Nobody should assume that China’s
coming dominance is going to be peaceful

It is a truism that business (apart from the defence sector) doesn’t like wars. This is to suggest, however, that wars are never about business.

Wars are always about human ego and paranoia – both the products of brain-wiring which hasn’t moved on over 630,000 years. But while the reason handed down for war is often Defence of the Realm/Way of Life and so forth, as often as not the aim is to open new markets and tilt the playing field in favour of the winner.

Britain, France and Rome all fought wars and created empires where the main gainer was commerce. The Slog has written several times before about the obvious designs China has on Africa. It is the new empire taking over from the old – the USA.

Although the US is unique in never having made territorial gains from any war, the regimes it supports are soon showered with advisers and trade representatives. America has never overtly gone to war with a business objective; but by and large, war has rarely done US business anything other than short-term harm. Now that some of China’s policies and its rapid industrialisation have made America’s situation worse, the G20 in Toronto the week after next is going to be crucial in several ways.

One can see Secretary Geithner coming when he observes that U.S. arguments for a more flexible yuan will ‘help’ China cool prices at home and redress global economic “distortions” elsewhere.

It’s all very polite at the moment, but China’s trade surplus widened to $19.53 billion in May. This may be enriching Beijing,but its knackering the US and Europe…who can’t begin to compete on price.

As it happens, this time around China will want to put a damper on prices: they’re making for an increasingly unhappy (and inflationary) workforce, while making China less competitive than some smaller Asian suppliers. So my guess is that some form of smiley-happy agreement will emerge in Canada.

But pretty soon, there won’t be mutual reasons to agree. Russia wants to sell energy and control prices via monopoly supply. The EU doesn’t. China wants to be big in automotive, and that’s bad for America. China wants to seal off Africa for its own raw materials exploitation. The US wants to ensure continuing access to power in the Middle East oil countries.

I’ll be retrurning to this theme over the next few days. In the meantime, the sparring prior to Toronto will be interesting.