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A few weeks back, we noted that China (via a state-run media outlet) appeared to be adopting a more conciliatory approach when it comes to describing Beijing’s vision for the Asian Infrastructure Investment Bank. The venture, which Washington did its best to undermine last year, has made an unlikely run at taking center-geopolitical-stage even as other, more ostensibly newsworthy events (such as the veritable collapse of the Yemeni state and the ongoing crisis in Greece) vie for the market’s very limited attention span.

And while we, more than perhaps any other news outlet, have gone to great lengths to demonstrate the importance of what is not only a move by Beijing to inaugurate a sino-Monroe Doctrine but to simultaneously start the world on the path to yuan hegemony, we were also quick to note that there’s such a thing as being too successful, especially when it comes to making sure a whole cohort of Western nations who have just gone out on the proverbial limb in defiance of The White House, are left with some assurance that there’s at least some part of the institution which is actually aimed at promoting infrastructure development rather than operating solely as Beijing’s newest foreign policy tool. .....

http://www.zerohedge.com/news/2015-04-07/china-cant-believe-its-luck-investment-bank

Published on Mar 24, 2015
Over the past couple weeks, large western countries led by the United Kingdom have rushed to join the China-run Asian Infrastructure Investment Bank. March 31st is the deadline for founding members and at least 35 countries, most of them in Asia, have joined. Germany, France, and Italy have followed Britain in saying that they would also join the bank. The eager European applicants have certainly annoyed the United States. Erin weighs in.

https://www.youtube.com/watch?v=ZLAlDCGaiAc

AIIB – It Just Happened: “The Moment The United States Lost Its Role . . .”

April 6, 2015

Santiago, Chile

Last week, the government of China closed the enrollment window to join its new Asian Infrastructure Investment Bank (AIIB) as a ‘founding member’.

The AIIB, if you haven’t heard of this yet, is designed to essentially displace the Western-controlled IMF and World Bank.

And prior to last Tuesday’s deadline, dozens of nations around the world from New Zealand to Denmark signed up to join.

Even staunch US allies like the United Kingdom and Israel agreed to be part of AIIB.

This is a huge coup for China, and probably the most obvious sign yet that the global financial system is in for a giant reset.

Under the weight of nearly incalculable debt and liabilities, the United States is in terminal decline as the dominant superpower.

From Ancient Rome to the British Empire, this has happened many other times in history.

This time is not different. And everyone else in the world seems to get it. . . except for the US government.

They act as if the financial universe will revolve around America forever—that they can print money, indebt future generations, and wage war as much as they want without consequence.

But they’re completely blind.

Practically the entire world is lining up against them to form a brand new financial system that is no longer controlled by the US government.
 
In an editorial published in the Financial Times, former US Treasury Secretary Larry Summers summed it up plainly saying that this “may be remembered as the moment the United States lost its role as the underwriter of the global economic system.”

The consequences of this shift away from a US-controlled financial system cannot be understated.

No more endless spending. No more solving problems with more debt and more money printing.

Suddenly it will be time for painful decisions in the US—like slashing Social Security benefits, drastically scaling back the military, and selectively defaulting on the debt.

Make no mistake, this transition is going to be bumpy.

China may already be the largest economy in the world by many measurements. But the Chinese economy is in for some serious strain over the coming months and years as its massive credit bubble bursts.

So in addition to America’s fiscal and monetary challenges, the world is going to have to suffer through a potential Chinese crisis as well.

But this does not affect the long-term story. Remember, nothing goes up or down in a straight line.

On its road to becoming the global superpower in the 20th century, the United States suffered its own series of deep economic setbacks—from the Panic of 1907 to the Great Depression, and several recessions in between.

China’s path will likely be similar.

This is one of the most important trends of our time. And it’s happening right in front of our eyes.

The world is rapidly throwing off US financial domination. The global financial system is starting to reset. Global financial and political dominance is shifting.

As with any great change, there are going to be people who get completely wiped out—primarily, people who didn’t see the change coming or chose to ignore the trend.

The flip side of this is that, for anyone with the intellectual courage and independence of mind to be paying attention, this is a time of extraordinary opportunity.

Some of the wealthiest people in Europe were minted in just a few years during the Weimar hyperinflation of the 1920s.

And some of the greatest fortunes in the world (some of which still exist today) were made in the early days of the United States as the country rose to dominance.

That’s ultimately the opportunity we have today. We can’t do anything about the trend. It’s happening.

What we can control is how we react to it: ignore it at our own peril, or seize the opportunities that come from it.

http://www.valuewalk.com/2015/04/aiib-dollar/

The US Dollar Rally Will Crush Stocks…Just As It Did in 2008

The world carry trade for US Dollars is over $9 trillion.

 

In today’s world of monetary insanity, investors seem to forget that $1 trillion is a staggering amount of money. So to put that $9 trillion carry trade into perspective, if it were a country instead of a carry trade, it would be roughly equal in size to the economy of China, the second largest economy in the world.

 

Suffice to say, we’re talking about a truly staggering amount of borrowed US Dollars that have been invested into other assets/ investments.

 

Carry trades only work if the currency you are borrowing in doesn’t rally. As soon as it does, your trade very quickly goes into the red.

 

This is particularly true if you’re talking about a corporation that has borrowed in US Dollars to fund projects in countries where sales are denominated in other currencies (Europe, Asia, etc.)

 

The reason for this is that many multi-nationals do not hedge their currency risk. So if, for instance, they are borrowing in US Dollars without a hedge to invest in Europe and the US Dollar rallies, their projects very quickly begin to lose their appeal… and a LOT of money.

 

Ka-Boom:

more:

http://www.zerohedge.com/news/2015-04-09/us-dollar-rally-will-crush-stocks%E2%80%A6just-it-did-2008

U.S. gets little support in its opposition to AIIB

April 9, 2015

When China rolled out the Asian Infrastructure Investment Bank last October, the stiff resistance from the U.S. (as well as Japan) took the world by surprise. This opposition notwithstanding, AIIB, has so far picked up 27 regional members and seven non-regional members, including the U.K., Germany, France and Italy. In addition, there was a virtual avalanche of applications before the March deadline for founding membership, which included another 23 countries that are currently under consideration. This overwhelming positive response to the AIIB from countries across the globe was perhaps more than China initially anticipated.

