China's Ultimatum: Let Us Invade Taiwan Or We'll Dump The Dollar

Financial analyst says China could use huge dollar reserves as blackmail for beefing superpower status

Paul Joseph Watson Prison Planet Wednesday, September 19, 2007

The Fed's decision to cut interest rates again is likely to send the dollar tumbling to historic new lows, leading one financial analyst to predict that China's fury at the devaluation of its huge dollar reserves will provoke them into giving the U.S. government a terse ultimatum - let us invade Taiwan unopposed or we'll dump the dollar and bring about economic chaos.

China holds $1.3 trillion of dollar denominated assets and leading Communist Party officials have repeatedly threatened to use what the London Telegraph referred to as "the nuclear option," the liquidation of US treasuries if Washington imposes trade sanctions to force a yuan revaluation, the result of which would be an almost certain and immediate collapse of the dollar.

But according to Greg Zanetti of the Financial Network, an advisor for the McDonalds franchise, China may also be using economic threats as a means of greasing the skids for the unopposed invasion of Taiwan.

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"So what is the end game?" writes Zanetti. "Well, there is now conjecture that China may willingly take the huge financial hit from the falling dollar… provided we don’t interfere with their claims to Taiwan."

"Their argument would be they acquired Hong Kong peacefully and that the envelopment of Taiwan would just be the finale of a 70 year civil war."

"Their gamble would be that Americans would not fall on their swords for Taiwan. Of course, if we agree to such a deal we have (for all intents and purposes) ceded regional hegemony to China. They would be considered the Asian power and we would begin our retreat as a global power."

Under the 1979 Taiwan Relations Act, the United States is mandated to provide support to Taiwan in the event of any hostile trade embargoes or military invasion on behalf of China.

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The fact that the U.S. government, with the help of Alan Greenspan, have done their utmost to bring about a slow-paced economic meltdown by continually bad-mouthing the dollar suggests they would want to avoid the rapid decline that would be triggered if the Chinese were to dump their assets.

Though public sentiment in China and the majority of analysts think a Chinese invasion of Taiwan is unlikely, any warming of relations between Taiwan and the U.S. is usually subject to vocal rebuke.

Earlier this year, Chinese government leaders threatened to plan new war games and heighten military readiness in anticipation of any attempt by the U.S. to defend Taiwan should a Chinese invasion occur, or simply if Taiwan declares its independence, after President Bush shook hands with Taiwan's representative to the United States, Joseph Wu.