By Peter Switzer
It looks like China has again ridden to our rescue with Beijing starting to close down the Kim Jong-un’s rocket man show by closing down North Korean businesses operating in China.
And why wouldn’t they, considering China is the USA’s biggest lender of money to the world’s biggest economy?
In August this year, CNN.com reported that “China's vast holdings of U.S. government debt jumped $44 billion to $1.15 trillion in June, according to U.S. Treasury Department data. That took China above Japan, which offloaded $21 billion in U.S. bonds in the month.”
So not only is ‘rocket man’ threatening China’s greatest debtor who would think twice about paying it back if it was in a nuclear war with an ally of China, the whole idea of what Kim threatens undermines the very growth of China that stops disgruntled Chinese from ever revolting against the Communist Party leadership.
It’s like that Jack Nicholson movie: It’s Complicated. China needs a Kim-created war like a hole in the head. It has surprised critics with its latest growth numbers, and while some always say they don’t trust them, the fact is the world economy is growing in synchronization for the first time in 10 years. As China makes so much stuff for the world, it only makes sense that a healthy world economy means a wealthy Chinese economy.
War wouldn’t help that equation!
Of course, the relationship works both ways. US website, thehill.com explained it neatly this way:
“The USCBC report said that trade with China supports roughly 2.6 million U.S. jobs, across many industries, and created $216 billion in growth in 2015.”
“China’s rise has had a significant and positive impact on the U.S.,” said Scott Livermore, managing director of macro and industry services for Oxford Economics, producer of the report.
Here’s more info from this report: “China purchased 7.3 percent of all U.S. exports — $165 billion in goods and services — from the United States in 2015. The United States actually has a surplus with China of 0.2 percent of gross domestic product on trade in services”.
This is an economic relationship that helps both the USA and China and two’s company but when Kim makes it three, it’s a crowd!
The SMH’s Kirsty Needham tells us today that: “China has given North Korean companies operating in China 120 days to close, including joint ventures with Chinese firms.
“The decision is a significant toughening of Beijing's dealings with North Korea, which operates restaurants and even art galleries in Chinese cities to generate foreign currency that is sent back to Pyongyang.”
Sure, this isn’t going to nuke Kim into good sense but it’s a start and it explains why Wall Street has not been spooked by ‘rocket man’.
It might surprise some but China is becoming a bit of a super hero to the world economy because when we were threatened by a Great Depression when the GFC hit, China was the first to throw a lot of money at the problem.
At the time, I reported in The Australian and my own website that China was riding to the rescue of capitalism, which was, I thought, a delicious irony.
Capitalism is inextricably linked to democracy, and while China is playing around with a Communist-version of economic democracy, I think the leadership gets what Winston Churchill once said: “Democracy is the worst form of government, except for all the others.”
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