Why did the U.S. opposition not convince even its traditional allies to steer clear? Part of the reason was a serious misreading of global sentiments on this matter.

To Asian developing countries, the U.S. opposition reflected a retrograde cold-war mindset that wasn't attuned to their economic wishes and aspirations. To sustain its current growth trajectory, developing Asia needs to invest about $800 million annually in infrastructure, according to an Asian Development Bank (ADB) study. And the existing international development finance institutions, such as the World Bank and ADB, cannot muster sufficient resources to meet this demand. ... more

http://www.baltimoresun.com/news/opinion/bs-ed-aiib-opposition-20150409-story.html

When you think the financial world can’t get any crazier… this happens

April 9, 2015
Medellín, Colombia

The world has truly gone mad.

We’ve become accustomed somewhat in the last several years to historical anomalies such as zero percent interest rates, Quantitative Easing, competitive currency devaluation, etc. by governments and central banks the world over.

It’s almost become the new norm.

But then there’s always something that happens that shocks us all over again.

And just like with any other addiction, the infusion of ridiculous and unsustainable policies has to be that much more potent to have any effect.

Two such developments have just taken place in the financial world.

First, Switzerland became the first to issue 10-year government bonds with a negative yield.

Let that sink in for a moment.

Especially in the last year we’ve seen governments issue short-term debt with negative interest rates. But now the Swiss government is the first that will actually profit from its long-term 10-year debt.

It’s insane.

Just like in a bad infomercial—“But wait, there’s more!”

The government of Mexico just sold 100-year bonds denominated in EUROS. Also the first ever of its kind.

A few years ago, Mexico sold its first 100-year bond—that one was denominated in US dollars. Later, they sold another century-bond in British pounds.

You can just imagine the figures at the Mexican central bank’s meeting going: “Well, that went great. I wouldn’t have believed we could ever get away with that… Hey, what if we tried to do it in euros next time, haha?”

So they did. They took advantage of the European Central Bank’s unprecedented stimulus and issued a 100-year bond in a currency that most likely won’t even be around in the next decade.

Who’s dumb enough to buy this stuff—10-year debt at negative yields and 100-year debt in a doomed currency?

Institutional investors, of course—large pension funds and the like. You might look at news like that and think, well, that’s crazy, I’d never do that. But the fact is, it’s being done with YOUR MONEY.

Just like Winston Churchill commented that it’s false to characterize the fighting at places like the Somme, Verdun etc. in WWI as battles, when they were actually more like prolonged sieges, what’s happening in the financial world today is similar. .... more

https://sep.yimg.com/ty/cdn/realityzone/UFNswiss10yearNegativeInterestBond.html

sometimes good luck follows by bad luck,, by keeping more hope on this bank,, is lot pressure as well as lot countries wants low cheap loans n dont even pay bank n bankrupt,, particularly these european nations having strong history of attacking n looting other countries,, by giving loans to those countries only brings bad luck

Well, the Chinese are quite brilliant of course. First they help Uncle Sam spend itself to bankruptcy in endless war adventures and regime changes leaving a string of ruined basket cases here and there. Then they come in flushed with currency, not weapons and war, and finance the rebuilding of the whole thing. And more. And their Russian partners will join in. The American shell corporation will be on the sidelines licking its wounds for the next decades. That small appendage in westernmost Eurasia called Western Europe will join the Eurasian Trade Zone in due course. This will be

The New World Order.

Good luck, g

China’s AIIB: The Final Tally
Interesting facts about the members of China’s AIIB — with even more interesting implications.

The deadline for prospective founding members to submit their applications to China’s new Asian Infrastructure Investment Bank (AIIB) came on March 31, leading a flurry of final applications from countries all over the world. When the dust settled, China moved on to selecting who would actually made the cut. Yesterday, the AIIB released its final, approved list of founding members (excluding Taiwan). With 57 countries signed up, the AIIB includes well over a quarter of the world’s nations. Even more interestingly, 16 of the world’s 20 largest economies are on board (with the U.S., Japan, Mexico, and Canada as the holdouts). .......

http://thediplomat.com/2015/04/chinas-aiib-the-final-tally/

http://thediplomat.com/wp-content/uploads/2015/04/thediplomat_2015-04-16_21-13-09.jpg

I'm still waiting because we don't know yet what China will do with that new investment bank. Will anything change? China has already made huge investments in Africa, paying for roads and ports to ship raw materials to its factories. Will it do anything more than that? So far, this new bank certainly looks like a nuclear bomb, but that doesn't mean China wants to use it to destroy the USA.

Well,it just got started virtually the other day so you´ll have to wait a while to see the results - I guess.

Good luck, g

AIIB: Has The U.S. Lost Its Role As Driver Of Global Economy?

Former U.S. Treasury Secretary Lawrence Summers wrote on April 5 that this month may be remembered as the moment the United States lost its role as the underwriter of the global economic system. His comments refer to the circumstances surrounding China’s launch of a new venture, the Asian Infrastructure Investment Bank (AIIB). Wary of China’s growing ambitions and influence, the United States had advised its allies not to join the institution, but many signed up anyway. The debacle was undoubtedly embarrassing for Washington, but even so, Summers’ prophecy is a bit premature at this stage. ... more

http://www.valuewalk.com/2015/04/aiib-america/

Anyone placing bets how much longer the US can keep up the current trajectory before the house of cards comes crashing down or will this just gradually just keep diminishing? The most interesting and perhaps unfortunate aspect to this whole thing is the sheer numbers of people who have no plan at all to deal w/ such a scenario outside of the survival, metals and bitcoin types. The boobs' ignorance and bliss will become their terror.

It´ll probably collapse at an opportune time before the next U.S. "election" so it can all be blamed on the outgoing puppet and the next desired puppet will thus come riding in like a savior. Then rinse and repeat for the next cycle.

