UPDATE: China Will Trade Debt for US Land…
CHINA POISED TO PLAY DEBT CARD – FOR U.S. LAND
Communist nation could control American land as ‘development zones’
by JEROME R. CORSI
EDITOR’S NOTE: Barack Obama’s involvement in the DeMar Second Amendment case was previously reported in Chapter 7 of Jerome R. Corsi’s “America for Sale: Fighting the New World Order, Surviving a Global Depression, and Preserving USA Sovereignty.”
NEW YORK – Could real estate on American soil owned by China be set up as “development zones” in which the communist nation could establish Chinese-owned businesses and bring in its citizens to the U.S. to work?
That’s part of an evolving proposal Beijing has been developing quietly since 2009 to convert more than $1 trillion of U.S debt it owns into equity.
Under the plan, China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss.
Yu Qiao, a professor of economics in the School of Public Policy and Management at Tsighua University in Beijing, proposed in 2009 a plan for the U.S. government to guarantee foreign investments in the United States.
WND has reliable information that the Bank of China, China’s central bank, has continued to advance the plan to convert China’s holdings of U.S. debt into equity owned by China in the U.S.
The Obama administration, under the plan, would grant a financial guarantee as an inducement for China to convert U.S. debt into Chinese direct equity investment. China would take ownership of successful U.S. corporations, potentially profitable infrastructure projects and high-value U.S. real estate.
Jerome Corsi exposes the globalists’ plan to put America on the chopping block in “America for Sale: Fighting the New World Order, Surviving a Global Depression, and Preserving USA Sovereignty,” available at WND’s Superstore.
The plan would be designed to induce China to resume lending to the U.S. on a nearly zero-interest basis.
However, converting Chinese debt to equity investments in the United States could easily add another $1 trillion to outstanding Obama administration guarantees issued in the current economic crisis.
As of November 2012, China owned $1.17 trillion in U.S. Treasury securities, according to U.S. Department of Treasury and Federal Reserve Board calculations published Jan. 16.
Concerned about the unrestrained growth in U.S. debt under the Obama administration, China has reduced by 97 percent its holdings in short-term U.S. Treasury bills. China’s holding of $573.7 billion in August 2008, prior to the massive bank bailouts and stimulus programs triggered by the collapse in the U.S. mortgage market, dwindled to $5.96 billion by March 2011.
Treasury bills are short-term debt that matures in one year or less, sold to finance U.S. debt. Holdings of Treasury bills are included in the $1.17 trillion of total Treasury securities owned by China as of November 2012.
In addition to a national debt in excess of $16 trillion, the U.S. government in 2010 faced over $70 trillion in unfunded obligations, including Social Security and Medicare benefits scheduled to be paid retiring baby boomer retirees in the coming decades, with unfunded obligations showing no sign of being reduced with Congress at a deadlock over reducing federal government spending.
Yu Qiao observed that if the U.S. dollar collapsed under the weight of proposed Obama administration trillion-dollar budget deficits into the foreseeable future, holders of U.S. debt would face substantial losses that the Financial Times estimated “would devastate Asians’ hard-earned wealth and terminate economic globalization.”
“The basic idea is to turn Asian savings, China’s in particular, into real business interests rather than let them be used to support U.S. over-consumption,” Yu Qiao wrote, reflecting themes commonly suggested by Chinese government officials. “While fixed-income securities are vulnerable to any fall in the value of the dollar, equity claims on sound corporations and infrastructure projects are at less risk from a currency default,” he continued.
The problem is that, in a struggling U.S. economy, China does not want to trade its investment in U.S. Treasury debt securities, with their inherent risk of dollar devaluation, for equally risky investments in U.S. corporations and infrastructure projects.
“But Asians do not want to bear the risk of this investment because of market turbulence and a lack of knowledge of cultural, legal and regulatory issues in U.S. businesses,” he stressed. “However if a guarantee scheme were created, Asian savers could be willing to invest directly in capital-hungry U.S. industries.”
Yu Qiao’s plan included four components:
China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
China would pool a portion of its holdings of Treasury bonds under the CFR umbrella to convert sovereign debt into equity. Any CFR funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.
“The CRF would lessen Asians’ concern about implicit default of sovereign debts caused by a collapsing dollar,” Yu Qiao concluded. “It would cost little and help the U.S. by channeling funds to business investment.”
Read more at:
World View: Discussion of China’s Directive to ‘Get Ready for War’
This morning’s key headlines from GenerationalDynamics.com
- China’s strategy
- How would the U.S. react to a Chinese invasion of a neighbor?
- China’s military strength
- The Chinese threat
My recent article “China’s directive to the People’s Liberation Army: Get Ready for War” was posted in several places and drew hundreds of questions and comments. In this article, I’m going to provide some responses.
