Dec 15, 2011

China Flexes its Muscle Again

China has announced that it will levy anti-dumping duties on US-manufactured car imports (see FT link). The taxes will mostly affect luxury vehicles and as such will only have a limited economic impact. The impact is mostly political and this is the latest move in China's unwritten policy of asserting its newly acquired clout on the global political and economic stage. The emerging "superpower" has been busy escalating territorial disputes with just about all of its neighbors which pushed the US last month to increase its military commitment to the region by stationing 2500 marines in Australia (see NY Times link). This stream of international provocations also probably serves to fuel the patriotic fire at home in order to deflect attention from the increasing (and mostly unreported) instances of riots and violent protests. Keeping its grip on power will be the biggest challenge for the Communist Party into the transition of leadership in 2012.

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