AIIB: China's 'Phase Zero Operation'?
Can Beijing’s claim that it wants to provide ‘global public goods’ via the AIIB be taken at face value?

A month after controversy erupted over the announcement that multiple U.S. allies will join China’s new Asian Infrastructure Investment Bank (AIIB), the Obama administration’s response was clearly misguided. Concerned that the AIIB represented a power play by China for influence in the rest of the world at the expense of the U.S., administration officials criticized the bank for not adhering to the “high standards” required of U.S. and Western-led international institutions such as the World Bank and the Asian Development Bank. ....more

http://thediplomat.com/2015/04/aiib-chinas-phase-zero-operation/

High standards ? Yeah yeah yeah  ;D

Well, a good chunk of the Chinese investments will most likely go to rebuild countries that Uncle Sam has blown to smithereens in numerous war scams. Someone has to do it, you can´t expect psychopaths to ever take responsibility for their actions.

China's AIIB Bank: Part of a Much Bigger Master Plan

In his latest book Henry Kissinger anticipated China’s initiative to create the first new international organization of the 21st century. He didn’t foresee the Asian Infrastructure Investment Bank (AIIB) as such, but argued that as China continued to increase its global economic weight, it would inevitably seek its security, in part, by building international organizations in which it sat at the center. And that this would rightly or wrongly be seen as a challenge to the post-World War II US-centric international architecture.

China and other major developing economies have long expressed their dissatisfaction with US and European dominated international institutions created at the end of WWII. China’s efforts to increase its contributions and hence voting power in the IMF, for instance, have been stalled for years in the US Congress. The reservation of the top job in each of the World Bank and the IMF for citizens of the US and EU, respectively, is offensive. The deal between the two that has stuck for over sixty years smacks of a global Tammany Hall racket. .... more

http://nationalinterest.org/blog/the-buzz/chinas-aiib-bank-part-much-bigger-master-plan-12748

China's Plan to Lead the Globe

BY ERIC MARGOLIS • MAY 23, 2015 •

As tensions in the South China Sea between the US and China continue to rise, the US Navy and Air Force are quietly gearing up to fight a war in the disputed region.

If necessary, that is. Both sides say they don’t want any military confrontation on China’s extensive coastal waters, but both are acting as if a military conflict is increasingly likely.

Optimists say that a peaceful resolution of China’s rise as a great power is achievable. The economies of the two powers are so enmeshed that a war sounds unthinkable.

Such is the thesis of an important new book just out, “The China Dream,’ by Professor General Liu Mingfu, a leading Chinese military thinker and commentator who speaks with the voice of China’s military.

US-China trade accounted for $579 billion last year. Beijing holds $1.2 trillion of US Treasury securities, thus financing a big part of America’s massive trade deficit. China claims its low-cost exports to the US saved American consumers $600 billion in recent years.

China only wants its place in the sun, say its strategists, using the same words as German strategists did before World War I. It’s time for a multi-polar world. The age of American world empire is over, writes Liu Mingfu, words that will not endear him to Republican hawks and neoconservatives.

Pessimists retort that Britain and Germany fought two world wars even though they were major trading partners. History is replete with examples of rising powers eventually going to war with the status quo powers resisting their rival’s economic and military growth. The Franco-British-Russian alliance against Germany prior to World War I is a perfect example.

One need not be a swami to see that China’s surging power will soon clash with that of the American hegemon. The battle lines are already drawn: China’s aggressive claims to the South China Sea – viewed by the US Navy as an American lake. Taiwan. Tensions over Burma. Korea. China’s access to the open seas.

According to Prof. General Liu, the days of America’s world domination, or hegemony, as he terms it, are just about over. By 2030, China will be the world’s largest economy in absolute terms (today it rivals the US in purchasing power parity), regaining the geopolitical primacy it formerly enjoyed until the 1500’s when it was the world’s leading economic power.

The US must find a way to accommodate China’s growing power, a point also made for many years by this writer. A policy of containment is not likely to work unless India becomes a principal participant. My first book “War at the Top of the World” deals with the scenario of a future India-China war in the Himalayas, Karakoram and Burma. India has been very cautious in joining any American-sponsored alliance against China.

Liu writes that America must quietly cede some of its power to China in the same manner that the British Empire did to the United States after 1900. The United States and China must share power and jointly rule the world as benign hegemons.

He insists that China has no territorial ambitions and never will. “China suffered 470 foreign invasions within 65 years from 1840 to 1905,” asserts Liu, though incursions would be a more accurate term. During this period, China was raped and pillaged by the western colonial powers and Japan. Hatred of Japan seethes throughout Liu’s book, as it does among most Chinese.

One could argue that China’s annexation or ‘reunification’ of Tibet and Sinkiang were aggressions. China considers them part of historical China, along with truant province Taiwan.

Liu points out that China never invaded or seized its smaller neighbors Korea, Burma, Thailand, or Laos.

Instead, China’s emperors always preferred to dominate without aggression so that its smaller neighbors respected the will of China and acted respectfully – rather as the United States in the 20 th century with Latin America. China, writes Liu, wants peace and prosperity in order to keep growing its economy. China remains an inward-looking colossus, content to be the Middle Kingdom.

America, according to the undiplomatic Liu, is a paranoid giant, afraid of the outside world and addicted to the need for enemies abroad. “Americans feel lost without any enemy.” Washington’s occupation and despoliation of so many countries, notably in the Muslim world, generates endless enemies and a war psychosis. America, he claims, is a half-democracy: democratic at home but promoting dictatorships abroad. He seems to believe that China is as democratic at home as the US – a claim that defies reality.

Liu asserts that China is devoted to peaceful relations, non-interference in other nations, and the desire to help build world prosperity, not just its own power or political system. What’s more, Liu modestly asserts, China should lead world development since Chinese are more intelligent and cultured than any other people and heirs to a 5,000-year history!