I quoted Dai Xu, a Chinese Air Force Colonel, as advocating a short decisive war against one of China’s neighbors:
Since we have decided that the U.S. is bluffing in the East China Sea, we should take this opportunity to respond to these empty provocations with something real.
This includes Vietnam, the Philippines and Japan, who are the three running dogs of the United States in Asia. We only need to kill one, and it will immediately bring the others to heel.”
One web site reader wrote:
“China might alternatively pick Vietnam as the dog to be killed. Vietnam does not have a defense pact with the United States and the U.S. might seek to provide only indirect assistance to Vietnam. Vietnam might also refuse to surrender and be impossible to pacify in a “quick war”.China could find itself at war with a minor power and not with any major power for a number of years.”
“If China was going to war with anyone (and I do not wish war on anyone) I’d prefer they attack Vietnam. This wouldn’t suck the Western Allies in and it could teach China a good lesson of being bled dry by a tenacious enemy. This would be best case IMO outside of peace of course.”
This discussion highlighted something that hadn’t occurred to me before: That an attack on Vietnam is the “logical” choice for China. From China’s point of view, there would be several advantages:
- It would raise far less nationalism in the United States than would attacks on Japan or the Philippines.
- China has a score to settle with Vietnam, following the 1979 China-Vietnam war.
- The motive would be “kill a chicken to scare the monkeys,” as the old Chinese saying goes.
- It would assert complete control over the South China Sea.
- China claims that America has been a troublemaker in the South and East China Seas, because these countries have been confronting China in the confident belief that they would be defended by the U.S. If the U.S. does not defend Vietnam, then the other countries would no longer feel confident, and would no longer challenge China.
- It would scare Japan, so that China could take control of the Senkaku/Diaoyu islands, and Japan would retreat.
(The last reason, of course, is sheer fantasy, but it’s possible that Chinese hawks believe it.)
China invaded Vietnam in 1979 in a war where China was repulsed quickly. China made some serious mistakes in that war. Those mistakes would not be repeated in this crisis era.
It’s possible that a Chinese invasion of Vietnam would lead to President Obama’s “Neville Chamberlain moment.” But, as in that case, any later aggressive action by China would lead to full-scale war. Time Magazine
How would the U.S. react to a Chinese invasion of a neighbor?
Some Chinese military planners believe that Americans will “run like rabbits” and not honor its mutual defense treaties, if China invaded one of its neighbors. A lot of commenters believe the same thing:
“The only reason the Chinese might think “Americans will run like rabbits” is because of this administration’s recent weak performance in the Middle East, and because of the tenuous U.S. (and Western) economy (both White House admins are to blame here).
Whatever one thinks about the wars in Iraq and Afghanistan, it is clear to all foreign entities that America shows neither a principled and goal oriented interaction nor a policy engaged from a position of confidence (exerted quietly or visibly).”
I expressed the opinion that “President Obama would not have any choice if Congress declared war, which might happen within hours of any Chinese attack.” One reader responded:
“First, yes he would. He could dither on the deployments the way France and the U.K. did after Hitler seized Bohemia and Moravia and declared Slovakia a Protectorate, then dithered some more when Hitler declared war on Poland, launching a mighty Sitzkrieg offensive in the Pacific while saving the Blitzkrieg for the media and stump circuit.In the face of that, all Congress could do is impeach him, even while an attempt is made to repeal the 22nd Amendment so he can do nothing for even more [years].
Second, what if a declaration of war passes the House but not the Senate? Never mind the Chamberlain in the White House, Harry Reid could play his own version of Neville, and no war resolution would ever reach the floor of the Senate.
What exactly would happen if Congress “couldn’t” decide?”
Dithering would be a high-risk political strategy for the President and a Democratic Senate. When Neville Chamberlain promised “Peace in our time” after meeting with Hitler, he was doing something that seemed perfectly reasonable on that day. And yet, Chamberlain has been damned by history as the man who appeased Adolf Hitler. President Obama would risk being damned as a modern day Neville Chamberlain who appeased the Chinese.
China’s military strength
There were widely varied opinions about China’s military strength:
“A nuclear holocaust might be a tad bit premature. We’re not really sure what China’s nuclear capability is, specifically their ability to hit the US. Couple of points:Until the 1990s, their primary nuclear target was the Soviet Union. China is notorious for stockpiling archaic military equipment, even if it doesn’t work.
Even if Obama’s military and nuclear cuts hit before any war with China, our nuclear capability far exceeds theirs. The Chinese government knows this.
China probably has around 500 – 600 nuclear weapons and enough materials to build another 400 over a few years. But the US is not China’s only target. Some of those weapons have to be kept aimed at India and Russia, both nuclear powers. Many of China’s warheads are mounted on train-track based launchers that are pointed north, northwest. China would be risking a Russian retaliatory strike by launching those warheads.
