, writing in Der Spiegel, points out the absurdity of US Presidents (Obama and Bush before him) slamming China over its currency policies, when in fact the country has done a way better job than the US at managing its finances.
Critics might argue that China has made it impossible for us to effectively manage our finances, but we’ll ignore this debate for the moment.
What’s interesting is the way China is going about expanding its global footprint. Whereas the US known globally as a military power, China is building itself up as a development powerhouse.
The People’s Republic has quietly been taking stakes in virtually all the world’s regional development banks. Like a mini-World Bank, China has been helping to shore up financially troubled countries in Latin America, Africa and Asia. It has also increased its stake in the International Monetary Fund, by $50 billion. Chinese monetary experts, not Chinese soldiers, have been driving the nation’s expansion — silently and efficiently.
The oil business is the foundation of the dollar’s hegemony. The oil-producing states do some $2.2 trillion dollars’ worth of business each year in the US currency. Larry Summers, Obama’s top economic adviser, has compared the dollar to the English language in terms of its importance to international trade.
But China, a huge consumer of oil, is already discussing alternative means of payment with its suppliers. It would like to pay in yuan. The oil states wouldn’t be able to use that currency worldwide, but they could make purchases in China. That, by contrast, would be like learning Mandarin.
Still, the piece ends with just slightly deficient in scepticism.
The economics textbooks never imagined a planned economy that was also run so cleverly. The world of planned economies is “a completely paralysed, artificially distorted, pseudo-order incapable of reaction,” Ludwig Erhard, the former German chancellor and economy minister widely credited with engineering Germany’s post-war economic miracle, once said. It would “collapse like a pack of cards.”
In other words: Whereas most of the time, you’d expect a centrally planned economy to make some huge, self-immolating error, it’s different this time.