Interestingly, Liu depicts the 1950 Korean War as a major victory for China because it showed that an Asian nation could fight off the world’s greatest military power. He claims that the US did not invade North Vietnam out of fear of the Chinese People’s Liberation Army after its bloody experience in Korea.

Will Washington back off and allow China to be the master of Asia? It seems highly doubtful. But unless some kind of modus vivendi is found, a military confrontation is likely to follow, one that the US might very well lose. China would be fighting virtually at home or just off its coast. The US, by contrast, would fight thousands of miles across the Pacific from its distant bases. The US might even win, but China would undoubtedly come back for more.

The “China Dream” thesis has been actively taken up by China’s communist leadership. But two things might derail China’s rise to world domination. First, China’s history is replete with example of internal strife, civil wars, and regionalism. This “Chinese curse” could come back to haunt Beijing.

Second, as I read Liu’s panegyric to Chinese greatness and peaceful humanism, I kept recalling Lord Acton’s wise maxim about absolute power corrupting absolutely. It happened in Washington, and there’s no reason why it might not occur in Beijing.


(Reprinted from EricMargolis.com by permission of author or representative)

http://www.unz.com/emargolis/chinas-plan-to-lead-the-globe/

Under the weight of nearly incalculable debt and liabilities, the United States is in terminal decline as the dominant superpower. Practically the entire world is lining up against them to form a brand new financial system that is no longer controlled by the US government.China may already be the largest economy in the world by many measurements. But the Chinese economy is in for some serious strain over the coming months and years as its massive credit bubble bursts.Where's the end of China’s path? Let's wait and see.

US-China war 'inevitable' unless Washington drops demands over South China Sea

Warning from state-run China newspaper as Beijing reveals plans for development of disputed South China Sea islands

By Julian Ryall, Tokyo3:35PM BST 26 May 2015
China’s armed forces are to extend their operations and its air force will become an offensive as well as defensive force for the first time, in a major shift in policy that will strengthen fears of accidental conflict.
A policy document by the state council, or cabinet, said China faced a “grave and complex array of security threats”, justifying the change.
The People’s Liberation Army, including its navy and air force, will be allowed to “project power” further beyond its borders at sea and more assertively in the air in order to safeguard its maritime possessions, the white paper stated.

The navy will add “open seas protection” to a traditional remit of “offshore waters defence”, it said.
The posture risks escalating the tension over disputed islands in the South China Sea and elsewhere in the Pacific, where the United States is determined to protect the interests of allies like Taiwan and the Philippines.
Only last week, a US aircraft ignored repeated warnings from the Chinese military to fly a reconnaissance mission over the islands.

Global Times, a tabloid newspaper run by the Communist Party, said that China might have to “accept” there would be conflict with the United States.
“If the United States’ bottom line is that China has to halt its activities, then a US-China war is inevitable in the South China Sea”, said the paper, which is often seen as a mouth-piece of hardline nationalists in the government in Beijing.

State media reported on Tuesday that Beijing had begun building two lighthouses on reefs in the Spratly Islands, a smattering of outcrops that are claimed by an array of countries including not only China but also Vietnam and the Philippines.
Last month, satellite imagery revealed the Chinese had almost completed an air strip on another reef - Fiery Cross - while they are turning another rock, Mischief Reef, into a full island through land reclamation.

The Global Times article described the construction of runways, harbour facilities and buildings on the disputed Spratly Islands as the nation’s “most important bottom line”.
Speaking at a press conference in Beijing, Yang Yujun, a spokesman for the Defence Ministry, dismissed international criticism of China’s policies in the South China Sea, claiming the work was the same as building roads and homes on mainland China and that it would benefit “the whole of international society”.
“From the perspective of sovereignty, there is absolutely no difference”, he said, adding that “some external countries are also busy meddling in South China Sea affairs”.

Analysts say neither Washington nor Beijing appear to be in the mood to back down and that there is a serious risk of a minor incident in airspace around the islands escalating rapidly.
“I think the concern has to be that China misjudges the situation”, said Robert Dujarric, director of the Institute of Contemporary Asian Studies at the Japan campus of Temple University.
“Neither party wants a war if it can be avoided, but there are red lines for both sides”, he said. “I worry whether Beijing considers the US to be a declining power and assumes that Washington will back down if it shoots down a US observation aircraft”.

Washington chose to “de-escalate” a major crisis that blew up after a Chinese fighter collided with a US Navy intelligence-gathering aircraft off Hainan Island in April 2001.
However, Prof. Dujarric said there would be a different response if a similar incident were to occur in what Washington insists is international air space over the South China Sea.
Recent developments have provoked new concerns in the region, with Ma Ying-jeou, the president of Taiwan, calling for the different nations laying claim to the South China Sea to put their differences aside and carry out joint development of natural resources.

http://www.telegraph.co.uk/news/worldnews/asia/china/11630185/US-China-war-inevitable-unless-Washington-drops-demands-over-South-China-Sea.html

May 27, 2015 5:12 pm

A bank made in China and better than the western model

David Pilling
 
It is possible that the AIIB will even exceed the standards of existing development lenders

Groucho Marx said he would refuse to join any club that would have him as a member. He did not however try to discourage his friends from signing up. That is what the US did when it came to the Asian Infrastructure Investment Bank, a China-led institution that Washington regarded with some suspicion.
One Beijing-based US executive scoffed at the very notion that China could run a multilateral institution. It did not know the first thing about how such a bank should be governed, he said.

Opponents of the AIIB whispered that it would lend to dictators, despoil the environment and trample on human rights. (Western institutions, of course, have never done any such thing.) The AIIB may turn out very differently from this caricature.
It is just possible that it will even exceed the standards of existing institutions. With 57 members, including Europeans such as the UK, Germany and Sweden, it is evolving fast and may end up an entirely different institution from the one Beijing envisaged.

