November 27, 2007 (LPAC)--Two Chinese economists warned about the effects of the dollar collapse in creating a hyperinflationary bubble in China's economy, in an editorial in the China Daily published yesterday. The editorial appeared on the same day that China Daily, People's Daily, and Xinhua News Service, prominently reported on economist Lyndon LaRouche's solution to the dollar crash; a New Bretton Woods monetary system initiative between China and the United States with Russia and India participating.
The dollar is down 10% relative to China's renminbi since the RMB was de-pegged in July 2005, but the drop is accelerating. The China International Capital Corporation (CICC), in a new report, expects the dollar to keep on falling, at least until mid-2009.
In the editorial, economists Guo Tianyong of the Central University of Finance and Economics, and Shi Jianhuai of Beijing University, warned that, as the dollar falls, more speculative capital will move into China in search of profits, increasing inflation. At the same time, prices of key commodities such as oil, grain and raw materials are rising for China, stoking what Guo called "imported inflation." Measures such as increasing internal interest rates are useless against these "international factors," he said. Shi Jianhuai warned that hot money just keeps getting into China, despite authorities' efforts to control the speculative funds.
The difficulties arising in China, from speculative capitol, as happened to the U.S. industrial and agricultural sectors, are the cause of globalization, as opposed to the American System. This topic was discussed recently, at a Global Summit, by Lyndon LaRouche.
"So therefore, we are bringing together now, hopefully, the leading nations of Asia, with some countries of Europe and beyond, to realize that their survival and benefit for the future depends upon cooperation, through economic development and through trade. And the key is the development of these new kinds of systems, which will link the entire world: You will be able be to go by train, or by magnetic levitation, to any point in Europe, the Americas, and Africa by rail systems, high-speed rail systems. This is especially important for high-value products, for freight. You can move cheap products by sea, but its slow. But since the products are cheap and the bulk is large, you can move by sea. High-grade products, high-technology products, sophisticated products, must move faster. They must move by land-area: They move by high-speed freight systems, and people systems, and that's the kind of world we're entering.
"So, if we are saying, those of us in all the world are going to unite around this kind of vision for the future, we can not have globalization. Because with globalization, you do not develop cultures. And the culture of people is old, and the roots of ideas in the culture are deeply rooted, in the history of the language, and in the history of the people. Therefore, national cultures are crucial. But the national cultures need not be divided by the cultures, they can be united by cooperation and projects of development."
