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Tags: lignet | china | briefing | huntsman | hayden

LIGNET: China’s Coming Crash Threatens U.S. Economy, Security

By    |   Monday, 03 December 2012 12:26 PM EST

A new online briefing from a high-level panel of experts, including a former director of the CIA, unmasks the growing threat posed by an increasingly troubled China.

After 30 years of annual GPD growth of up to 10 percent, the world’s most populous nation is facing mounting economic challenges that could have a significant impact on the United States as well.

The bottom line of the panel discussion: China’s economy is at serious risk – and the entire world will feel the blow both economically and even militarily.

“I spend as much time fretting about Chinese failure as I do about Chinese success, about China being weak as opposed to being strong,” says panelist Michael Hayden, former director of the Central Intelligence Agency and a retired 4-star general.

LIGNET.com, Newsmax’s global intelligence and forecasting service, gathered the experts to discuss the future of China and the “sweet and sour” U.S.-China relationship — as panelist Jon Huntsman, former U.S. ambassador to China, puts it — as new Chinese leader Xi Jinping takes the reins of power.

The 4-member panel is moderated by Frank Sesno, director of the School of Media and Public Affairs at The George Washington University and a former CNN Washington bureau chief.

See the LIGNET China Briefing – Click Here Now

The main focus was on the world’s second-largest economy and how China might respond to growing problems in sustaining its amazing growth — and the possibility of escalating tensions between the United States and China.
Ironically, the panel gathered soon after the Shanghai composite stock market hit its lowest level in 3 1/2 years.

“While it’s been an incredible 30 years, the easy part is over,” says panelist Steven Cortes, founder of the market research consulting firm Veracruz LLC and a frequent contributor on CNBC.

“The easy part was exploiting seemingly endless cheap Chinese labor. They are running out of that labor now as the demographic tide starts to turn against China. Wage costs are accelerating dramatically. They’re losing the one advantage that they’ve really exploited to an incredible degree. So what do they do next?”

Said former Utah Gov. Huntsman: “You can only take the investment-led export machine so far, and it has run its course.”

And Hayden points out that the Chinese people will tolerate the communist leadership only as long as the economy keeps growing.

“Here’s the security connection: The last thing to grab onto for the party, for the current leadership, might be nationalism. A party backed into a corner, a party searching for its own legitimacy, could find it in acting overly nationalistic and that could lead to the kind of confrontations we would want to avoid.

“Desperate men take desperate measures.”

Cortes agrees: “The greatest risk to the United States right now is a failed China It is a real risk now because of the imbalances, the misallocation of capital, the demographic crunch. All these factors are converging to make China an incredibly dangerous investment.”

See the LIGNET China Briefing – Click Here Now

Cortes adds: “The level of corruption in China would make a Chicago alderman blush. We’re talking about literally billions of dollars not just from Chinese people but from American investors as well, many of whom have been duped into buying from fraudulent Chinese companies.

“The Chinese themselves are racing to send funds outside of China, selling their own shares, buying U.S. treasuries, and the pace is accelerating.”
The panel explores China’s growing military threat.

Says Huntsman: “I’d say if there’s one military that we really do need to keep our eye on in today’s world to make sure we have countermeasures to protect our people, which is what we do, it’s to keep a very close eye, in every which way, on China’s military rise.”

Hayden warns that the Chinese have been trying to catch up with the American military machine after they saw its capabilities in the first Gulf War. And they’ve been doing that to a large degree through espionage.

He discloses that the Chinese are guilty of economic espionage “on an unprecedented scale, most of it being cyber-enabled. I stand back in awe about the Chinese espionage effort against the United States. Sophistication. Depth. Breadth. Persistence.

“We have a nation state successfully attempting to steal secrets not just from our nation state but from American industry.

“They developed technology, they bought technology, and when those don’t work they steal the technology.”

Panelist Dr. Mark Groombridge, a senior adviser to the Departments of State and Commerce during the George W. Bush administration, observes that about 95 percent of the software sold in China is pirated.

The panel also discusses China’s currency manipulation, the possible “flashpoints” that could trigger a U.S. confrontation with China, China’s massive holdings of American debt, China’s energy needs, the nation’s air and water pollution, what President Obama should do if he meets with the new Chinese leader, and more.

Huntsman summarizes: “Well, 1.5 billion people with a large land mass and access to raw materials and a lot of brain power won’t disappear any time soon.

“Are we prepared for the rest of the 21st century in terms of where the challenges lie?”

See the LIGNET China Briefing – Click Here Now

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A new online briefing from a high-level panel of experts, including a former director of the CIA, unmasks the growing threat posed by an increasingly troubled China. After 30 years of annual GPD growth of up to 10 percent, the world s most populous nation is facing mounting...
Monday, 03 December 2012 12:26 PM
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