Last week, members met in Singapore to draw up articles of agreement. With input from both China, which has proved it knows a thing or two about development, and western countries, which have a better record of implementing safeguards, the project has made a promising start.
The bank will have initial capital of $100bn, double that originally intended. That will make it a serious challenger to the Asian Development Bank, the 50-year-old Tokyo-dominated regional bank with capital of $150bn. China will have the biggest capital quota, probably about 25 per cent. India will have the second-largest, then Russia, Germany, Australia and Indonesia. Overall, 75 per cent of the bank’s capital — and therefore voting rights — are likely to be Asian. Initial indications are that China will not have a veto.
The bank will be based in Beijing. It will have a non-resident board that meets periodically in the Chinese capital and convenes by video conference. At first glance, this could raise the suspicion that the AIIB will have less rigorous oversight than the World Bank, with its resident board that approves all loans. Yet many see the World Bank board as expensive — it costs $70m a year — and cumbersome.

David Dollar, a World Bank veteran who has acted as an unpaid consultant to the AIIB, says the World Bank had become so slow and risk-averse that most governments had stopped coming to it for infrastructure financing. He quotes an Indian official, exasperated at the pace of World Bank-sponsored projects, as saying: “Mr Dollar, the combination of our bureaucracy and your bureaucracy is deadly.”
The hope, he says, is that the AIIB can combine the best of both worlds. “The enthusiastic response of developing countries in Asia to the AIIB concept reflects their sympathy with the idea that a bank can have good safeguards and still be quicker and more efficient than the existing banks,” he writes.

In Jin Liqun, tipped to become the AIIB’s first president, China’s new institution has one of the country’s most experienced technocrats. He is a former deputy finance minister and a former ADB vice-president. His job will not be easy. With such high-profile western involvement, the AIIB will find its projects (a dam in Myanmar here, a highway through an Indonesian township there) scrutinised by board members from the likes of Germany. By inviting in so many foreign participants, Beijing has probably given up on the idea that the AIIB can be a crude instrument of Chinese diplomacy. It may even be having buyers’ regret.

In one way, though, the bank is a success before it has even started. It has triggered what one commentator calls “infrastructure wars”. The ADB has performed some accounting magic in order to increase the amount it can lend. ADB officials say the bank will review approval procedures so that it can match the AIIB’s expected greater speed. On the day that AIIB members met in Singapore, Shinzo Abe, Japan’s prime minister, announced that Tokyo would make $110bn available for infrastructure projects in Asia over five years. These, he implied, would be of higher quality than those led by China.
Like Groucho Marx, Japan and the US are not rushing to join the new club. Yet if the AIIB proves as effective as its advocates hope, before long even Tokyo and Washington may be angling for membership.

http://www.ft.com/cms/s/0/14c9f302-0397-11e5-a70f-00144feabdc0.html#axzz3bTNMBxTJ

China perhaps got tired of the humiliation it received from the Asian Development Bank (ADB). China was having only 5% voting right in the ADB, while Japan was having 13% rights. The United States, which is a country located outside Asia, was also having 13% voting rights. The Asian Infrastructure Investment Bank will soon destroy the ADB. After that the US and Japan can take their voting rights to elsewhere.  ;D

WW3 may start soon, Soros warns, unless US loosens up on China

Published on May 22, 2015
There's a warning that World War 3 will erupt in just a few years - unless the US financial system loosens up on China. Billionaire investor George Soros says America needs to let Beijing join the global currency basket, or the consequences could prove catastrophic.

https://www.youtube.com/watch?v=MwwhVoR4Jqs

Why China has the upper hand in the South China Sea

By Barry C. Lynn June 3, 2015

Washington’s failure in recent years to keep careful watch over what goods are made where — especially when it comes to such vital items as electronics and drugs — means the United States now depends far more on China than vice versa.

Back in the 1990s, advocates of liberalizing U.S. trade with China said economic interdependence would inevitably lead to peaceful coexistence. But one-sided dependencies invite adventurism, as China’s growing belligerence today proves.

Washington must now address the fundamental flaws in the international trade system that gave China such a big advantage. The White House claims the proposed Trans-Pacific Partnership will help offset China’s increasing heft. Unfortunately, the pact, which includes 11 Pacific Rim allies but excludes Beijing, will do nothing to fix the problems.

The fact that the global trading system is not working as promised is most dramatically evident in the seas around China. Beijing is engaged in a pattern of provocation bordering on recklessness. In late 2013, China unilaterally imposed an “air defense declaration zone” covering portions of the East China Sea. Earlier this year, the Chinese navy set about transforming a reef in the Spratly Islands into a military base.

International relations in East and South Asia are tenser than at any time since the 1960s. Japanese Prime Minister Shinzo Abe last year compared the situation to 1914 just before World War One. The U.S. Navy recently began to directly challenge China’s claims of sovereignty over large swaths of the South China Sea.

This is the opposite of what was supposed to happen when the United States and its allies created the World Trade Organization in the mid-1990s and then invited Beijing to join. President Bill Clinton asserted that “growing interdependence would have a liberalizing effect in China.”

Worse, the extreme industrial interdependence fostered by the World Trade Organization appears to have put powerful levers into China’s hands.

During the Cold War, the United States promoted high degrees of integration with allies, including Japan, Germany, Britain and Canada. Washington did this to promote mutual prosperity and peaceful coexistence. Yet even though each of these nations was smaller than the United States — and all were more or less democratic — Americans chose not to rely entirely on any of these close friends for any vital good.

Today, the United States depends on China for myriad items that U.S. citizens need every day. These include 100 percent of key electronics and chemical components. They even include basic ingredients for some of the nation’s most important drugs, including antibiotics. Given that supply chains often run on a just-in-time basis, in which goods are produced only as fast as they are consumed, there are often no backup supplies nearby.

China, by contrast, depends on the United States for little of vital importance. For what it does import in quantity, like energy and metals, it holds large stockpiles.

And unlike Washington’s main trading partners of the past two decades, China’s economy is bigger than America’s and growing fast. China is also by no means a democracy. Quite the contrary. The United States finds itself increasingly dependent on the good will — and stability — of the world’s most powerful and sophisticated autocracy.

The World Trade Organization freed U.S. corporations and foreign nations to restructure every assembly line on which Americans depend in almost every respect, such as by concentrating production wherever and however they wished.

