Top Chinese officials echo book’s self-assertive tone

• Last Updated: April 03. 2009 9:30AM UAE / April 3. 2009 5:30AM GMT

Sunny Lee

Foreign Correspondent

BEIJING // An unusually blunt remark from Wen Jiabao, the Chinese prime minister, about the safety of China’s investment in US debt and a comment from the governor of the People’s Bank of China arguing for a new currency to replace the US dollar reflects the country’s confidence amid the global financial crisis, analysts say.

Some observers argue China’s uncharacteristic self-assertion was partly motivated by an influential book, Currency Wars, written by a Chinese who went to graduate school in the United States and later worked for US mortgage giants Freddie Mac and Fannie Mae.

The book claims there is a “conspiracy” behind the current financial crisis and calls for a change in the international financial order.

Blaming the West for setting off the global financial crisis, the book was an instant bestseller in China. And its author, Song Hongbing, was dubbed by the Chinese media as an “economic prophet” for his predictions.

His book has since become essential reading for Chinese financial analysts and he has given lectures to the Communist leadership.

Song’s influence in shaping the Chinese perception of the US-initiated financial crisis was so great that Martin Wolf, a Financial Times columnist, even faced a question on it from a Chinese scholar during a speaking engagement at China’s elite Tsinghua University in Beijing.

Song claims the financial crisis is a scheme engineered by some powerful interest groups that run Wall Street. “In the US, Federal Reserve prints the dollar. But if you look closely, the Fed is composed of 12 regional banks. Five of them, including the one in New York, exercise the most influence. And the major stake holders of these five are private institutions, such as JP Morgan. That means, the Federal Reserve is in fact under the control of private interest groups,” he said in an interview at the Beijing-based Global Business and Finance Institute, a government-backed think tank where he is the director.

He said the US government colludes with these interest groups, making the economic stimulus plan a failure. “Ninety per cent of the US financial package money was spent to save the Wall Street bankers, not people. Wall Street controls the US,” he said. The fundamental problem with the US stimulus plan, he said, is paying debts by borrowing more. He expects the G20 summit in London will be demoted to a venue for America to ask other countries to buy US debt.

“It’s the same purpose that [US Secretary of State Hillary] Clinton visited China in February. Among the four Asian countries she visited, China was the most important country as the number one holder of US debt. And among the agendas she had in China, prodding China to continue to buy American Treasury bills was the most important goal,” he said.

Mrs Clinton was criticised for being “silent” on China’s human rights issue during her visit, which she concluded with a speech at the US Embassy in Beijing. “By continuing to support American Treasury instruments, the Chinese are recognising our interconnection. We are truly going to rise or fall together.”

Song’s book also carries a nationalistic theme. “The West spread its ideology to the East through globalisation, creating an unfair power-balance system. America promotes its national interest first and does it publicly. But when China talks about it, it criticises we are nationalist. That’s not fair.” He said the idea of a “global community where we are all one family sharing the same values” was also a myth, sowed by the West to pursue its self-interest.

Wang Jisi, dean of the School of International Studies at Peking University, thinks the book’s popularity reflects the Chinese suspicions that the US has plans to restrain the growth of China’s power and to take advantage of its vulnerabilities.

“According to Song, the financial history of the world is simply a tale of conspiracies seeking domination and the uneven distribution of wealth in favour of the rich. He concludes that China should be prepared to fight ‘bloodless wars’ waged by evil forces like the US Federal Reserve aimed at destroying China’s economy,” he wrote in Global Asia, an influential journal.

Song is an advocate of China reducing its holding of the US dollar in its foreign reserve. China and other Asian economies, he said, should decouple from the sinking US economy to survive. “The US economy is like a big Titanic that is going to sink. If you want to survive, you should distance from it.”



slee@thenational.ae