Beijing makes a poor bet

After a 2 day meeting in Beijing, leaders of Europe and Asia have come up short on common ground for handling the deepening global recession. The meeting met the criterion for a ‘no meeting’; a meeting at the end of which high principles are enounced with no follow up. China however did make a bold move to a big mover on the international scene, calling for replacing the US dollar as world currency by either the Euro or the Japanese Yen or and why not by the Yuan Reminbi? China’s call for dumping the US dollar makes one scratch one’s head. Let’s look at the situation: one, China has a large amount of US debt, its has an enormous reserve in US dollars, and thanks to massive infusion of US dollar investment and industry. It’s own rapid industrialization is very dependent on America’s unbridled appetite for consumerism, snapping up China made retail items. Its monetary reserves in US dollars, Euros, and Japanese Yen have not sheltered Beijing from the toxic effects of the sub prime mortgage effect on the US and global markets. It has protected China from a shift towards abstinence among US shoppers. And its own bungling of quality control, its toys, its milk, its over the counter medical products have caused serious illness if not certain death. In consequent, sales have fallen off; factories by the hundreds closed and abandoned; workers fired and many not paid for work done. You’d think that China had enough internal spreading economic problems promising social unrest than to challenge the primacy of the US dollar. A gross miscalculation if there is any! A strengthening US dollar has shifted monies into the US market which may have a good injection into an ailing American economy. Beijing has made a poor bet, it seems. And if Barack Obama occupies the White House, although he’s not made much about China, Beijing may find an American president more interested in job growth in the US; keeping US investment at home and not in China; and a more realistic approach to a China that the two Bushes and Clinton kowtowed to gladly.