Washington’s challenge now is to understand what this revolution means in the real world. Most specifically, how exactly does Washington’s asymmetrical dependence on China affect U.S. sovereignty and freedom of action? Might it, for example, lead Beijing to conclude that the United States will not use force in response to Chinese aggression?

The proposed Trans-Pacific Partnership, at best, amounts to a doubling down on a strategy that failed. At worst, it sets Americans to fighting with one another at a time when the international threats they face grow ever more complicated and dire.

Globalization is a smart and viable strategy. U.S. trade policy from the end of World War Two to the mid-1990s proved that.

Rather than waste more time on the Trans-Pacific Partnership, Washington must figure out how the extreme changes of the 1990s upset those balances. More to the point, it must swiftly figure out how to live and trade peacefully with China in what is fast becoming a post-global world.

http://blogs.reuters.com/great-debate/2015/06/03/how-u-s-dependence-on-chinese-goods-invites-beijing-adventurism/

Is China Floating a China-Euro Currency Bloc?

Published on Jun 4, 2015

SHOW NOTES: https://www.corbettreport.com/?p=15014

In today's thought for the day James discusses an editorial from The Global Times about China's upcoming inclusion in the IMF's SDR basket. Is China sending up a trial balloon for the idea of deeper Chinese-European monetary integration, and if so what would this mean for the ongoing creation of the new monetary world order?

It will be better for China to keep away from the Euro. The Euro is losing its value day-by-day, and I am sure that the situation will continue in the near future also. I don't think that China will be getting any benefit out of this. Why can't China float a currency bloc with the BRICS nations? India or Brazil can substitute the European Union.

Yes, in fact China´s exports to Asia, Russia and Brazil amount to more than to U.S. and Europe combined. So, to maintain trade growth they´ve been gradually shifting from those stagnant and debt-ridden economies to more lively ones. Maybe that Euro thing has to do with Chinese investments over there I don´t know.

The world needs some push back to Uncle Sam for sure, just can't imagine major players trusting China. Remember, when the USA got it's rating downgraded, the dollar got stronger.

Yes, the dollar has had a considerable bounce since last year especially in anticipation of interest rate hikes. When that gets postponed and QE4 (or is it 5?) arrives it´ll probably soon be back in the dumps.

http://www.tradingeconomics.com/charts/united-states-currency.png?s=dxy&d1=19670101&d2=20151231

The United States is taking undue advantage of the status of USD as the world's reserve currency. Now it is time to end that. I don't know whether CNY will be any better than the USD or not. But for sure, it can't be worse than the US Dollar. And we need multiple reserve currencies instead of a single one. Other important currencies such as JPY, RUR, EUR, CHF, AUD, INR, UKP, CAD.etc should be given the same status as the USD, and the international trade should be conducted in them.

You got be kidding me.
We even don't believe CNY by ourself. Of course CNY is worse than US dollar. Why the Investment Bank use US dollar, because no one will accept CNY.
Do you know the mechanism to issue CNY?
Of course, you don't. I don't know too because it's the top-secret of the government.
At least, the mechanism to issue US dollar is transparent.
How can you trust a currency when you don't know the mechanism to issue it?

Times are changing my friend. The Chinese government have made it clear that they want the CNY to replace the USD as the global reserve currency. And already they have received the support from a large number of other powerful nations for this initiative. For example, Russia is offloading its US Treasury Bonds, and conducting its trade with China in CNY.

http://en.wikipedia.org/wiki/Internationalization_of_the_renminbi

Another joke, they want to doesn't mean they can do, right?
CNY even can't compare euro and Japanese yuan. Do you think US dollar was replaced by euro or Japanese yuan.
Sure, you know,they are not .
Russian, do they really want CNY, sure  they didn't, they really want is US dollar.
It's never changed.
I can tell you, CNY is one of the most inflation money in the world.
the exchange with US dollar can be keep stable because CNY is not a free exchange rate money .
Who accept CNY is a fool .

Not gonna happen. =)

Maybe Russia and brazil but china hates india.

I think a good analogy is with CNBC, Bloomberg and Fox News Business Channel. The majority of people that watch those business only channels are likely in line with Fox politically. However, when their money is on the line, they will throw ideologies out the window and watch the channel that actually gives them the most professional outlook.

No "Big Boy" nation is going to give up dollars.

The Sino-Indian relations have seen quite a lot of improvement in the last one year time, ever since Narendra Modi was elected as the Prime Minister of India. The Chinese seems to have realized that they have enough enemies among their neighbors, and may be it is time to woo at least some of them back to their fold. Good relations between the two nations can benefit both the sides.

If you believe Chinese can be friend with other countries, you are a fool.
China is a dictator country, they only can buy friends, but never could make a real friends.
You can't be friends with some one if you are don't share the same values.

You are really naive, my friends.
China can't keep away from Euro. We Chinese government do business don't for economic benefits, but for political interests.
After Venezuela debt default about $20 billion dollars of China, but we Chinese government continue loan them about $50  billion dollars, for what?
Of course we Chinese will lose some money, but we could keep a dictator government of Venezuela.
That the Chinese government want.

Half of the world nations are under dictatorships, including the United States. Does that mean we should stop doing business with all of them? And I disagree with your argument that "You can't be friends with some one if you are don't share the same values". Take Japan and the USA for example. There is hardly anything similar between these two nations. Still, they are good friends.

United States is a dictator country? This is the funnest joke i ever heard.
You have no idea to live a real dictator country which means you can speak freedom.
So who is the dictator of USA? Obama?
I heard lots of people can criticize Obama, every american people can criticize Obama freely.
But if you are a Chinese, you criticize the president of China, or the Party of China, I can ensure you, you will be got in jail.
That's one of the different.
Who tell you Japan and the USA has no common thing?
Do you even know the Shinzo Abe's Speech to Congress of USA recently?
Forget that, you really know nothing, I realize argue with you is really makes no sense.

For me it is not a joke. The United States is a country where individual privacy has no place. The government wiretaps every one, and all the phonecalls, video-chats and emails are rcorded and screened. Even in places such as North Korea, this doesn't happen. In my opinion, the United States of America is even worse than North Korea.

