Russia and China: A Natural Alliance

26.02.09-Matthew Raphael Johnson

Today’s headlines are abuzz over the “threats” the U.S. is making to China over its currency. The issue is simple: American capitalists are angry that the Chinese government is pegging the Yuan at an artificially low rate via-a-vis the dollar, giving, so it is said, an indirect subsidy to Chinese exporters. Making it more simple, it is a move by the Chinese government that will maintain a cheap Yuan against the dollar, making Chinese imports cheaper.

Notice what I said: The U.S. capitalists said x, the Chinese government said y.
That’s no accident. In China, the state controls nearly all investment, and it is the state apparat that controls the value of the currency. Therefore, for anyone with any rudimentary political economy knowledge, what the U.S. capitalists are angry about is that the Yuan is being pegged at a rate that is good for China. In the U.S., a secretive private corporation called the “Federal Reserve” dictates U.S. interest rates for their good. This is the issue at hand.

Let us say that the Chinese permitted the Yuan to “float,” which means for the Chinese currency to permit “the market” to dictate currency relationships. If this were to happen, immediately, European, Japanese and American finance capital would quickly flock to buy up Yuans to manipulate the Chinese economy.

Now the issue should be clearer. Of course, the phrase “the market” is a mystification: this phrase refers to a handful of major currency profiteers such as George Soros and Warren Buffet, who, along with a few others, have the power to control currency values worldwide.

The amusing aspect of this is that the U.S. believes itself to be in a position to “threaten” the Chinese. American politicians, by and large, are a dull bunch, with often only a smattering of knowledge in these very complex fields,. However, they need to be informed that the Chinese government owns a rather uncomfortable share of American debt.

On the other hand, China desperately needs the U.S. to continue to finance its economic boom. But even that has its down side in that China’s rise to power has been the result of the American consumer permitting his level of debt to rise far in excess of his net worth. In the U.S., the middle class, for the first time in its history, has reached a level of debt roughly 115% percent of their collective worth. It is growing, and this figure is only measuring credit card debt. Without the cheap Chinese goods at the Walmart stores, not to mention rising oil prices, the U.S. economy would be set into a tailspin.
What does this have to do with Russia?

Firstly, it should be clear that, in order to maintain Russia’s economic independence, the rouble should be made non-convertible.

This would protect it from predatory strikes such as the one George Soros launched against Thailand in 1996, nearly destroying all the Asian economies–except China’s.

Secondly, an alliance between the Chinese and the Russians stands in stark relief to the economic rapists of the New World Order.

They could be successfully challenged through an alliance of this kind. China needs oil and natural gas desperately. She also needs Russian military know how, equipment and spare parts. Russia’s impressive scientific establishment is also necessary for further Chinese growth and innovation.

Thirdly, the economic/military alliance between these two countries would serve as a major brake against American expansionism and military adventurism.

Russia and China need each other. Both countries are doing very well economically with a strongly state-centered investment policy; this model can serve as a mode of development for third world countries, many of which still nurse deep scars of exploitation and debt thought direct foreign investment.

Lastly, an alliance between the two countries will quickly silence the endless stream of hypocritical criticism from Washington. The two would make a superpower that could easily take on an overextended and arrogant U.S.
Keep in mind, that despite the overbearing rhetoric about being the “world’s only superpower,” the U.S. has not taken on a significant military power since Korea.
In Iraq, the U.S. has yet to face the Russian-trained Republic Guard, who, according to my sources, have moved to the extreme north of the country, waiting for the U.S. to extend its forces hundreds of miles beyond their supply depot at Kuwait City.

An exhausted, overextended and morale-less U.S. infantry will be easy pickins for a rested, elite trained and well armed Republican Guard.

It’s far from certain whether the war in Iraq has even begun as yet.
America’s superpower status is being challenged globally. Massive debt, unpopular war, imperial overstretch, vicious trade competition, the third-worldization of the southern U.S., outsourcing and an increasingly alienated population are just a few of the ills that show major gaps in America’s armor that challengers can exploit. A Russia/China alliance on top of this, with India as a wild card, would put an end to the delusions of the American neocons and capitalist bosses.

