To arms! China is plotting against us!

[Dida]

The Chinese plot against capitalism
May 29th 2007
From Economist.com

CHINA'S secret plan to bring down capitalism, especially in America, has become a little less secret in the past week or so. One clue came with a brave piece of whistle-blowing; a second when China started deploying its huge arsenal of capital. Congress was right to worry, after all. Those cunning commies in Beijing have studied capitalism and found its Achilles' heel: corporate governance.
First, the whistle-blower. Lynn Turner was director of research at Glass Lewis, a firm that advises institutional shareholders how to cast their proxy votes. Last week Mr Turner said he was leaving, five months after Glass Lewis was sold to Xinhua Finance, a Chinese financial-information firm. According to the Wall Street Journal, Mr Turner, a former chief accountant of the Securities and Exchange Commission, was worried about potential conflicts of interest with other Xinhua businesses, and by “another potentially troubling aspect: Xinhua once had ties to China’s Communist Party”.
If you wonder why it took Mr Turner five months to figure this out, you are questioning an American hero.
One can only worry what the Chinese will do now to sway America’s institutional shareholders—who, let's face it, are a flock of sheep led easily astray. What heroes the bosses of corporate America were to oppose changes in corporate-governance rules that could now empower the Chinese foe: prompt action by Congress could still block competitive elections for company directors, and shareholder votes on executive pay. Even now, lists of useless directors to be imposed on corporate America are being drawn up in Beijing (though The Economist hears that the Chinese leadership is split over whether it can do more damage to capitalism by voting to pay corporate bosses less, or by sending their salary packages to ever more preposterous heights).
It is clear, too, that this proxy-voting strategy will operate in tandem with a direct assault of the commanding heights of capitalism, known to Beijing insiders as “investing in private equity”. Last week China said it would invest $3 billion in Blackstone Partners, one of the world’s leading private-equity firms. No matter that China is buying under 10% of Blackstone (which has a public offering under way) and has given up the voting rights that would ordinarily come with its shares. You can see where this is heading.
Private-equity firms are the new kings of capitalism. They buy up controlling stakes in big companies, and raise profitability by improving corporate governance. Until now, that is. What better way for China to set back capitalist industry than by buying into private equity, and thereby exerting its pernicious influence beyond the scrutiny of public stockmarkets?
This is only the beginning. A Chinese wall of money will be on its way, once the Blackstone precedent has been set. Hiding behind the bland language of “diversifying foreign-exchange reserves”, China plans to deploy abroad at least 40% of its $1.2 trillion reserves. As the Financial Times has pointed out: “to invest that you would have to buy more than 10% of the capitalisation of the Dow Jones Industrial Average.”
Congress repulsed an earlier Chinese assault in 2005, when the China National Offshore Oil Corporation tried to buy Unocal, a Californian oil firm. Let it man the barricades again to stop the Blackstone deal. It should not be deterred by suggestions that selling a stake to China is a masterstroke by Blackstone’s boss, Steve Schwarzman (pictured left), to get the politicians in Washington to defend his firm as a jewel of American capitalism at the very moment that they were preparing to denounce private equity and to regulate and tax it more heavily.
Nor should Congress be lulled into inactivity by suggestions that the Blackstone IPO, which is expected to value the firm at over $33 billion, is evidence of a bubble in private equity—and that China's investment will prove about as canny as those disastrous purchases of American real estate and Hollywood movie studios in the early 1990s by that previous great Asian threat, the Japanese.
And don't let's be fooled by all the recent talk that China has embraced capitalism—to the point of allowing that American business icon, Starbucks, to set up shop in the Forbidden City. This is surely a Muhammad Ali-style rope-a-dope move to make the enemy complacent before the decisive blow is struck. This column knows a plot when it sees one. This is China we are talking about—and capitalists, especially Americans, should be afraid, very afraid.

