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LOOKING AHEAD
14.02.2009

February 04, 2009 (the date of publication in Russian)

Maxim Kalashnikov

AGAINST WHOM WILL THE G2 COUNTRIES BE FRIENDS?

The USA-China tandem turns to be real: "Obama plan" must be approved in Beijing

YIN AND YANG OF THE GLOBALIZED WORLD

A unique G2 – the tandem of the USA and the People's Republic of China Ц is emerging little by little. Always being "sworn friends", they're interacting and complement each other. And there are more and more evidences of that.

Soon we will have to deal with absolutely new geo-economic and geopolitical reality.

Actually, some kind of a system has already formed. On the one hand Ц the USA, which is a global financial center and a "headquarters" country, the source of high tech and the main outlet (60%) for Chinese industry. On the other hand the USA is essentially dependent on the supply of Chinese goods to its home market. The curtailment of this supply will definitely turn into social-economic catastrophe. Thousands of the US companies and corporations aren't able to work and make profits without outsourcing or placing manufacturing orders with Chinese plants and factories.

China has turned into an industrial center for the USA and other Western developed countries, into a huge workshop, which will remain essential for all these states in the foreseeable future. China is inferior to the USA both in military and military- industrial aspects. The USA has the strongest aircraft carrier and nuclear submarine fleet in the world, powerful aerospace force and huge reserves of high-precision weaponry. But at the same time China has turned into the major creditor to the USA. China keeps a major part of its huge official reserves ($1.95 trillion) in the US currency and treasury bonds. Beijing can easily crush the dollar and make the USA go bankrupt. But still the PRC itself is strongly dependent on the state of the US currency and finances. Its catastrophe means a collapse of Chinese industry also. At the same time the profits of many US corporations which are based on outsourcing are "tied" to the vital capacity of Chinese real sector. A small detail: during the January meeting in Davos China made furious free-trade statements, demanding maximum openness of other countries' markets for Chinese production. Beijing stood strictly against "economic nationalism". Beijing's anti-protectionist statements resound strongly with the US financial-liberalistic plutocracy's demands. The unity of American and Chinese interests in the creation of "the-world-with-no-fuel" is just about to occur, as this would "loosen" the dependence of both superpowers' economies from the import of hydrocarbons. The PRC is turning into the provider of engineer personnel for the USA before our eyes. Both the USA and China have huge reserves of coal, which potentially can provide the production of liquid fuel.

So what do we have now? Even in spite of Washington and Beijing geopolitical rivalry, these countries definitely form an interdependent and mutually complementary tandem. And that's the base for a forced, but still real alliance between the USA and China. And latest events can only confirm that.

THE USA WON'T DO WITHOUT CHINESE "INDUSTRIAL AREA"

Already now, when the US powers are forced to accept "Obama proposal", which is about $838-billion economic stimulus (in the addition to $700-billion Paulson plan), a question appears, whether the PRC would like to agree to tolerate a horrible ($1,1-trillion in 2009) budget deficit of star-stripy state. Thus according to two-year "Obama proposal" $54 billion must be invested into the energy: New Energy for America plan for the sake of decreasing the dependence of the state form the supply of the hydrocarbons from the outside. $141 billion is going to be spent on education in the USA. $24 billion Ц to reduce prices of health care. $6 billion Ц to lay the lines of broadband Internet access (which is already being called a "digital equivalent" to the US President Lyndon Johnson's 1960s electrification program for Texas mountain regions).

But the program like this will only increase the US national debt and its budget deficit. During the recent Davos forum the apprehensions had been announced in lobbies about the USA printing too much dollars and overwhelming the whole world with them. They're driving the budget deficit away too fast. And this, as it was said, might lead to the global inflation, to undesirable growth of interest rates all over the world and Ц oh Lord! Ц to the devaluation of the dollar.

As David Sanger said in his article "Reinvention [of the USA Ц edit.] or Recovery?" (The New York Times, January 31, 2009), Obama will have to convince not only the USA, but the whole world either, in the effectiveness of his program. For example, Alice M. Rivlin, a former US Federal Reserve official and an expert on the budget, and at present a Brookings Institution economist, thinks that "Obama plan" should be split into two parts. First should be immediate stimulus components. And second Ц "long-term list", which would include everything: from the improvement of the US educational system to the development of medical care for children. But according to Rivlin, this second part should be worked out carefully and without a hurry. As the result, all the same a huge rescue plan will appear Ц the greatest by scale for the last seventy years.

"We seem to be counting on the Chinese to keep investing to pay for this" Ц Rivlin said. As the evidence she pointed on the huge part of national debt which is in the hands of Chinese.

Indeed, when in 1930s Roosevelt was pulling the US economy out of the Great Depression-1 by means of building new roads, he financed it all at the expense of inner reserves. But in the situation of the Great Depression-2 Obama lacks this possibility: he has to convince Congress, the country's public and also world financial markets in the reasonability and adequacy of his actions.

As you can see, he'll have to persuade China first of all. We are sure that Washington will have to wage backstage, very nonpublic negotiations with Beijing. And this will objectively lead to the strengthening of the Washington-Beijing axis and finally to the creation of G2.

We must clearly understand that the USA can't carry out a new industrialization and get rid of its dependence from Chinese goods at breakneck speed. It can't create an alternative industrial zone in Latin America. The USA is a bit late with new technological revolution, which could destroy their dependence from hundreds of millions of cheap Chinese workers. And even though nowadays Americans declare large-scale robotization and cyborgization plans, the development of the medicine which could "turn aging mechanisms off ", nanotechnologies and etc., it all will only give results many years later. And before that they still will have to use Chinese "industrial area".

But if the forming of the USA-PRC axis is in process, then who will get them out of the crisis, which has spread in both countries (even though to different extent)?

The US strategic alliance with China might become a new and effective key factor to influence the EU. In the limits of the new configuration of power centers Washington might demand from Europeans: "Either you follow our fairway, or you move to the rank of smaller partners, whose opinion can be neglected".

And special role in this situation belongs to the Russian Federation. How can't we recall the plan of the creating of Chinese-American unit by means of separating and utilizing the RF, which was proposed by Brzezinski already in 1990s! That time, as we know, "Big Zbig» offered to pacify the Chinese by giving them Russian Maritime Province. Yes, it would be a new living space, but without any oil or gas. And those Siberian carbohydrates, which have strategic meaning, would come to the hands of Siberian and Far Eastern Republics, which would be under the US protectorate.

AT THE EXPENSE OF THE RUSSIANS

We ought to notice that solving some problems at the expense of the Russian Federation is quite logical move for the forming G2. The suffocation of Russian manufacturing industry and making it totally dependent from import (read: Chinese) goods, banning of the development of manufactures which could replace the import Ц these are their most obvious interests. And then Ц the division of Siberia and the Far East. It becomes even easier nowadays, as these territories are de-industrializing and depopulating gradually Ц people simply run away from there. And Moscow couldn't start up any large-scale project of high-tech-industrial development in these regions since 1991 and till now.

Of course, the full "warm-hearted" agreement cannot occur between Washington and Beijing anyway. China can't approve the US actions in Afghanistan and Middle Asia, which are aimed, in addition, to "override" possible ways of the transport of carbohydrates from the Middle East to the PRC. But still this tandem can find rivals to withstand together. And the first place in the list of these rivals is given to Russia, which owns huge territories and mineral resources.


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