (Diaoyu Islands in Chinese), and the dispute over Scarborough Shoal (the Huangyan Island in Chinese). {The latter two are long-standing disputes.} All these happened during this period. The conflict between China and the Philippians over Huangyan Island and the conflict between China and Japan over the Diaoyu Islands, might not appear to have much to do with the U.S. dollar index, but was it really that case? Why did it happen exactly in the tenth year of the U.S. dollar being weak?
Unfortunately, the U.S. played with too much fire [in its own mortgage market] earlier and got itself into a financial crisis in 2008. This delayed the timing of the U.S. dollarโs hike a bit.
If we acknowledge that there is a U.S. dollar index cycle and the Americans use this cycle to harvest from other countries, then we can conclude that it was time for the Americans to harvest China. Why? Because China had obtained the largest amount of investment from the world. The size of Chinaโs economy was no longer the size of a single county; it was even bigger than the whole of Latin America and about the same size as East Asiaโs economy.
Since the Diaoyu Islands conflict and the Huangyan Island conflict, incidents have kept popping up around China, including the confrontation over Chinaโs 981 oil rigs with Vietnam and Hong Kongโs โOccupy Centralโ event. Can they still be viewed as simply accidental?
I accompanied General Liu Yazhou, the Political Commissar of the National Defense University, to visit Hong Kong in May 2014. At that time, we heard that the โOccupy Centralโ movement was being planned and could take place by end of the month. However, it didnโt happen in May, June, July, or August. What happened? What were they waiting for?
Letโs look at another time table: the U.S. Federal Reserveโs exit from the Quantitative Easing (QE) policy. The U.S. said it would stop QE at the beginning of 2014. But it stayed with the QE policy in April, May, June, July, and August. As long as it was in QE, it kept overprinting dollars and the dollarโs price couldnโt go up. Thus, Hong Kongโs โOccupy Centralโ should not happen either. At the end of September, the Federal Reserve announced the U.S. would exist from QE. The dollar started going up. Then Hong Kongโs โOccupy Centralโ broke out in early October.
Actually, the Diaoyu Islands, Huangyan Island, the 981 rigs, and Hong Kongโs โOccupy Centralโ movement were all bombs. The successful explosion of any one of them would lead to a regional crisis or a worsened investment environment around China. That would force the withdrawal of a large amount of investment from this region, which would then return to the U.S.
Unfortunately, this time the Americanโs opponent was China. China used โTai chiโ movements to cool down each crisis. As of today, the last straw to break the camelโs back has yet to occur and the Camel is still standing. The camel didnโt break. Therefore, the Federal Reserve couldnโt blow its horn to increase the interest rate, either. The Americans realized that it was hard for them to harvest China, so they looked for an alternative.
Where else did they target? Ukraine, the connection between the EU and Russia. Of course there were some problems under Ukraine President Yanukovychโs administration, but the reason that the Americans picked it was not simply because of his problem. They had three goals: teach a lesson to Yanukovych who didnโt listen to the U.S., prevent the EU from getting too close to Russia, and create a bad investment environment in Europe.
Thus, a โcolor revolution,โ took place, which the Ukrainians themselves appeared to have led. The U.S. achieved its goal unexpectedly: Russian President Putin took over Crimea. Though the Americans did not plan it, it gave the Americans better reasons to pressure the EU and Japan to join the U.S. in sanctioning Russia, adding more pressure to the EUโs economy.
Why did the Americans do this? People tend to analyze it from the geo-political angle, but rarely the capital angle. After the Ukraine crisis, statistics showed over US$1 trillion in capital left Europe. The U.S. got what it wanted: if it couldnโt get dollars out of China, it would get dollars out of Europe. However, the next step didnโt occur as the Americans planned. The capital out of Europe didnโt go to the U.S. Instead, it went to Hong Kong.
One reason was that the global investors preferred China, which claimed the worldโs number one economic growth rate, despite the fact that its economy started to cool down. The other reason was that China announced that it would implement the Shanghai – Hong Kong Stock Connect {in Nov 2014}. Investors over the world wanted to get a handsome return through the Shanghai – Hong Kong Stock Connect.