Many, as high as 20%, of China’s warheads are gravity bombs designed to be dropped by late WWII style bombers.
China does not have force projection capabilities. They have one carrier in partial service and with a small air wing. They have no long range amphibious assault ships. They cannot establish a perimeter line, like the Japanese, that could keep US forces away from mainland China. And China does not have the nuclear ability to knock the US out of any fight. They can position diesel electric subs at choke points in an attempt to ambush US carrier groups. That does nothing about the USAF and China would be gambling their entire sub force.
A far more realistic scenario would be a Chinese invasion of easier targets in the region. Picture The Philippines, Okinawa, and/or Taiwan. If the US intervened, China would use a limited number of nuclear weapons on nations that could provide the US with military bases, specifically Japan. Hitting Japan would have the bonus of hitting the US economy. China will be betting on the US not retaliating with nuclear weapons if the US is not the target. China would then fortify their gains and simply wait for the US to go bankrupt. Once that happens, China would be free to begin expanding its control throughout the remainder of South East Asia and the Pacific unopposed.”
Another reader pointed out:
“Based on what we know, the DF21 “carrier killer” missile shown in the photo has never been tested on seaborne targets.”
However, one more reader said that China’s military capabilities are far more advanced than we realize:
“What most people don’t realize is that most of China’s infrastructure is dual-use civilian/military. That is, every train, plane, truck, railway, road, you name it, is designed for military use, as well as civilian use. For example, in a matter of weeks, all of China’s shipping -ALL of it- can literally be plugged into the military command and control system and converted for military use. This incluse ‘plug and play’ cargo, missile and weapons systems for their cargo ships and civilian aircraft.In short, they held an arms race…and no one else showed up.
What set them off was America’s victory in the first gulf war. They paid attention and began to redesign their entire military and civilian infrastructure. They also reworked their military philosophy. For over twenty years, they’ve been preparing to fight America in a war.
A probable naval scenario: Imagine a cargo ship loaded with disposable anti-ship missile platforms. Precision guided missiles. Thousands of them. Imagine a US navy task force on the receiving end of five thousand precision guided missiles.”
China is known to be planning “asymmetric warfare,” attacking America’s weak points by unconventional means. According to one reader:
“Our key vulnerability is cyberattack. We’re still not doing as much as we should to protect ourselves, but we’re finally taking action and it looks like some of our leaders are realizing how dangerous it is. That’ll be the primary method to take down our capabilities. I would say it would set us back at least a couple months, probably longer than that. Their optimum time to strike in that theater would be in the near future.Our satellites will be the next mode of crippling us. I read in the 2007 about their anti-satellite and I’d bet that by now they’ve got hundreds of anti-satellite missiles ready for use. It won’t take more than a day or two.”
See also “14-Oct-12 World View — Huawei scandal exposes potential ‘Cyberwar Pearl Harbor’ from China” from last year.
The Chinese threat
There were some skeptical remarks, like:
“With the coming soft or hard landing in China’s economy, using war with a small neighbor, is a sure fire way to divert the attention of the common person. Look at Argentina did during the Falkland Island war and ready to do it again. Only a mistake or believing their own public relations spin will start a war between the US and PRC.”
However, the most skeptical remark of all was simply:
“This is a completely uninformed and ridiculous article.”
I knew I would get this kind of criticism, and that’s why I put in links to several Chinese and American sources, so that readers could verify the information for themselves. However, I would add that comments like this usually come from someone who couldn’t even find China on a map, let alone have a clue what’s going on in the world.
When I was growing up in the 1950s, my school teachers mocked and ridiculed two sets of people in the 1930s: The ones who, like Herbert Hoover, believed that “prosperity was just around the corner,” even though the Depression kept worsening, and the ones who ignored the dangers in Europe and simply took “Peace in our time” for granted. When I was in school, I never understood how so many people could be so obviously wrong. Now that the same thing is happening today, I realize that there are many people who simply can’t deal with the anxiety, and are willing to believe almost anything.
I’ve been writing about the coming war with China for almost ten years now. What has been apparent all along is that China isn’t even bothering to hide their intentions. It’s not like Russia, for example, where Vladimir Putin may bash and scorn the West, but the days of “We will bury you” are long gone.
But the Chinese vocally threaten war somewhere almost on a daily basis. They have a very different world view that we have. In 2007, I quoted Sha Zukang, the Chinese U.N. ambassador, who said, “one INCH of the territory is more valuable than the LIVES of our people.” With 1.5 billion people, the Chinese Communist Party (CCP) almost has no choice but to view people as interchangeable and expendable cogs in a massive wheel of agriculture and industry. China has made this clear repeatedly. I believe that it was Lao Tzu in “The Art of War” who said that in a war the side with the advantage is the side that isn’t afraid to die, and the Chinese aren’t afraid to allow millions of their people die if that’s the way to achieve victory.
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