Beijing hints at bond attack on Japan

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posted on Sep, 19 2012 @ 12:29 PM
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A senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees, unless Tokyo reverses its decision to nationalise the disputed Senkaku/Diaoyu islands in the East China Sea.

A member of the Chinese Commerce Ministry, writing in the Communist Party newspaper China Daily has called for China to 'impose sanctions' on Japan as Japan's biggest creditor, presumably by dumping its $230bn of bonds on the market, while the HK Economic Journal reported that China plans to cut off China's supply of rare earth metals, essential for virtually all electronics manufactured by Japan.


Jin Baisong from the Chinese Academy of International Trade – a branch of the commerce ministry – said China should use its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.

Writing in the Communist Party newspaper China Daily, Mr Jin called on China to invoke the “security exception” rule under the World Trade Organisation to punish Japan, rejecting arguments that a trade war between the two Pacific giants would be mutually destructive.

Separately, the Hong Kong Economic Journal reported that China is drawing up plans to cut off Japan’s supplies of rare earth metals needed for hi-tech industry.

The Telegraph


It should be noted that 'rare' earth metals are not actually terribly rare. To set up a mine however costs around $500 million, with China having previously put other rare earth metals mines around the world out of business by under cutting them.

Despite the threat, China's holding of Japanese debt making up only just over 2% of Japanese government borrowing (foreign ownership of Japanese government borrowing amounts to only 8.3% ($948.5bn) of the total Link) making China's threat either highly symbolic or highly misinformed.

Nonetheless, the mere threat to dump the bonds and cut off Japan's supply of rare earth metals is an open declaration of economic war. It should also be noted that China's moves to encourage other countries to not trade in US dollars has also constituted an open declaration of economic war.

It could be observed that China is making a bold move by effectively declaring economic war on the largest and third largest economies in the world. Its threats to dump Japanese bonds and cut off the supply of rare earth metals will also presumably serve as a warning to foreign manufacturers that China is not a safe place to either source rare earth metals or to manufacture in.

It could be argued that China is over playing its hand, with long term negative economic consequences.




posted on Sep, 19 2012 @ 12:34 PM
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poor japan



posted on Sep, 19 2012 @ 12:35 PM
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A declaration of war? No.

This is China's way of saying "don't bite the hand that feeds you".

China wants the islands and will play every card they have, within reason, to get it. And rightfully so.

China is quickly becoming the next superpower of the world and it has always been a "right of passage" to flex your muscles to get what you want. America has and still does it, but are much less effective than we used to be.



posted on Sep, 19 2012 @ 12:39 PM
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China is taking this too far for some small islands. I think we would be correct to assume there was something else we weren't being told. Japan rightfully owns the islands, if my information is correct, weren't they sold to Japan by a Japanese family? If that is the case, the Chinese should haul their asses back to their markets and leave the Japanese alone.



posted on Sep, 19 2012 @ 12:52 PM
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Originally posted by FidelityMusic
China is taking this too far for some small islands. I think we would be correct to assume there was something else we weren't being told.


According to a Chinese person I spoke to recently, revolution is simmering just below the surface in China. There is no love for the Communist party. Quite the opposite in fact.

Consequently, nationalism directed against Japan is a way to introduce an external enemy in an attempt to unite the Chinese people behind the Communist party.

Be aware that while the Chinese are cunning and long term planners, they tend to under-estimate their enemy and over-estimate themselves. Hubris if you will.

edit on 19-9-2012 by ollncasino because: (no reason given)



posted on Sep, 19 2012 @ 12:55 PM
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Headlines on this issue for some reason always make me think it would make a great adult film theme!



How many of you, after reading that, just thought the same thing ?!?



posted on Sep, 19 2012 @ 12:59 PM
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reply to post by ollncasino
 


That would make a lot of sense if that were true. We'll just have to wait and see further. By the looks of what's occurring now you might have hit the real issue spot on.



posted on Sep, 20 2012 @ 08:07 AM
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Originally posted by ollncasino
According to a Chinese person I spoke to recently, revolution is simmering just below the surface in China. There is no love for the Communist party. Quite the opposite in fact.

Consequently, nationalism directed against Japan is a way to introduce an external enemy in an attempt to unite the Chinese people behind the Communist party.


Interesting... very interesting. The fact there is no love for the Communist party has been obvious for a long while now. But if there is revolution simmering just below the surface, the Communist party using nationalism to take the heat off themselves makes a lot of sense.

Of course, that wouldn't be very flattering towards the Chinese people in the sense that it would indicate they are generally, fairly easily manipulated. But then I would counter myself by pointing out that there is a lot of animosity between the cultures... however, I'm very surprised at just how intense the Chinese public's response has been, it's a little difficult to mentally fathom for me.



posted on Sep, 20 2012 @ 08:27 AM
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Originally posted by FidelityMusic
China is taking this too far for some small islands. I think we would be correct to assume there was something else we weren't being told. Japan rightfully owns the islands, if my information is correct, weren't they sold to Japan by a Japanese family? If that is the case, the Chinese should haul their asses back to their markets and leave the Japanese alone.


Isn't there large oil reserves under the islands? Or am i thinking of a totally set of disputed islands that China claims? (distinct possibility!).

Either way, this is exactly what i thought China would do and said as much in the other thread where there was a bit of "warmongering" going on. China has far too much to lose these days for a proper war. People (particularly those in high office) have got used to the good life. Why endanger that? Rare Earth metals is a much simpler route to go down against a country that has so much economic emphasis on high tech electronics, etc. Cut off supply, get what you want.





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