There is little doubt that this has been on the mind of Putin since he took office in 2000. Regular meetings between Russian an Chinese officials at all levels are a matter of course. American threats, and the saber rattling of the neocons are forcing the two giants together. Increasing polarization of Russia/China and the west can only be in the interest of Russia and her nationalist movements and parties. Many in the Russian “Eurasian movement” have long looked to China to begin building an alternative model of development that stresses solidarity, national pride and local community over profits and debt.
An infrastructure is already present. Self-interest is already at work. Soon, the endlessly pompous U.S. will see herself challenged significantly abroad as her internal rot worsens. The Islamic world is already permanently embittered against the U.S., and elite sources are predicting oil prices to top $150 a barrel.

Many years ago, I predicted that Russia and China will attempt to monopolize global energy resources, keeping them out of the hands of Exxon, Mobil and Texaco, and thus ensuring the American domination of the globe.

As only a few people are saying, the wars in the Middle East, though undoubtedly connected with the Regime’s love of Zionism, more importantly have as its basis the salvaging of the terminal American economy. In other words, the control over Central Asian and Middle Eastern oil is the last gasp of American imperialism; the final, disparate attempt to shore up the American economy, based almost entirely on perceptions and debt.

Why should any of us Slavophiles be upset? The pompous, arrogant and ultimately cowardly uses of U.S. aggression are built into the very lifeblood of American capitalism. It is to world politics as genetics is to height and eye color. Recently, the always solid, Paul Craig Roberts reported that China is soon to take over building military ships for the U.S. Navy, without a peep from the same crazies who blame all of this on the Jesuits.

All of this is music to the ears of those of us who see the writing on the wall: the coming end of American domination of the globe, which means, as a matter of the globe’s political structure, the proportional increase in Russian, and therefore Orthodox, power abroad. Putin’s stroke of genius, deplored in the west, is his smooth and well maneuvered alliance with China. Why is China slowly but surely defeating America in the field of political economy? The answers are as simple as rare. Here are a few thoughts:

a) The Chinese are reproducing. Americans are not. American women, driven by shattered marriages and personal arrogance, find it more “fulfilling" to work for some boss than to raise a family. Therefore, they become part-time parents who have only one or two children.

b) The Chinese have a government that can only be called social nationalist, a state-centered economy that has a substantial percentage of privately owned capital. Though even the latter is under the tight leash of the state. Japan and South Korea also developed under this model.

c) Because of this state system, the Chinese government has been able to strategically manipulate the United States, buying up debt and attracting American investment.

d) Americans are, en masse, clinically insane. Americans care about nothing other than their own financial condition, and all American politics revolves around that nexus. Therefore, debt will be central to the economy. In China, as in Japan, fiscal strictness is the norm among the population, meaning that the yuan will always be strong and that trade balances will always be in China’s favor.

In sum, all what the conservative, liberal and libertarian economists have been telling American college students has been wrong.

Markets do not outperform state run economies, and further, that global economics remains national, and in the case of China, more national than ever. National interest is the primary engine of China’s economic boom, and all of it has been state directed.


Many years ago, Imperial Japan, an extraordinary power staffed with extraordinary people, developed an ideology of the East Asian Co-Prosperity Sphere. Its purpose was to throw out unwanted European invaders and replace them with Asian governments in a coalition with Tokyo, under their indirect control.

Today, the very same thing is happening, but under the system in Peking rather than Tokyo. As soon as China announced that it was no longer pegging to the dollar (as if, today, that was even a relevant factor), Malaysia announced the same. As the yuan moves up and up, more and more Asian economies will hitch their wagon to this brilliant star.

Finally, the arrogant, execrable American capitalist and foreign policy hack will have a brake put on his murderous dreams.

As China’s empire grows, Russia will become its primary supplier of energy and technical knowledge. A new superpower will emerge to challenge American hegemony, one already stretched to the limit, and based on a population largely held together by drugs, the legal system, debt and threats.

Making matters more interesting is China’s interest in Africa. Africa is the land of untapped natural resources and a rather unremarkable population who simply cannot get its own act together.

