US keeps funding its main foe PRC

He also served as the reserve G2 (intelligence) and G5 (plans and policy) at Marine Forces Pacific and was the US Marine Attaché, US Embassy Tokyo. He is also a former US Foreign Service Officer specializing in insurgency, counter-insurgency, and commercial matters.

Additionally, Col Newsham is an attorney with experience in international trade and public international law and was, for over a decade, an executive director at Morgan Stanley Japan. He spent 2019 in Taiwan as a MOFA-sponsored Taiwan Fellow researching options for improving Taiwan’s defense and is currently Senior Research Fellow for the Japan Forum for Strategic Studies in Tokyo and the Center for Security Policy in Washington, D.C. At the recent Indian Ministry of Defence, Department of Defence Procurement, GCTC conference on Defence and Security, Col Newsham spoke about China’s economic warfare.  Here he discusses it further.

Q: Is China’s currency a vulnerability for Beijing?

A: We hear about the Chinese economic juggernaut, but you rarely hear about one main, if not THE main vulnerability. The Chinese currency is not freely convertible. And nobody much wants it.

Meanwhile, for all the things the CCP does overseas or wants to buy from overseas, it has to pay in “convertible currency”—or in other words, money that somebody wants. So, you see the problem for Beijing? Choke off that supply of foreign exchange and the Chinese economy (and the CCP) starts to look a lot less successful than is claimed.

But currently, that’s not a problem for the CCP. For the last few decades ,Americans, Europeans, and Japanese have been pouring foreign exchange into the PRC—maybe a few hundred billion worth in US$ a year? So, they’ve been funding the country that seeks to dominate—if not destroy —them.

Currency remains a potentially fatal weakness for the PRC, however. And it’s  really the only lever the Americans have left—if someday they are smart enough to use it. Will that happen? I doubt it. The US has practically cornered the market on Quislings, and Japan and the Europeans aren’t far behind.

Q: What is the importance of “decoupling from China” and what are the impediments?

A: Why would any sane person invest in a country where your investment and your business are entirely at the whim of a ruthless capricious dictatorship? You cannot have a contract predictably enforced in China, and the law is exactly what Xi Jinping and the Chinese Communist Party say it is. And don’t forget that the CCP objective is to replace foreign companies with Chinese ones. In other words, put the foreigners out of business as soon as possible.

Westerners (and others) seem to go insane at the prospect of selling one of something to every person in China. You’d think some smart lawyers would make a bundle bringing shareholder lawsuits.

The impediments to decoupling? No greater than when US business decoupled millions of Americans from their jobs and lives over the last 30 years. When the elites/Wall Street says we can’t decouple from China—well they sure as hell decoupled from America, from places like Youngstown, Ohio, Pittsburgh, Pennsylvania and a thousand other places.

They gutted towns and neighbourhoods the same as if they’d walked down the streets with a flamethrower and tossed C-4 into every building—and then left a bundle of heroin on every corner for the survivors.

These people did it with such ease and heartlessness. And now are saying they can’t decouple from China? That only makes sense to someone with an Ivy League education. The excuses sound like either pure laziness or the excuses for staying in an abusive relationship.

You don’t have to be all that old to remember when the China market didn’t matter—and the world was still a decent and prosperous enough place. It can be once again—without China.

The billions we pour into China along with manufacturing and technology help the Chinese Communist Party paper over the huge problems they have. And how can we expect to defeat China (or not be defeated by China) if we keep funding them?

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