Tuesday 23rd August 2005 AD
"BRIDGING EAST AND WEST"

To this day China evokes a range of picturesque and romantic images from golden pointed temple roofs, docks of old style fishing junks, Mongolian ponies, rice terraces etched into the side of 3000-foot mountains to crowded, bicycle filled streets. 

Since Roman traders first ventured over the Silk Route in the early days of the Han dynasty, the Western world has been fascinated and intrigued by the Far East. It could be said that the closest the east came to the west was in the 1300's when the kingdom of Khan extended from Beijing through Korea, Mongolia to the doorstep of Russia. For millennia, an its sheer distance and inaccessibility left this ancient land shrouded in mystery. 

Even in today's global village, information age and interconnected markets, there remains much mystery around China, more than what many in the west may at first think. 

"Our world has become a very dangerous place because or the abandonment of gold as money, . . the discipline of gold" claims Ferdinand Lips. Last week we dug up the first three of ten conclusions reached by our esteemed Swiss Banker. 

"China will probably become the biggest economy in the world", announces Mr. Lips moving to his fourth conclusion, as he points out its long history and timeless value. "Believe me, it is far superior to Disneyland. China will become the most important country." 

But Ferdinand Lips' prediction comes with some urgent warnings, "China will have a great future - AS LONG as it can master the speed at which it is changing and growing. That will be difficult."

"China's economic progress creates not only wealth BUT ALSO tensions. It SHOULD NOT be built on the American consumer, who consumes so much only because he thinks the housing boom makes him rich. So China and the other Asian countries will one day need to have their own integrated markets. They will no longer depend so heavily on an American consumer drowning in debt." 

Again Mr. Lips returns to the vulnerability of a global economy built on the back of unsustainable fragilities, in this case the "American consumer". 

Will modern day China manage to bridge the east-west bridge, or will it be like the great old empire of Khan, never quite reaching beyond the doorstep of the west? As our esteemed Swiss Bankers points out, it MUST NOT gear up and build its economy around the unsustainable consumption of a debt-ridden western consumer. 

China has urgent energy problems, which we will dig into more in the days ahead, however already it is acquiring strategic energy assets and future supply from around the world.

As Mr. Lips points out "China will have a great future as long as it can master the speed at which it is changing and growing." One thing of which we can be sure, in one way or another, the China of tomorrow will affect us all. 

Best Regards - Philip Judge pjudge@anglofareast.com