China both has the means and money to treat African oil, diamonds, tin and fertile soil the very same way the U.S. has treated the same from Latin America and the Middle East. Many American policymakers are aware that this would be the final nail in the Regime’s coffin.

As per usual, the pompous Chris Smith (R-NJ), referred to China’s involvement in Africa as “helping to support Africa’s dictators” and, in a more candid moment “possible taking Africa’s resources for themselves.” I’ll let that one sink in for awhile. Not only has dictatorship delivered the goods about as well as “democratic” systems in Africa have, but the U.S. record in resource extraction as well as “supporting dictators” would take a library of volumes to record.

The recent “forgiveness” of African debt has everything to do with fears of China.

Of course, governments cannot forgive debts, only banks can. And I found it humorous that the major banking families in the world, all of whom owned some African debt, permitted politicians to take the credit–and the blame–while, as usual, remaining on the sidelines themselves.

However, the forgiveness of African debt is a rather cynical poly to counteract the influence of Peking on African politics. The overthrow of African “dictators” as now being considered by neocons has everything to do with neutralizing this influence.

Many of my readers have heard of They are a rather well respected, albeit elite and somewhat “official” sounding, resource on international politics. Their services are not free, and are designed to assist international investors in evaluating the political situation in various parts of the world.

Apparently, someone there has been reading my material, for there is a piece which, among other things, deals with Russia’s relations with China, specifically, the reasons why Russia cannot trust the Chinese, and how longings for a formal alliance against the west are ill-conceived.

Given the nature of’s clientele, this conclusion can certainly shock no one.

However, I thought the arguments they put forth to be very good ones, and thus felt it necessary top comment upon them. Here is the paragraph dealing with this issue:

And while many Russians dream of a Chinese alliance against the West, China has been taking advantage of that mis-perception and preparing for a world in which Russia no longer matters. It is Beijing, not Moscow, which has been building rail lines and petroleum pipelines into Central Asia and acquiring Central Asian energy firms. It is Beijing, not Moscow, which is now pre-eminent in influence in North Korea. It is Beijing, not Moscow, which quietly sponsors an unofficial policy of encouraging migration of its citizens to resource-rich Russian Siberia. It is Beijing, not Moscow, which is purchasing component after component of Russian military technology as part of a broad-based modernization program. And it is Beijing, not Moscow, which likes to hold large-scale military maneuvers on the border named innocuous things like "Northern Sword."

Let me take this bit by bit:

“And while many Russians dream of a Chinese alliance against the West, China has been taking advantage of that mis-perception and preparing for a world in which Russia no longer matters.”

It is far from certain that China’s pursuit of its interests, either correct or not, can lead one to the conclusion that China wishes Russia no longer mattered. I suppose a strict realist would wish that no other country except one’s own actually mattered.

“It is Beijing, not Moscow, which has been building rail lines and petroleum pipelines into Central Asia and acquiring Central Asian energy firms.”

China is being supplied by Russia in terms of its energy needs. China is merely pursuing its interest in diversifying her energy sources. Either way one looks at it, both Russia and China are using energy as a weapon against the west. It is, after all, the west’s Achilles heel.

“It is Beijing, not Moscow, which is now pre-eminent in influence in North Korea.”

“It is Beijing, not Moscow, which quietly sponsors an unofficial policy of encouraging migration of its citizens to resource-rich Russian Siberia. “

Yes, Russians have considered this a problem for some time. China, contrary to popular myth, is not overpopulated. The majority of her citizens are crammed into a few cities. Western and southwestern China are empty, as is inner Mongolia and outer Mongolia (that is, Mongolia proper). Unfortunately, Siberia is also largely empty as well.

“It is Beijing, not Moscow, which is purchasing component after component of Russian military technology as part of a broad-based modernization program.”

This is far from a problem. It is, on the contrary one of the central areas where Russia and China have cooperated against western imperial designs on the region (that is, Central Asia).

“And it is Beijing, not Moscow, which likes to hold large-scale military maneuvers on the border named innocuous things like ‘Northern Sword.’”

