Friday, November 26, 2010

China and Russia: Strange bedfellows or a reddish-hued match made in heaven?

Note regarding the crisis on the Korean peninsula:

In order to stop North Korea's aggression against the South, our "friend" China needs to step in. China is the only government North Korea listens to, so the question is will China intervene? Failing that intervention, the next question has to be whether North Korea is actually acting as a proxy for China?

China and Russia versus Japan and United States?

Who would have thunk it? Consider this, that China, Russia and the United States, the troika of combatants and the equilateral triangle of enemies, now may be a two against one isosceles triangle with the odd man out being the United States. Wow!

Confused by the analogies? So was I when I read an article on Wednesday that talked about China and Russia using their own currencies for bilateral trade instead of the global currency of choice, the US dollar. It spoke of closer relations between these two countries and of their two currencies beginning to trade with each other on the Forex market.

Is the phrase odd man out slightly over-dramatic? Is this announcement concerning the dollar really a big deal?

Not so much in economic terms as the level of trade will not be all that significant. But definitely a big deal in the scope of U.S. foreign policy and even national security. The fact that these two former arch enemies of ours and most certainly of each other are now forging a closer relationship is certainly concerning. The only thing that brings solace is that they will hopefully be as reliable friends to each other as they are to the U.S.

Additionally, while this announcement not a tacit denunciation of the dollar, it is a shot across the bow.

Chinese and Russian statements

Chinese Premier Wen Jiabao said that the partnership between Russia and China had reached "an unprecedented level," and that the two countries will "never become each others enemies." That over the year "our strategic cooperative partnership endured strenuous tests and reached an unprecedented level." That cooperative partnership is evidenced by the oil pipeline running from Siberia to Daqing in China.

A senior researcher at the Chinese Academy of Social Sciences said that this new yuan-ruble relationship reflects the problems with a dollar denominated world that became apparent after the financial crisis hit. A specialist at Remnin University of China said much the same thing. These statements coming out of China, would undoubtably require sanctioning from some higher authority.

Veiled statements of historical disdain against the U.S. and Japan were also made in a trip made by Russian President Medvedev to China back in September.

Are the statements of friendship between China and Russia, the start of currency trading and increased trade all about symbolism or about something more. Do the United States and Japan have anything to worry about?

Not yet, but this certainly is not a great and welcomed development! And finally, do these announcements have any relation to the perceived strength of the Obama administration around the globe.

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