China’s Plan to Quit Dollar Infuriates US by Finian Cunningham

by Finian Cunningham
Writer, Dandelion Salad
East Africa
Crossposted from PressTV
December 1, 2013

Capitalism Kills

Image by Dandelion Salad via Flickr

The escalation of military tensions between Washington and Beijing in the East China Sea is superficially over China’s unilateral declaration of an air defense zone. But the real reason for Washington’s ire is the recent Chinese announcement that it is planning to reduce its holdings of the US dollar.

That move to offload some of its 3.5 trillion in US dollar reserves combined with China’s increasing global trade in oil based on national currencies presents a mortal threat to the American petrodollar and the entire American economy.

This threat to US viability – already teetering on bankruptcy, record debt and social meltdown – would explain why Washington has responded with such belligerence to China setting up an Air Defense Identification Zone (ADIZ) last week extending some 400 miles from its coast into the East China Sea.

Beijing said the zone was aimed at halting intrusive military maneuvers by US spy planes over its territory. The US has been conducting military flights over Chinese territory for decades without giving Beijing the slightest notification.

Back in April 2001, a Chinese fighter pilot was killed when his aircraft collided with a US spy plane. The American crew survived, but the incident sparked a diplomatic furor, with Beijing saying that it illustrated Washington’s unlawful and systematic violation of Chinese sovereignty.

Within days of China’s announcement of its new ADIZ last week, the US sent two B52 bombers into the air space without giving the notification of flight paths required by Beijing.

American allies Japan and South Korea also sent military aircraft in defiance of China. Washington dismissed the Chinese declared zone and asserted that the area was international air space.

A second intrusion of China’s claimed air territory involved US surveillance planes and up to 10 Japanese American-made F-15 fighter jets. On that occasion, Beijing has responded more forcefully by scrambling SU-30 and J-10 warplanes, which tailed the offending foreign aircraft.

Many analysts see the latest tensions as part of the ongoing dispute between China and Japan over the islands known, respectively, as the Diaoyu and Senkaku, located in the East China Sea. Both countries claim ownership. The islands are uninhabited but the surrounding sea is a rich fishing ground and the seabed is believed to contain huge reserves of oil and gas.

By claiming the skies over the islands, China appears to be adding to its territorial rights to the contested islands.

In a provocative warning to Beijing, American defense secretary Chuck Hagel this week reiterated that the decades-old US-Japan military pact covers any infringement by China of Japan’s claim on the Diaoyu/Senkaku Islands.

It is hard to justify Washington and Tokyo’s stance on the issue. The islands are much nearer to China’s mainland (250 miles) compared with Japan’s (600 miles). China claims that the islands were part of its territory for centuries until Japan annexed them in 1895 during its imperialist expansion, which eventually led to an all-out invasion and war of aggression on China.

Also, as Beijing points out, the US and its postwar Japanese ally both have declared their own air defense zones. It is indeed inconceivable that Chinese spy planes and bombers could encroach unannounced on the US West Coast without the Pentagon ordering fierce retaliation.

Furthermore, maps show that the American-backed air defense zone extending from Japan’s southern territory is way beyond any reasonable halfway limit between China and Japan. This American-backed arbitrary imposition on Chinese territorial sovereignty is thus seen as an arrogant convention, set up and maintained by Washington for decades.

The US and its controlled news media are absurdly presenting Beijing’s newly declared air defense zone as China “flexing its muscles and stoking tensions.” And Washington is claiming that it is nobly defending its Japanese and South Korea allies from Chinese expansionism.

However, it is the background move by China to ditch the US dollar that is most likely the real cause for Washington’s militarism towards Beijing. The apparent row over the air and sea territory, which China has sound rights to, is but the pretext for the US to mobilize its military and in effect threaten China with aggression.

In recent years, China has been incrementally moving away from US financial hegemony. This hegemony is predicated on the US dollar being the world reserve currency and, by convention, the standard means of payment for international trade and in particular trade in oil. That arrangement is obsolete given the bankrupt state of the US economy. But it allows the US to continue bingeing on credit.

China – the second biggest economy in the world and a top importer of oil – has or is seeking oil trading arrangements with its major suppliers, including Russia, Saudi Arabia, Iran and Venezuela, which will involve the exchange of national currencies. That development presents a grave threat to the petrodollar and its global reserve status.