Yes, but, recently, such maneuvers have been done in concert with the Russians, with more planned on the way. This is one of the major reasons why I have written many times in the past that Russia “has the west quaking in its boots.”

Though Stratfor’s arguments seem compelling, and are very well stated, they ultimately fail. China and Russia under normal circumstances would be rivals for influence in Siberia and Central Asia. But these are not normal circumstances, and the result is that China and Russia have been thrown together, in spite of many disagreements, due to the manifest threat of the United States and other western powers and proxies.

Therefore, with much confidence, I predict that, so long as the western threat exists, cooperation rather than conflict will be the norm between Russia and China.

Things will change if and when such threats dissipate. So far, Russia and China have developed a rather pleasant symbiosis. China is in need of Russian technical expertise, as well as her energy resources. Russia, on the other hand, wants influence in Asia in order to counter western subversion in Belarus, Ukraine, Georgia, Azerbaijan and all of Central Asia, and the Chinese vehicle may assist them in this regard. Further, China is a growing market used to Russian goods and is a substantial chip to play against the U.S. and the corporate, liberal oligarchy that current controls her institutions.

Now, this symbiosis may change, and then conflict will replace cooperation. But even here, the threat of U.S. domination may keep the alliance together even when the symbiosis breaks down. China, Russia, the Islamic states, Venezuela, some in the EU, Malaysia and many others are drawn together under one banner: multipolarity.
Therefore, with fits and starts, it might be rational to expect an increasing level of cooperation among these states and regions, as well as the increasing philosophical plausibility of Eurasianism among educated Russians.


Anonymous said...

The Ziowest are on the brink and they still haven't a clue. Whereas the CR alliance is with it, on the ball and running so hard towards the newer world order, they'll reach their goal before the others have even caught on. One could call it the RC alliance, but there might be people who think the Roman Catholic Church is meant, another clueless organisation that struts about the place.

The multipolar world will look something like this: China, Russia, India, the Muslim sphere, the federated States of South America, the African continent as a whole and a much-diminished West. They might have disagreements amongst themselves, but no one will threaten any other with extinction as is now the case. They will strive for the betterment of mankind and leave behind once and for all indulgence in unending scams and horrendous destruction.

poiuytr said...

right, yes, it does seem that way, but the trouble is that the west beast won't go for this arrangement.

in fact, USA was broke sometime in 1993 or there... by the end of 90s, China owned the bulk of USA bonds (USA was paying monthlies to China like mad and without hope of ever paying the principals), plus by being cash bitch of China, China ran US interest and a word ushered in Beijing would send US central bank grappling with its own interest rate.

911 wasn't a fun event, it was necessary for the west, if they were to try to re-assert their slaver, colonist, evil dominance.

the idea was to take iran's oil, take african oil, and force china to buy US oil making it pliable. they thought the road was open since Russia was a "non power". the NWO were wrong, dead wrong. (promoting stupidity only goes so far)

and the NWO lost everything, oil in Africa, and oil in Middle east, Caspian Reserves... and made lots of enemies in the process on every continent. plus the West, which was an unexpected blow to them, lost the dollar.

and so the new map is emerging and indeed the west has no course but to break up, but notice they're not about to do that and prefer a tight fascist lockdown, total and complete sacking of all West coffers, rinsing the west idiots of their last cash, and who knows... they'll either turn on the people of the west creating very "gapped" dictatorships in which those allowed to live will slave, or they'll provoke a giant, maybe WWIII, conflict, in which they'll hope to run and hide in Dubai or Africa someplace.

you're right... the lines are clear, west's choices are no more, but we're dealing with a psychopath that just won't go peacefully. that's why CR plays it so careful, slow, and so far , thank goodness, very clever, always a few steps before the moronic baboon nwo.

Anonymous said...

Thank you. That was a good analysis, and I'm grateful. I agree about extreme CR caution. Also, the place people on the run might land up in (a J. Vialls' prophecy) is Tasmania.

Anonymous said...