Discuss the evil of Commies, especially scurvy Chinese Commies and the necessity to nuke them in order to save our precious freedom.

 

[GenMarshall]

And risk having the Chinese overrun Afghanistan, India, South Korea and Japan?!

 

[CurtSibling]

Since when has it been a surprise that the Reds plot against the West?

And don't you think the West also plots against the Reds?

PS
Freedom? Don't make me laugh.

...

 

[bhsup]

Well, duh.

The cold war never really ended, the primary enemy just shifted. The PRC government currently oppressing China is the long-term threat to the west in general and the USA in particular, but idiots bowing down to the almighty dollar would rather sell out their country for a fast buck than face this fact.

 

[Atlas14]

Is this why we've seen not only the poisonous dog food imported from China, but many other products?

 

[GenMarshall]

Is this why we've seen not only the poisonous dog food imported from China, but many other products?

So now were going to get crap from China now?

 

[Colonel]

We must re-arm Japan to halt Communist aggression from China.

 

[CurtSibling]

We must re-arm Japan to halt Communist aggression from China.

Good luck with that.

China could obliterate many Japanese cities with a few missile strikes.
Not that I am backing up the filthy commies, just citing the reality...

...

 

[ParkCungHee]

And Japan, if Rearmed, would be able to obliterate them back.

 

[The Yankee]

Destroying everything will likely do more harm than finding a strategy to shake this threat.

 

[Perfectionist]

Never mind.

 

[Tabasco Sauce]

The only problem is, China ceased to be a "true" communist nation when Deng Xiaoping instituted his reforms on the Chinese economy, effectively putting it on the road to capitalism.

I am sure that China is plotting against us somehow, and of course we are planning against China also, however, I do not think it is in the economic center, due to the fact that the Chinese and American economies are so interdependent that causing the "collapse" of one would cause the "collapse" of the other. Ladies and Gentlemen, I present to you E.M.A.D or Economic Mutually Assured Destruction.

 

[Integral]

At the risk of sounding complacent, I would posit that the USA and PRC are too economically intertwined to fight a major war.

China needs the USA to buy its goods.

The USA needs China to buy its debt.

And as said before, China has become much, much less "communist" since the 1980 reforms. The government is still one-party authoritarian, but it is decidedly not economically communist.

But again, maybe I'm getting complacent.

Integral

 

[silver 2039]

Am I the only one who saw sarcasm in that article?

 

[CurtSibling]

And Japan, if Rearmed, would be able to obliterate them back.

Everyone could obliterate each other, but that isn't the point, is it?
The first sign of re-armament, and the Chinese would make it financially
hard for the West. Hence, Mr Bush will not dare upset his trading pals.

And in any case, there appears to be an unspoken deal between the USA
and China to keep out of each other's conspiracies and shady operations.

...

 

[DNK]

Am I the only one who saw sarcasm in that article?

You never can tell with those crafty British...

Which leads me to another theory: the British, via The Economist are attempting to throw a wedge between the US and China in order to cause a disastrous falling out between the two, and in the resulting chaos the Queen will once again rise to glory and enslave the world!



On a slightly more rational note, the US has been under-the-table coaxing the Japanese to rearm, and I am under the impression that this is seen as more of a positive in Japan lately. Japan is a "proxy" for the US, but at the same time being the 2nd largest economy in the world, having over 100 million citizens, and a history of a strong military, it's hardly without autonomy on these matters.

 

[Disenfrancised]

Am I the only one who saw sarcasm in that article?

Nope, and if i remember the print version correctly (rife with italics) then the sarcasm was pretty obvious.

 

[Dann]

All I can say is....
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[MadScotsMan]

They don't have to kill us with their military, just keep on using lead paint on our toys and chemicals in our toothpaste or activate those computer chips they've put in everything they make

 

[Perfection]

Dann, I'll make you a deal: If the US ever crushes China I'll watch your back and if China ever crushes the US you'll watch mine.

Sound good?