Are you really stupid or something?
The normal North Korea people even don't have the right to use the internet.
You think your privacy is more important than their life?
Even your privacy was invasion, at least your life does not be threaten.
But for a normal North Korea people, their life was threaten by the government at any time.
One of example is a professor was executed because he has be found to watch a DVD TV series produced by
South Korea.
Their privacy for them is nonsense. Even their usual talking may be reported, which may lead them to be executed.

Normally I ignore retarded people who indulge in name calling. But I'll give you one more chance, as you seems to be a low-IQ individual.


Privacy is very important, at least for me. The fact that you doesn't consider privacy as an important factor, is irrelevant here. I don't want the government guys to hear whatever I speak on the phone, or check all my video-chat records. In my opinion, a country where privacy is not respected, is not a true democracy.

This words make you are an idiot. Not my words.
If you really think so, why don't move into North Korea?
Oh, waiting a minute, you just can't enter to North Korea.

Oh I see... You lack English comprehension skills as well. I said that the North Korea (or the DPRK as it is known) is better when compared to the United States. That doesn't mean that North Korea is an inhabitable place for people like me. I am currently residing in a progressive country, which respects people's privacy. Why should I move to any other country?

The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi

Submitted by Tyler Durden on 06/09/2015 11:25 -0400

Two topics we’ve deemed critically important to a thorough understanding of both global finance and the shifting geopolitical landscape are the death of the petrodollar and the idea of yuan hegemony.

Last November, in “How The Petrodollar Quietly Died And No One Noticed,” we said the following about the slow motion demise of the system that has served to perpetuate decades of dollar dominance:

Two years ago, in hushed tones at first, then ever louder, the financial world began discussing that which shall never be discussed in polite company - the end of the system that according to many has framed and facilitated the US Dollar's reserve currency status: the Petrodollar, or the world in which oil export countries would recycle the dollars they received in exchange for their oil exports, by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop.
 
The main thrust for this shift away from the USD, if primarily in the non-mainstream media, was that with Russia and China, as well as the rest of the BRIC nations, increasingly seeking to distance themselves from the US-led, "developed world" status quo spearheaded by the IMF, global trade would increasingly take place through bilateral arrangements which bypass the (Petro)dollar entirely. And sure enough, this has certainly been taking place, as first Russia and China, together with Iran, and ever more developing nations, have transacted among each other, bypassing the USD entirely, instead engaging in bilateral trade arrangements.
Falling crude prices served to accelerate the petrodollar’s demise and in 2014, OPEC nations drained liquidity from financial markets for the first time in nearly two decades:


By Goldman’s estimates, a new oil price “equilibrium” (i.e. a sustained downturn) could result in a net petrodollar drain of $24 billion per month on the way to nearly $900 billion in total by 2018. The implications, BofAML notes, are far reaching: "...the end of the Petrodollar recycling chain is said to impact everything from Russian geopolitics, to global capital market liquidity, to safe-haven demand for Treasurys, to social tensions in developing nations, to the Fed's exit strategy.”

Shifting to the idea of yuan hegemony, China is aggressively pushing its Silk Road Fund and Asian Infrastructure Investment Bank.

The $40 billion Silk Road Fund is backed by China’s FX reserves, the Export-Import Bank of China, and China Development Bank and seeks to increase ROIC for Chinese SOEs by investing in infrastructure projects across the developing world, while the $50 billion AIIB is funded by 57 founding member countries (the US and Japan have not joined) and will serve to upend traditionally dominant multilateral institutions which have failed to respond to the rising influence and economic clout of their EM membership. China will push for the yuan to play a prominent role in the settlement of AIIB transactions and may look to establish special reserves in both the AIIB and Silk Road fund to issue yuan-denominated loans.

Back in early November, SWIFT data showed that 15 new countries had joined a list of nations settling more than 10% of their trade deals with China in yuan. "This is a good sign for [yuan] adoption rates and internationalisation. In particular, Canada's [yuan] usage for payments, which has increased greatly over this period, is very interesting since we have not seen strong adoption of the [yuan] from North America to date,” Astrid Thorsen, Swift's head of business intelligence said.

Earlier that month, China and Russia indicated that going forward, more trade between the two countries would be settled in yuan. From Reuters, last November:

Russia and China intend to increase the amount of trade settled in the yuan, President Vladimir Putin said in remarks that would be welcomed by Chinese authorities who want the currency to be used more widely around the world.
 
Spurred on by their often testy relations with the United States, Russia and China have long advocated reducing the role of the dollar in international trade.
 
Curtailing the dollar's influence fits well with China's ambitions to increase the influence of the yuan and eventually turn it into a global reserve currency. With 32 percent of its $4 trillion foreign exchange reserves invested in U.S. government debt, China wants to curb investment risks in dollar.
 
The quest to limit the dollar’s dominance became more urgent for Moscow this year when U.S. and European governments imposed sanctions on Russia over its support for separatist rebels in Ukraine.
"As part of our cooperation with this country (China), we intend to use national currencies in mutual transactions.The initial deals for rouble and yuan are taking place. I want to note that we are ready to expand these opportunities in (our) energy resources trade," Putin said at the time, suggesting that going forward, Russia may look to settle sales of oil in yuan.

Sure enough, Gazprom has confirmed that since the beginning of the year, all oil sales to China have been settled in renminbi. From FT:

Russia’s third-largest oil producer, is now settling all of its crude sales to China in renminbi, in the most clear sign yet that western sanctions have driven an increase in the use of the Chinese currency by Russian companies.
 
Russian executives have talked up the possibility of a shift from the US dollar to renminbi as the Kremlin launched a “pivot to Asia” foreign policy partly in response to the western sanctions against Moscow over its intervention in Ukraine, but until now there has been little clarity over how much trade is being settled in the Chinese currency.
 
Gazprom Neft, the oil arm of state gas giant Gazprom, said on Friday that since the start of 2015 it had been selling in renminbi all of its oil for export down the East Siberia Pacific Ocean pipeline to China.
 