To counterbalance above, how about "CHIMERICA". the fusion of China and America as the "natural alliance"? Or is it, as the name so aptly suggests and we feel deep in our hearts, no more than a hopeless dream? A further question and an important one at that: Poiuytr you convinced us about the present crisis having nothing to do with sub-prime mortagages and all to do with the nuking of the dollar. How about August 2007 and the hemorrhage of the hedge funds?

Economist Niall Ferguson on the Financial Crisis: "There Will Be Blood"

The Globe and Mail 'There will be blood'
By Heather Scoffield
February 23, 2009 at 6:45 PM EST

...Policy makers and forecasters who see a recovery next year are probably lying to boost public confidence, he said. And the crisis will eventually provoke political conflict, albeit not on the scale of a world war, but violent all the same.

"There will be blood."

...And much of today's mess is the fault of central bankers who targeted consumer-price inflation but purposefully turned a blind eye to asset inflation. (The emphasis is not only purposely, but willfully so - Jesse)

....Partly because they can throw so much at it, and they can do it at a lower cost than anybody else, because the U.S. retains the safe-haven status, which makes the world so unfair. Here is the world's biggest economy, which gave us subprime mortgages, rampant securitization, the collateralized debt obligation, Lehmann Brothers, Merrill Lynch. It is, in a sense, the fons et origo of this crisis. And yet, because it retains safe-haven status, in a global crisis, investors want to increase their exposure to the U.S. Hence, the dollar rally. Hence 10-year Treasuries down below 3 per cent yields. It's almost paradoxical that an American crisis ... reinforces the status of the United States as a safe haven.

...As you know, Chimerica – the fusion of China and America – is one of my big ideas. It's really the key to how the global financial system works, and has been now for about a decade. At the end of The Ascent of Money, I speculate about whether or not that relationship will survive. If it breaks down, then all bets are off, for the U.S. and indeed for Asia. I think that's really the key point. Both sides stand to lose from a breakdown of Chimerica, which is why both sides are affirming a commitment to it.”

... “There will be blood, in the sense that a crisis of this magnitude is bound to increase political as well as economic conflict. It is bound to destabilize some countries. It will cause civil wars to break out, that have been dormant. It will topple governments that were moderate and bring in governments that are extreme. These things are pretty predictable.

The question is whether the general destabilization, the return of, if you like, political risk, ultimately leads to something really big in the realm of geopolitics. That seems a less certain outcome....

...It's just that I don't see it producing anything comparable with 1914 or 1939. It's kind of hard to envisage a world war. Even when most pessimistic, I struggle to see how that would work, because the U.S., for all its difficulties in the financial world, is so overwhelmingly dominant in the military world.”

....“It's obvious, surely we know by now, that this is something quite different. It's a crisis of excessive debt, the deleveraging process has barely begun, the U.S. consumers are not going to suddenly bounce back and hit the shopping malls just because they get a tax cut. The savings rate is going to continue to rise. These processes have tremendous momentum that quite clearly differentiates them from anything that we've seen, including the early 80s, including 73, 74, 75. Those big crises, the ones that we have lived through, were bad. But seems certain to be deeper, and more protracted.”

...“One possibility is that policy makers are lying in order to encourage people and prevent depression from become a self-fulfilling psychological conditions. That's why it's called a depression … Maybe they don't really believe this, but they're saying it in order to cheer people up, and if they're sufficiently consistent, perhaps people will start to believe it, and then it will magically happen.”

...“August, 2007, was when this crisis began. And if you were really watching the markets carefully, April is when it began, when the various hedge funds started to hemorrhage. The stock markets carried on until October of that year. And in many ways, consumer behaviour in the U.S. did not change until the third quarter of 2008. So there was a massive denial problem. It was like Wile E. Coyote running off a cliff, and they'd run off a cliff and they didn't look down so they didn't start falling. As soon as people realized it was bad, the behaviour switched. Now, people have to try to unscare them before this thing becomes a self-perpetuating downward spiral. I think that's why you have to say ‘growth will return in 2010' with your fingers crossed behind your back.”

