Song Hongbing believes the West is using its currency policy to prevent the East’s rise. His best-selling Chinese-language book, “Currency Wars”, is being read by senior officials across China. They are dipping into such chapters as “Financial Nuclear Bomb: Target Tokyo” and reading how the Plaza Accords, signed in 1985 between Japan and four Western nations, including the United States, contributed to the collapse in the Japanese economy.
Critics will argue that Song is only appealing to conspiracy theorists. Maybe so. But the number of people who believe in Song’s views is often larger then we might think.
I was reminded of this while watching Al Jazeera. Who should appear? That’s right. Song Hongbing. He was being interviewed by Ahmed Mansour the anchor of No Limits. (The program is Al Jazeera’s version of the BBC’s HardTalk). Here was a Chinese author speaking on an Arabic-language TV program to an audience in the Middle East about how the West’s currency policy has been used to suppress the East’s economies.
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I was chatting with an Egyptian friend last week, a twenty-year resident of Hong Kong, and was struck by a remark she made: “I had lunch at the Shangri-La hotel last weekend, and the waiter showed me which dishes had pork and which dishes didn’t. It’s the first time that’s happened in twenty-years”.
The story is an example of Hong Kong’s free-market at its best. My friend wears a Hijab and is easily identified as a Muslim. In the past, the waiter might have overlooked this. But not anymore. Why? Because Muslim tourists are Hong Kong’s latest big spenders.
In fact, it’s now common to hear the Arab Gulf dialects spoken in Hong Kong’s air-conditioned malls. The number of Saudi Arabian tourists, for instance, has soared from a low 5,000 in 2000 to 19,000 in 2007. (The numbers have since dipped modestly as a result of the economic crisis).
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It hasn’t been an easy year for the Silk Road’s largest investors. Their big-ticket purchases once caught the media headlines. But a number of their acquisitions are now struggling.
I think China’s Wang Qishan, a Vice-Premier and former Beijing-mayor, best sums up the challenges. Wang was speaking to Xiang Wenbo, president of Sany, a machinery-maker based in the central province of Hunan. Xiang had pointed out that the financial crisis gave Chinese firms a chance to acquire foreign companies.
“You are someone who is worthy to have come from the same soil as Chairman Mao”, replied Wang. But “have you analyzed the cultural differences between the two sides?. Do you understand the labor relations?” “If the engineer of your partner resigns don’t tell me that you would send people over from Changsha and get the entire company to start speaking Hunanese.” Ouch!
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Land is the new oil, just ask Saudi Arabia.
O.K., Saudi Arabia has plenty of land, but it isn’t easy growing wheat and rice on largely rocky desert. So, the country has to import a large share of the food it consumes, and that’s a problem when the price of food soars.
Saudi Arabia has responded by buying wheat fields and banana plantations in places like Sudan, Pakistan, and Indonesia, and using it to grow food for dinner tables in Riyadh, Jeddah, and Dhahran. In short, it’s using its oil exports to buy food imports.
It isn’t alone. In fact, the Silk Road countries rank among the world’s largest buyers of foreign farmland.
A recent report by Grain, a non-profit organization, highlights this point: the report cites 13 countries as large buyers of foreign farmland―12 of the 13 are Silk Road countries, including, China, Egypt, Jordan, Kuwait, Qatar, and Saudi Arabia.
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Chas Freeman, President Obama’s choice for Chair of the National Intelligence Council, withdrew his candidacy last week.
I admit to taking a personal interest in this as Freeman has written an endorsement for my book. But, most importantly, he is a smart and engaging individual. He was also President Nixon’s translator in Beijing and a former US Ambassador to Saudi Arabia. In short, he has a remarkable resume for today’s challenges.
I was reminded of this while in Beijing last month. I heard that Freeman had only recently passed through the city. A friend of mine, an academic at Beijing University, was left deeply impressed: “Freeman can even tell a good joke in Chinese”, he said. This might seem like a small thing. But it’s not. It’s a rare skill.
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Egypt, welcome to the club. It used to be only developed economies that suffered from collapsing auto sales. So, I was surprised to learn the other day that Egypt’s annual car sales have plummeted from 250,000 to 85,000 in the past six months. I imagine there are thousands of unsold cars parked in lots outside of Cairo just like there are in Detroit.
But don’t worry, Egypt, you’re not the only new member: car sales have also fallen in China and India. In fact, you can probably find mini-Detroits all across the Silk Road as unsold cars pile up.
The middle-class dream has turned sour. How so? The rise of the Silk Road’s middle-class was one of the region’s big stories of the past decade. And, importantly, the middle-class was a big buyer of cars, whether it was China’s Volkswagen Santana or India’s Maruti 800. In fact, more cars were sold in China, Egypt, and India last year than in the United States.
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It’s two weeks since Valentine’s Day. But I’ve just read Egyptian cleric Hazem Shuman’s criticism of the holiday. And I think it deserves repeating.
“I have come tonight to warn all boys and girls about an extremely dangerous virus, which is about to attack the hearts of the nation’s youth…we must confront this Valentine virus!”, he says. Shuman has an important point to make. It’s just not the point he intended.
The export of Western culture to the Middle East has long been a potential source of social friction: this is well known. Less well known, however, is that China has a role to play.
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“Nationalism” is on the rise and it is bad news for the Silk Road.
I’m reminded of the risks by events in Syria. I recall Syrian friends praising China a few years ago―the arrival of “Made-in-China” goods to the streets of Damascus meant the middle-class could afford to buy the type of high-end consumer goods, such as digital cameras, which were once unaffordable.
But the tone has since changed. Mohammed Sharabti, the head of the Aleppo Chamber of Industry, alleged earlier this year that Chinese clothing imports have flooded the market. A number of textile manufacturers in Aleppo, the country’s second largest city, have closed. (You can’t afford to buy “Made-in-China goods if you don’t have a job). The Syrian government has responded by imposing tariffs on Chinese textile imports.
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