No.
Contrary to the hyperbole of the blogosphere, this year neither the US nor China will burn to the ground in some grotesque fashion.
No the Chinese yuan (RMB) is not taking over the international markets (it accounts for a mere 0.6% of letter-of-credit transactions), no there is no concerted war on the USD. In fact, despite incredulous hypotheticals to the contrary, China is still buying US treasuries. The RMB has also depreciated relative to the USD.
Exaggerations sell and exaggerating more than the next Joe is even more sellable (sic). Or as Matt Ridley wrote in a recent Wired piece, many westerners have become apocaholics.
There won’t be a nuclear exchange between the US and China or China and Japan (the Chinese arsenal by the way, is overstated and exaggerated by the same hawks that brought us the second Iraq wars). In fact, Bill Gertz, among others is flat out wrong regarding his assertions of China’s secret nuclear stockpile.
In fact, despite a concerted effort by the CCP and state media (like Xinhua) to paint Japan (and the US) as foreign devils, there probably will not be any military confrontation between China and Japan. In part because there is approximately $350 billion in bilateral trade and also, for what Bill Bishop has recently written: cooler heads on both sides want a dialogue. Similarly, never in the history of the modern world have the two largest trading partners, let alone the two largest economies, gone to war with one another.
Or in other words, US and Chinese businesses would not want to torpedo their cargo ships, bomb their own factories, blow up their employees, burn their shareholders, decimate the infrastructure that provides electricity, water and telecommunication services to their retail stores and/or otherwise destroy their property. (As an aside, to assuage those electoral fears of a purported Chinese invasion: the Chinese military complex can’t even make decent jet engines yet, what jets will protect this phantom invasion fleet?)
Pandemonium might be the lucid dream of certain bloggers who enjoy hyping a story but wishful thinking is of course, fallacious at best.
What problems will China face internally?
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