Stop the presses

"Vietnam, strategically situated on the south China Rim, will emerge as a key US trading partner and ally over the next ten years." That's one of several startling conclusions from "Crisis on the China Rim," (PDF-85 pages), a recently released report now available from Research Connect.

The subtitle, "An Economic, Crude Oil, and Military Analysis," gives you some idea of the reasons for the turn of events. It's all about energy, in particular, oil. The author of the report, Laguna Research Partners, also makes another startling prediction. Instead of merely coalescing around trading blocs, the world's nations will also coalesce around what Laguna calls "Energy Security Blocs."

Just as the Cold War of the 20th century had its opposing communist Eastern and democratic Western Blocs, we expect the intensifying race for energy security will prompt the formation of opposing "Energy Security Blocs. These Blocs will take time to emerge, but they are coalescing now. We anticipate that, eventually, one energy security bloc will be US-centric, while the other is likely to be China-centric.

The Laguna analyst also sheds light on the current posturing between China and Taiwan, showing the blinders that Western thinking can put on any attempt at analysis. He quotes from Sun Tzu's The Art of War: "The skillful leader subdues the enemy's troops without any fighting." Then, he explains what it means in the context of China and Taiwan.

Viewed from a Western perspective, China's threats regarding Taiwan represent counter-productive saber rattling. From an Asian perspective, China is pursuing a Taiwan re-unification strategy of "breaking the enemy's resistance without fighting."

The report also makes note of how the recent pipeline deal between Iran, Pakistan and India "provides an excellent example of how the crisis on the China Rim is trumping deep historical distrusts and forging radical changes in world view among China Rim governments."

With respect to the Chinese economy, the report states, "As long as China keeps the value of the Yuan Renminbi pegged to the value of the US Dollar, we expect that China's economy will continue to surprise observers to the upside."

Any other surprises on the upside? You probably guessed it: oil. "[P]rice targets calling for $100 per barrel within the next three years will prove to be conservative," the report concludes.

The Laguna report is filled with statistics on military expenditures, GDP, border lengths, oil reserves--a myriad of fascinating detail that provides a solid statistical basis for some of the seemingly outlandish conclusions. There are more conclusions just like the ones I've cited for those with the patience to read through the entire report.

(Thanks to reader T. O. at Research Connect for putting me onto this report.)

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