Russian companies’ crude exports were largely settled in dollars until the summer of last year, when the US and Europe imposed sanctions on the Russian energy sector over the Ukraine crisis...
 
Gazprom Neft responded more rapidly than most, with Alexander Dyukov, chief executive, announcing in April last year that the company had secured agreement from 95 per cent of its customers to settle transactions in euros rather than dollars, should the need to do so arise.
 
Mr Dyukov later said the company had started selling oil for export in roubles and renminbi, but he did not specify whether the sales were significant in scale.
 
According to Gazprom Neft’s first-quarter results issued last month, the East Siberian Pacific Ocean pipeline accounted for 37.2 per cent of the company’s crude oil exports of 1.6m tonnes in the three months to March 31.
With that, the "PetroYuan" has officially been born and while FT notes that "other Russian energy groups have been more reluctant to drop the dollar for settlement of oil sales," the fact that Russian producers are now openly considering a shift at the same time that officials in the US and Europe are openly discussing stepped up economic sanctions suggests renminbi settlements may become more commonplace going forward.

To understand why and to what extent this is significant in the current environment, consider the following from WSJ:

Officials of the Organization of the Petroleum Exporting Countries, which declined to cut oil production last year, reasoned that maintaining high production levels would protect market share in crucial importing nations.;
 
But Chinese customs data released Friday show that China’s crude imports from some big OPEC nations have plummeted, while imports from Russia surged 36% in 2014. Meanwhile, imports from Saudi Arabia fell 8% and those from Venezuela dropped 11%.

 
To summarize: Western economic sanctions on Russia have pushed domestic oil producers to settle crude exports to China in yuan just as Russian oil is rising as a percentage of total Chinese crude imports. Meanwhile, the collapse in crude prices led to the first net outflow of petrodollars from financial markets in 18 years, and if Goldman's projections prove correct, the net supply of petrodollars could fall by nearly $900 billion over the next three years. All of this comes as China is making a concerted push to settle loans from its newly-created infrastructure funds in renminbi.

Putting it all together, the PetroYuan represents the intersection of a dying petrodollar and an ascendant renminbi.

http://www.zerohedge.com/news/2015-06-09/petroyuan-born-gazprom-now-settling-all-crude-sales-china-renminbi

galdur

Just to remember, first design of 1 yuan banknote, circulated in the beginning of 1930s.

https://upload.wikimedia.org/wikipedia/commons/3/39/Chinese_Soviet_Republic.jpg

It seems unlikely that they expected such result of their actions. :)

Hmm, he looks somewhat Chinese in that drawing. Artistic licence I´m sure. That note is from the Chinese Soviet Republic of the 30´s when Chairman Mao was an up and coming man.

The World's Biggest Economies Are About to Feel the Impact of China's Slowdown
Commodity, reprocessing and developed country exporters should brace for the impact of weakening China demand this year

by Malcolm Scott Ailing Tan
June 23, 2015 — 4:00 PM GMT

Emerging markets and commodity suppliers have grappled with reduced demand from China as a property downturn weighed on the world's second-largest economy.
U.S., Japanese and German exporters did better, supplying capital goods like machines that China still demanded. That may soon change, according to a study of global exposure to China by UBS Group AG economists Donna Kwok, Wang Tao and Jennifer Zhong.
"As the multiyear Chinese property downshift continues to unfold beyond this year, we may see a longer-term decline in China's appetite for foreign industrial imports,'' the analysts wrote in a report June 22. "Commodity, reprocessing, and developed country exporters alike should brace themselves for the impact of weakening China demand this year, irrespective of whether U.S. or EU imports pick up.''
That's not good news for a world economy increasingly reliant on China. ... more

http://www.bloomberg.com/news/articles/2015-06-23/world-s-biggest-economies-to-feel-china-chill

With all the money they have,  they must have been told from an insider...

AIIB vital to meet Asia's funding needs: Indonesia FinMin

Sri Jegarajah   | See Kit Tang

Tuesday, 30 Jun 2015 | 7:15 PM ET
CNBC.com

Indonesia's Finance Minister has defended the structure of the new Asian Infrastructure Investment Bank (AIIB), saying that the China-backed institution would ensure projects it funded were high quality and delivered with appropriate governance.

Speaking to CNBC, Bambang Brodjonegoro said the AIIB was adhering to the best practices as followed at its international counterparts such as the World Bank and the Asian Development Bank.

"Indonesia has been involved in the discussion regarding the establishment and governance of AIIB. So far, we are satisfied because experiences from the World Bank and ADB have been used fully in the discussion. In fact, we're trying to improve what have been doing well, both in the World Bank and ADB, in order to make the AIIB better," Brodjonegoro told CNBC on Tuesday.

The remarks come after 50 founding members of the AIIB on Monday signed the articles of agreement outlining how the new international bank would be run. Indonesia is one of the countries who took part in the signing ceremony in Beijing, alongside the U.K, Germany, Australia and South Korea.

The $50 billion AIIB, which aims to support infrastructure development in lower- and middle-income Asian countries, has been viewed by some as a rival to the Western-dominated World Bank and ADB. The U.S. and Japan have notably declined to join the China-led economic outreach project, citing concerns over debt sustainability, environmental protection and governance.

There are also worries that Beijing could use the AIIB to push its own geopolitical and economic interests as a rising power, considering that voting rights are determined by gross domestic product (GDP) and capital contribution, which will give the world's second-largest economy an outsized say in the multilateral financial institution.

According to the Articles of Agreement, "regional countries" such as Asia and the Middle East region will shoulder 75 percent of the total capital base while "non-regional countries" such as European nations will contribute the remaining 25 percent.

Reuters reported that China will hold a 30.34 percent stake in the AIIB, rendering it the largest shareholder, and that Beijing will have 26 percent of the voting rights. India is the second-biggest shareholder with an 8.4 percent stake, while Russia is third with a 6.5 percent stake. ... more

http://www.cnbc.com/id/102797670