What if ..... ?

The Chinese premier made a remark earlier this week that should alarm world leaders. Premier Wen Jiabao said that he was worried " about the safety of our assets " !

He was referring to the $A 1.11 Trillion in US Treasury bonds that China has invested in the US economy. For decades the surplus from China's burgeoning trade balance has propped up Americas deficits - and now the world recession has cast a doubt on America's financial stability and ability to repay.

China has long been an enigma. It is the only successful Communist economy and balances rigorous - and often brutal - control of it's citizens with a fast expanding capitalist industrial base.

At the same time it has been steadily expanding as a military power, and is now entering space ambitions by launching satellites and considering it's own space station.

World leaders must be trying to second guess just what the Chinese leadership is thinking, and several troubling options are open to them.

What if they decide that further investment in the US economy is too risky - and announce that they will make no further purchases of US Treasury bonds ?

The result would be instant - and catastrophic. The sub-prime mortgage debacle would pale into insignificance. The loss of confidence would see markets plummet and chaos reign on the worlds bourses. We would need to find a new word, because " Depression " would not describe the situation that would follow.

What if this rejection of American dollar value caused what has become " the world's currency " to slide into free fall ? The oil producing countries - not exactly friends of the United States - could refuse to supply oil paid for in US dollars. The effect on both the US and world economy would be shattering - and without oil the mighty US military would be crippled.

What if would military domination was high on the Chinese wish list ? By deliberately throwing the world economy into chaos the Chinese leadership could argue that it's rigid internal control could preserve order within the country and allow it to survive the meltdown.

What if the Chinese plan was to extend just enough credit to Europe and the rest of the world to allow enough Chinese exports to keep their economy moving ? Mass unemployment in China could be kept under control by it's police and military and it would emerge as not only the world's banker - but as the primary military power.

At the moment we live in a fragile world trying to chart a course back to recovery. There is no doubt that the capitalist west has been foolish in not cracking down on greed and sloth in government policies - but it is also evident that China is enjoying a huge advantage in occupying the prime source of wealth amongst the nations of the world.

What remains to be seen is whether the inscrutable Oriental mind of this most populous of countries is willing to take a huge chance and opt for world domination - or whether it will remain within the world family and be content to go along with a gradual recovery.

The number of " What ifs ... " in play present a chilling scenario !