Dollar survival behind US-China tensions

US-DollarsFinian Cunningham
THE escalation of military tensions between Washington and Beijing in the East China Sea is superficially over China’s unilateral declaration of an air defence zone. But the real reason for Washington’s ire is the recent Chinese announcement that it is planning to reduce its holdings of the US dollar.
That move to offload some of its 3,5 trillion in US dollar reserves combined with China’s increasing global trade in oil based on national currencies presents a mortal threat to the American petrodollar and the entire American economy.

This threat to US viability — already teetering on bankruptcy, record debt and social meltdown — would explain why Washington has responded with such belligerence to China setting up an Air Defence Identification Zone (ADIZ) last week extending some 400 miles from its coast into the East China Sea.

Beijing said the zone was aimed at halting intrusive military manoeuvres by US spy planes over its territory.
The US has been conducting military flights over Chinese territory for decades without giving Beijing the slightest notification. Back in April 2001, a Chinese fighter pilot was killed when his aircraft collided with a US spy plane.

The American crew survived, but the incident sparked a diplomatic furore, with Beijing saying that it illustrated Washington’s unlawful and systematic violation of Chinese sovereignty.

Within days of China’s announcement of its new ADIZ last week, the US sent two B52 bombers into the air space without giving the notification of flight paths required by Beijing.

American allies Japan and South Korea also sent military aircraft in defiance of China. Washington dismissed the Chinese declared zone and asserted that the area was international air space.

A second intrusion of China’s claimed air territory involved US surveillance planes and up to 10 Japanese American-made F-15 fighter jets.

On that occasion, Beijing has responded more forcefully by scrambling SU-30 and J-10 warplanes, which tailed the offending foreign aircraft.

Many analysts see the latest tensions as part of the ongoing dispute between China and Japan over the islands known, respectively, as the Diaoyu and Senkaku, located in the East China Sea. Both countries claim ownership.

The islands are uninhabited but the surrounding sea is a rich fishing ground and the seabed is believed to contain huge reserves of oil and gas.

By claiming the skies over the islands, China appears to be adding to its territorial rights to the contested islands.
In a provocative warning to Beijing, American defence secretary Chuck Hagel this week reiterated that the decades-old US-Japan military pact covers any infringement by China of Japan’s claim on the Diaoyu/Senkaku Islands.

It is hard to justify Washington and Tokyo’s stance on the issue. The islands are much nearer to China’s mainland (400km) compared with Japan’s (960km). China claims that the islands were part of its territory for centuries until Japan annexed them in 1895 during its imperialist expansion, which eventually led to an all-out invasion and war of aggression on China.

Also, as Beijing points out, the US and its post-war Japanese ally both have declared their own air defence zones. It is indeed inconceivable that Chinese spy planes and bombers could encroach unannounced on the US West Coast without the Pentagon ordering fierce retaliation.

Finian Cunningham (born 1963) has written extensively on international affairs, with articles published in several languages. This story is reproduced from Press TV.

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