The latest move by Beijing on November 20 giving notice that it intends to shift its risky foreign exchange holdings of US Treasury notes for a mixture of other currencies is a harbinger that the American economy’s days are numbered, as Paul Craig Roberts noted last week.

This is of course China’s lawful right to do so, as are its territorial claims. But, in the imperialist, megalomaniac mindset of Washington, the “threat” to the US economy and indebted way of life is perceived as a tacit act of war. That is why Washington is reacting so furiously and desperately to China’s newly declared air corridor. It is a pretext for the US to clench an iron fist.


Finian Cunningham, is a columnist at Press TV and a Writer on Dandelion Salad. He can be reached at cunninghamfinian@gmail.com.

8 thoughts on “China’s Plan to Quit Dollar Infuriates US by Finian Cunningham

  1. Pingback: Gerald Celente: 2014 Will Be A Year of Extremes | Dandelion Salad

  2. I wish I could be honestly optimistic about this enthusiastic trend toward Pacific ascendancy, but I’m not sure if it is either realistic or desirable.

    The core issue for me is catastrophic habitat loss, exponential decline of biodiversity and wanton destruction of irreplaceable ecosystems; so this interminable wrangling over territory and national interests just pales into insignificance in comparison to the urgent need to address this titanic crisis.

    I think peacevisionary is completely correct, but I believe we more than innovation, we need a radical reconfiguration of values and goals.

    It seems that everywhere humankind has “flourished” everything else diminishes.

    Do we intend to just persist in this perverse and fixated sense of ecocidal procrastination, or do we face the real facts of life, rise to the occasion and acknowledge the karmic burden we have inherited, passed on from one generation to the next? China and the Chinese are no different, their land was once an abundant paradise.

    I fear the American way of annihilation has tipped us over the ecological precipice, and we are barely clinging by our fingertips now, as we struggle to summon the spiritual strength to regain a foothold, and reclaim that crucial vantage point we have almost certainly foregone.

  3. The elite are chess players and all us peasants are mere pawns in their “Great Game.” As former U.S. att’y gen’l Ramsey Clark said, “There is only one thing the rich want. And that is every thing.” Two steps forward towards encircling Russia & China; one back. The road to Moscow runs through Tehran via Damascus, but temporarily that road is blocked, and China sees our impotence there as a signal they can push back against U.S. hegemony over the Pacific Ocean and all lands touching it. China is on a buying spree however, using its vast reserves of US $, which, if oil can be purchased using gold-back Chinese currency instead of the essentially counterfeit U.S. variety, will soon be as valuable as deutschmarks were in the Weimar republic. Americans will soon be pushing wheelbarrows of $ to the grocery store buy a loaf of bread, too. Those who fail to learn the lessons of history are doomed to repeat them.

  4. Wait a minute. I fail to see how a massive territorial grab by China might be justified by past and continuing American hubris and arrogance. The territorial dispute arises over the failure of the Chinese to engage in the post WWII treaty process, and thus failed to assert whatever rights they may have had to the islands. Now they are trying to make up for that failure, and the Japanese are not willing to agree. There are International forums for the parties to settle their differences, but the Chinese apparently believe they will be more successful this way.

  5. I can so clearly see that the correct and most obvious path to peaceful relations with China and prosperity for both countries (and, incidentally, the rest of the world as well) takes a very different trajectory than that which Finian Cunningham has so accurately described as the current state of affairs.

    It is one built of trust, of goodwill, yes, even friendship and love between China and the U.S…. of business partnership crafted on the principles of benefiting the most people in both countries. And it is very feasible.

    What’s happening now is so retrogressive… I want to shake everyone and get them to see what a splendid future we can have if we could just let go of these old ideas of how things should be.

    Adapt, you people, to changing conditions. Americans need to accept that we have been on a wildly extravagant spending spree with our military might and that unchecked Wall Street greed and excesses have jeopardized our economy. Why should China go on buying steadily devaluing U.S. dollars that erodes their financial assets, while it makes possible even greater military expenditure that can be used against them?

    I challenge people in the U.S. to be flexible, creative, daring and yes, entrepreneurial… everything that Americans are fully capable of, and that the Chinese will meet us more than halfway on, and we can create a better way of doing business that works better than any model that we’ve had before… But this military mindset, this old thinking, this blinkered way of looking at the world, it threatens all of us.

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