by Michael Snyder
We are closer to a war with China than most people realize. Right now, U.S. officials in Washington are deeply concerned that the Chinese may impose a full-blown blockade on Taiwan as the first step in a “reunification” campaign. Many Americans don’t realize that such a move would be a really, really big deal. If China chooses to blockade Taiwan, the U.S. and China would instantly be in a state of war. All of a sudden, the flow of high-end computer chips from Taiwan would completely stop. And all of a sudden, the flow of products that we import from China would completely stop. In other words, our standard of living would be radically altered for the foreseeable future.
But there are certain things that are likely to happen before China pulls the trigger on a military solution. In recent months, China has been making moves to reduce economic exposure to the United States, and one of those moves has been to sell off U.S. Treasuries.
In fact, January was the sixth month in a row in which Chinese holdings of U.S. Treasuries fell:
China continued to cut its holdings of US Treasuries at the beginning of the year amid rising long-term interest rates, which slashed its returns on its overseas investments after the US Federal Reserve accelerated its lending cost increases last year.
As foreign holdings rose for a third straight month in January, China’s holdings slid to US$859.4 billion in January from US$867.1 billion in December, declining for the sixth straight month and marking their lowest point since May 2009, according to data released by the US Department of the Treasury on Wednesday.
The good news is that the Chinese have been selling off their holdings at a measured pace.
If a blockade or an invasion was imminent, I would expect the Chinese to start selling off Treasuries much more rapidly.
We will keep watching to see if the pace changes.
Meanwhile, CBS News is reporting that China just completed “three days of military drills meant to simulate a blockade of Taiwan”:
China has completed three days of military drills meant to simulate a blockade of Taiwan. The drills included an aircraft carrier and nuclear-capable bombers as tensions continue to ramp up following a meeting between House Speaker McCarthy and Taiwan President Tsai Ing-wen.
Many analysts believe that they are literally showing us what they intend to do.
During these drills, the Chinese practiced attacking Taiwan from the east for the very first time:
China’s newest aircraft carrier has for the first time practiced attacking Taiwan from the island’s east coast, demonstrating Beijing’s growing determination to project power beyond the Taiwan Strait and far into the Pacific Ocean, an area traditionally dominated by the United States and its regional allies.
If the Chinese fully encircle the island, Taiwan would be totally cut off from U.S. help.
The U.S. could try to break the blockade, but that would mean shooting at the Chinese.
Of course the Chinese would not just use ships to impose a blockade. On Monday, the Chinese sent more fighter jets toward Taiwan than they ever have before:
Late Monday, the Taiwan Defense Ministry registered 91 fighter jets and 12 ships from the Chinese military within the space of 12 hours. This is a record-high number of Chinese military aircraft entering the airspace surrounding Taiwan in a single day.
Of these, 54 aircraft crossed the median line of the Taiwan Strait and entered Taiwan’s south-western and south-eastern airspace.
The Chinese are making it very clear that they aren’t messing around.
In fact, the Chinese military just released an animated video that simulates what an all-out attack on Taiwan would look like:
China’s military has declared it is ‘ready to fight and smash Taiwanese independence’, releasing an animated video simulating how it would launch an all-out attack on the self-governing island nation.
The clip, shared by the Chinese military’s Eastern Theatre Command’s official WeChat account and later posted on Twitter by The Global Times, showed how Beijing would launch a torrent of missiles from the mainland and its navy in the Taiwan Strait to demolish Taiwan’s defences before invading.
The moment that such an attack is launched, the war between the United States and China will have begun.
But most Americans still aren’t taking this seriously.
Most Americans still believe that everything will work out just fine somehow even though Taiwanese Foreign Minister Joseph Wu just warned that we are dangerously close to “an uncontrollable war”:
“The Chinese military exercises this couple of days have been very serious,” Taiwanese Foreign Minister Joseph Wu told Fox News Sunday. “If you look at the sorties of the Chinese air force, together with the ships, they’re coming very close to Taiwan. And any accident might spark an uncontrollable war in between Taiwan and China. And if other countries are trying to intervene, it might be the start of a war of great scale.”
Sadly, he is quite right.
We are so close to the edge, but both sides just continue to raise tensions even more.
On Monday, the U.S. military sailed a guided-missile destroyer right through a very sensitive area of the South China Sea, and the Chinese were not happy about that at all:
An American guided-missile destroyer, the USS Milius, conducted a freedom-of-navigation operation in the South China Sea on Monday, coming within 12 nautical miles of Mischief Reef in the Spratly Islands to challenge China’s extensive territorial claims in the disputed waters. Beijing called the operation “illegal.”
And U.S. politicians just continue to beat the war drums.
In response to a question about a potential Chinese blockade of Taiwan, U.S. Senator Lindsey Graham suggested that the U.S. might just blockade China in return:
So, what would I do to deter a blockade? I’d like the Chinese to know if you blockade Taiwan, you’re going to have a hard time getting oil from the Mideast.
I would increase training and get the F-16s they need in Taiwan. There’s a backlog. I would solve that backlog. I would move war forces to South Korea and Japan.
Unlike the conflict in Ukraine, there is no obvious peaceful solution to this crisis.
Chinese leaders are absolutely obsessed with Taiwan, and they have made “reunification” a very high priority.
But the U.S. simply cannot allow the Chinese to take military action against Taiwan. More than 60 percent of the high-end computer chips that the world depends upon come from Taiwan, and once the Chinese have gobbled up Taiwan they are not likely to stop there.
At this point, China is looking to establish military bases literally all over the globe:
A list of where Beijing is pursuing or exploring bases, according to the U.S. government, includes South China Sea islands; Cambodia, Myanmar, Thailand and Indonesia in Southeast Asia; Djibouti, the United Arab Emirates, Pakistan, Kenya, Sri Lanka, the Seychelles and Tanzania in the Indian Ocean area; the Solomon Islands and Vanuatu in the South Pacific; and even Equatorial Guinea and Angola on the Atlantic coast of Africa.
The only other country that has such an expansive military footprint is the U.S., with its global military and commitments.
A showdown with China is coming.
In fact, a four-star U.S. Air Force general recently stated that he believes that the U.S. and China will be fighting in 2025.
Needless to say, 2025 is just two years away.
The Chinese military has been preparing for such a war for a long time, and meanwhile the U.S. military has been focusing on other things.
My hope is that a conflict between our two nations can be avoided for as long as possible, but without a doubt the clock is ticking.
Source: End Of The American Dream – China Is Selling Off Treasuries As It Prepares For A Blockade Of Taiwan And A War With The United States