In the past, Western capital was cautious about entering Chinaโs stock market. A key reason was Chinaโs strict foreign currency control: you can come in freely but you canโt get out at will. After the Shanghai – Hong Kong Stock Connect, they could invest in Shanghaiโs market from Hong Kong and leave immediately after making a profit. Therefore, over US$1 trillion stayed in Hong Kong.
This is why the hand behind โOccupy Centralโ has kept planning a comeback and has not wanted to stop. The Americans need to create a regional crisis for China, to get the money back to the U.S.
Why does the U.S. economy rely so desperately on capital flowing back to its market? It is because, since 1971, the U.S. has given up producing real products. They called the real economyโs low-end or low-value-creating manufacturing industries garbage industries or sunset industries and transferred them to developing countries, especially China. Besides the high-end industries, such as IBM and Microsoft, that it kept, 70% of its people moved to finance and financial services industries. The U.S. has completely become a hollow state which has little real economy to offer investors a big return.
The Americans have no choice but to open the door of the virtual economy, which is its three big markets. It wants to get the money from the world into these three markets so that it can make money. Then it can use that money to harvest other countries.
The Americans only have this one way to survive now. We call it the U.S.โs national survival strategy. The U.S. needs a large amount of capital flowing back to sustain its daily life and its economy. If any country blocks that capital flow, it is the enemy of the U.S.
———————– End Excerptย ———————–ย
Analysis
In this section of his speech, General Qiao Liang gives a master explanation for many of the geopolitical events of the past decade, with the US as the world’s master pulling the strings of its puppets. He attributes US intent to the actions not just of its allies, but also China itself (e.g., China’s natural expansion into its bordering seas — and the resulting conflicts with its neighbors).
He even attributes largely domestic-driven events, such as China’s bubbles in stocks and real estate, to US actions. This is beyond oversimplification; it’s almost imaginary.
His analysis of America is mostly fallacious. He says “The U.S. needs a large amount of capital flowing back to sustain its daily life and its economy.” With interest rates at multi-generational (or record) lows, there is zero evidence that the US needs more capital. The strong dollar implies foreigners are buying dollars, not selling them — driving the dollar to levels that depress US exports.
His claims that “since 1971, the U.S. has given up producing real products” is ludicrously false. As shown in part 2, America’s manufacturing competitiveness has improved: since 1971 US exports have grown even faster than GDP, increasing from 5% to 13% of GDP.
On the other hand, the General has ample grounds for suspicions about US interference in other nation’s affairs — especially for overthrowing elected governments that oppose US policy. We done so many times, often leaving those people at ruled by merciless tyrants while we preach about self-determination and human rights.
About the big picture the General is obviously correct: the US sees China as its most dangerous competitor, and has focused US policy on containing it growth. The UK’s unwillingness to peacefully manage German’s growth contributed to WWI. Let’s hope we do better.
Other Posts in this series
- China introduces us to the future of warfare (asymmetric).
- The American Empire, as seen by a Major General of the PLA.
- A Chinese general judges America’s leadership of the world economy.
- A Chinese general sees a ruthless America striving to contain his nation’s growth.
Unrestricted Warfare: the way of 21stC conflict
One of the key texts describing 4th generation warfare is Unrestricted Warfare
For more about this see China introduces us to the future of warfare (asymmetric).
About Chinascope
Chinascope gathers, translates, and analyzes Chinese-language media reporting and documents that are generally inaccessible to the West. … Chinascopeโs candid and objective presentation allows readers to feel the pulse of PRC opinion makers. Its contents provide a unique window into Chinese policy making, official attitudes, social developments, changing perceptions of the West, and much more. Based in the Washington it is owned by Global Communications Association, Inc., an independent, nonpartisan, 501 (c)3 nonprofit organization.ย {From their About Page.}
For More Information
See this note by Qiao Liang published in Xinhua describing how the U.S. is “Containing China by Agents“. Also important is his 2010 speech about China’s geopolitical strategy: “Regional Power with Global Influence“. For more about economics seen from China’s perspective: A new world comes, probably one with no place for our โlords of financeโ.
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