...“We kind of have had a bubble in the sense that we've seen such a rally in U.S. government bonds. It's tempting to say that will burst and we'll see yields go back up. Because, you know, $2-trillion worth of debt is going to hit the market this year, maybe more. Supply is exploding just when demand is contracting. You don't need to be a Nobel laureate to see that that has to impact on the price. The difference is there is this thing called the Fed that can step in and start buying the stuff if the foreign demand fades. So it's not completely guaranteed that we'll see bonds sell off in price. (Yes but if the Fed starts overtly monetizing Treasury Debt the limiting factor will be the value of the dollar. It is a 'hinged' constraint, Bonds and Dollar - Jesse)

“There is still this inertia that prevents the dollar from falling off a cliff, that keeps the Treasury market from falling off a cliff. That's really important to bear in mind. I don't think we'll see a bubble distressed assets, because I think the price of these assets has started to fall. Anybody who comes into the market now is essentially paying a premium. There will be better bargains in the middle of this year, and maybe even better bargains later on. If I were in the market to buy distressed assets, I would wait, I would wait a bit longer until they're really desperate. And it might even be better to wait until they're bankrupt.”

...“In the Ascent of Money, I argue that you can't really have a bubble if you don't have a monetary authority that has been excessively generous. From John Law in 1719 to Alan Greenspan in the late 90s, there's always a banker, there's always a central banker making credit too readily available. The second thing is, though, that regulation may not prevent that.”

..."The two great zones of conflict in the 20th century were central and eastern Europe, and a critical part of northeast Asia – Manchuria, Korea. It makes me a little nervous that those are also places that are going to take a very heavy share of the pain. But we're looking at a Great Recession, not a Great Depression. We may be looking at a Lost Decade.

There was a time when if you said the United States was going to suffer a lost decade like Japan did in the 1990s, everybody would have said you were a mad pessimist. That begins to look like quite a good scenario. And I think it's a realistic scenario.

One of the facts is if you subtract mortgage equity withdrawal from the Bush years, the real underlying rate of growth of the U.S. economy was 1 per cent. So much of the consumption has been fuelled by mortgage equity withdrawal. So that seems like a reasonable growth rate for 10 years.

We just don't have an improvement of standard of living of the sort we're grown used to. And indeed if you have a more equitable redistribution through the tax system, which Obama is committed to, it might actually be no discernible downside for middle America and lower-class Americans. So many of the benefits of the boom went to the elites. If you have a lost decade plus redistribution, it may not be that dramatic a change for many, many people. People just have to get over the fact that their wealth wasn't worth what they thought it was in 2006. Whether it's their stock market portfolio or their housing. If we simply go back to where we were, in 2005, that's surely not the worst thing that could happen to us.”

Anonymous said...

Illusion, pure illusion in the Buddhist sense of the term. The path to hell is paved with bright illusions.

Anonymous said...

And even as we take our next breath, God's gift to mankind, the US State Dept, has issued two reports condemning Russia and China on their human rights record, whatever that might mean. Coming from slaughterous America,we can only laugh till our sides ache.

Anonymous said...

Establishment lackey Niall Ferguson is as much an historian as you and I are chimney sweeps. All he's good for is a memorable, side-splitting laugh.

Anonymous said...

You pays your money and you takes your choice. Which is is to be, Chimerica or the CR Alliance?

Anonymous said...

One common trait of the Russians and Chinese may be that they both avoid acting in deliberate stupidity or in ignorance of the facts. RC chances of leaving a major fingerprint increases if they follow principles of Justice, no doubt.

Anonymous said...

Right you are. The world could certainly do with a bit more of intelligence and the light of Justice should illuminate every dark corner of the planet. In that sense, then, CR over Chimerica anyday.

Anonymous said...

It's far from done yet.

Pirouetting, manoeuvring, tangoing as they go, the indispensable alliance takes its own sweet time over openly declaring their interests.

There's BRIC as well. As the Chinese foreign minister recently stated:
"Brazil, Russia, India and China are big players on the international arena. We face similar challenges, have opportunities for joint development, and are making a common contribution to ensuring peace and stability in the region."

Somehow, RC and zigzagging, tap-dancing Prez. O seem be well-matched.

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