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NEED FOR A NEW ERA OF STRATEGIC TIES WITH CHINA

Yousuf Nazar

Dawn, October 15, 2008

PRESIDENT Zardari is visiting China at a time when the global economic power balance is undergoing a historic shift.

“End of US era — now China calls the tune” declares a headline of The Sydney Morning Herald, Australia’s oldest and most respected newspaper. “Can Chinese cash save the world’s banks?” is a lead story in Time. “Is this the end of the American era?” is the title of an op-ed written by noted historian Paul Kennedy in The Sunday Times, UK.

Billionaire investor George Soros has predicted the financial crisis would mean the end of a US-led market system that has dominated the global economy through debt and deregulation since the 1980s. “This is now over. The game is out. It does mean a very serious adjustment for America,” Soros said in a CNN interview.

China should lead rescue efforts for the US financial crisis, Mexican tycoon Carlos Sim, one of the world’s richest men, told the press last week. “China is now the most important country to help responsibly in this crisis,” he said.

“China owns us, lock, stock and barrel, so it’s more important than ever that the US monetary authorities coordinate their monetary policies with China,” Chris Rupkey, New York-based chief financial economist at Bank of Tokyo-Mitsubishi, Japan’s largest, told Bloomberg.

The headlines and report convey a dawning realisation in western capitals that the biggest casualty of the western financial meltdown might be the US dominance of the global financial system, the linchpin of its global power. And that it is China, with over $1.8 trillion in foreign exchange reserves growing at a pace of $40bn a month, which holds the key to the financing of the astronomical budget deficit that the US will have to run to finance the bailout of its financial institutions.

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