Tuesday, March 16, 2010

Is China's Politburo spoiling for a showdown with America?

The long-simmering clash between the world's two great powers is coming to a head, with dangerous implications for the international system.
clipped from www.telegraph.co.uk
U.S. President Obama shakes hands with Chinese ambassador to the U.S. Zhou as U.S. ambassador to China Huntsman looks on during a tour of the Great Wall of China in Badaling

China has succumbed to hubris. It has mistaken the soft diplomacy of Barack
for weakness, mistaken the US credit crisis for decline, and mistaken
its own mercantilist bubble for ascendancy. There are echoes of Anglo-German
spats before the First World War, when Wilhelmine Berlin so badly misjudged
the strategic balance of power and over-played its hand.

Within a month the
US Treasury
must rule whether China is a "currency manipulator",
triggering sanctions under US law. This has been finessed before, but we are
in a new world now with America's U6 unemployment at 16.8pc.

"It's going to be really hard for them yet again to fudge on the obvious
fact that China is manipulating. Without a credible threat, we're not going
to get anywhere," said Paul Krugman, this year's Nobel economist.

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