Tibet and Taiwan: On Sale for 10 Cents

“The Pope! How many divisions has he got?” The quote is unconfirmed but attributed to Stalin. If he really did say it, it represents one of the Soviet dictator’s greatest blunders. Today, the Soviet Union and the communism of Stalin lie in the garbage dump of history. The Vatican, however, continues, scandals and all, without a single division or tank and without the need for either. It is a good indication of the political idiocy of Pablo Neruda*, who praised Stalin with the famous phrase “era más sabio que todos los hombres juntos”** when the murderer died.

Another group of people who seem to have learned just how wrongheaded Stalin was in this area are the Chinese. The new superpower has fewer atomic bombs than Israel or France yet can count on something that neither of these two countries can ever attain: 1.77 billion euros ($2.4 billion) in reserves of foreign currency. Of this, 557,000 million euros ($755,000 million) is in bonds from the U.S. Treasury. In addition to this, they have a currency, the renmimbi, which is non-convertible, fixed to the dollar at the artificially low price (undervalued at between 12 and 50 percent) of 6.827 units per dollar. In other words, a renmimbi is worth 14 cents per dollar or 10 cents per euro.

This offers them far more power than atomic bombs. So much so that Chinese leaders have already discovered that in exchange for their presence in Washington, the U.S. is ready to go to whatever limits are necessary.

In fact, the renmimbi is going to be the star of the Global Nuclear Security Summit that is taking place in eight days in Washington and will welcome 40 heads of state, among them José Luis Rodríguez Zapatero.

The renmimbi has nothing to do with nuclear security, but the Chinese president, Hu Jintao, is going to be present at the meeting. In theory, two days after the meeting, April 15th, the U.S. Treasury will have to officially declare that China is manipulating its currency in order to keep it at an artificially low level. This would be an unprecedented declaration, which would open the doors for a commercial war between the two countries.

It was enough that Hu confirmed his presence in Washington for the Obama administration to insinuate that the Treasury is going to postpone its ruling. In addition, the Chinese have insinuated that they are ready to raise the value of the renmimbi. They have not said, of course, by how much or when. They have, however, begun to raise prices. Today, in the Financial Times, Li Daokui, a member of the central Chinese bank, declared that the rise in value of the renmimbi will be linked to the U.S. respecting China’s “core interests,” particularly Tibet. Other themes up for discussion could be Taiwan, a country to which the U.S. plans to sell 66 F-16 bombers, and the eternal question of human rights in China. In fact, the Taiwanese press is already speculating that, in exchange for Hu’s presence at the summit, the U.S. will postpone the sale of its planes.

So the next time someone comes with talk of divisions, tanks, bombs and missiles, let’s remember the Pope or the Chinese. In today’s world, an undervalued currency or reserves equivalent to nearly double the GDP of Spain can be of much more use than the entire Sixth Fleet. In the end, it is possible that the E.U. will “sell” Tibet and Taiwan in exchange for the 10 euro cents that the renmimbi is worth. The Dalai Lama should take note: instead of giving speeches, he should start buying currencies.

*Pablo Neruda (1904–1973) was a Chilean writer and politician known for his support of communism.

**Translator’s version: “he was more knowledge than all other men put together.”