China in a Changing World,
Keynote by Lyndon LaRoucheChina.

Eurasian Land-Bridge As an Alternative
by Helga Zepp-LaRouche

Reflections On a New Basis
for U.S.-China Economic Relations
by Dr. Jonathan Tennenbaum

Lyndon H. LaRouche, Jr. was the keynote speaker at a conference on China on August 17, 2002, sponsored by the Institute of Sino Strategic Studies (ISSS) in Whittier, California, and extensively covered in the Chinese press. The "Seventh Annual Conference on the Re-emergence of China" was attended by scholars, intellectuals, and political activists from the United States, Taiwan, and the People's Republic of China, many of whom were happy for the opportunity to hear directly from LaRouche, whose ideas are widely known in these circles.

LaRouche's speech was titled "China in a Changing World," and addressed the effects of the current global financial and strategic crisis on China, and the implications of this crisis on relations between the U.S. and China. His keynote was backed up by additional presentations, by Schiller Institute scientific adviser Dr. Jonathan Tennenbaum on U.S.-China economic relations, and by Schiller Institute founder Helga Zepp-LaRouche, on the Eurasian Land-Bridge as the means of recovery from the economic depression.

We will soon post all three of these addresses to this landmark conference.

The Institute held a well-attended special press conference prior to the opening of the conference, to introduce LaRouche and the other speakers to the Chinese-language press. More than ten news services with correspondents in California attended. The introduction of LaRouche, and statements from the other participants, showed the high esteem in which he is held among the conference organizers and other scholars and political activists present. Dr. Tie Lin Yin, for example, a leading advocate of peaceful Chinese reunification, referred to LaRouche as "the distinguished thinker," adding that, to him, there is no higher designation than that.

Zhong Jian Hua, the Consul General of the People's Republic of China, was the sponsor of the pre-conference reception, at which he and Lyndon LaRouche gave remarks.

The Chinese journalists' questions to LaRouche focussed first upon his Presidential campaign, and second on his views on relations between China and Taiwan. His own remarks stressed that the ISSS conference was occurring at a moment of economic collapse; thus the most important questions are what caused this situation, what are the solutions, and what can the role of China be, in solving this crisis? All these subjects, including LaRouche's campaign, were prominent in the coverage, in the Taiwan-linked Chinese Daily News, China Today, Sing Tao of Hong Kong, the China Press, and China Daily. The Chinese Daily News and World Journal headline was typical: "LaRouche: Reunification Across the Taiwan Strait is in America's Best Interest." The City Magazine headlined its coverage, "The Economic Crisis Leads to War: Frightening Words of Lyndon LaRouche."

When a number of Chinese journalists asked LaRouche about the situation today in the Taiwan Straits, and what he considered were the prospects for reunification of China, or for Taiwan independence, the Presidential candidate replied that answering these questions requires going back in U.S. history to President John Quincy Adams and his crucial American view of national sovereignty. Adams proposed that U.S. policy must be to establish a community of principle among perfectly sovereign nation-states. His view was that the nation-state is not a source of conflict, but the basis for the establishment of a community for achievement of common purposes.

Modern China emerged as the result of the fight by overseas Chinese, led by Sun Yat-sen, for just such a sovereign nation-state. There are two aspects of the development of China as a modern nation-state, LaRouche said, which are important to the interest of the United States today. First, there is the idea of the unity of the Chinese people, as exemplified by Sun Yat-sen's plans for railroad construction throughout the vast extent of the country. The development of the interior of China still needs that rail program today. Second is the development of Eurasia, which requires the cooperation of three nations: China, India, and Russia. We must build a community of principle built around these three nations, he concluded, for peace, security, and development.

LaRouche said that while it is not for the Americans to tell China how to come together, there should be a reunification of China, as well as Korea, as part of a new, just order among nations. "Our hearts, of those in the U.S. who know history, are with the unification of China," he concluded.

The journalists peppered LaRouche with more questions on the U.S. Presidential campaign, his own electability in particular. The candidate emphasized that there are major political changes occurring in the United States because of the accelerating economic collapse. Asked for more detail, LaRouche referred to growing ferment among youth in support of his candidacy. This was shown dramatically later in the day, when LaRouche spoke to a meeting of nearly 100 young campaign supporters and prospective supporters in Los Angeles. The press conference closed with several journalists asking to have their pictures taken with "the future President."

Among the participants in this major conference were officials from the All-China Federation of Taiwan Compatriots; the Association for Relations Across the Taiwan Straits; the China Association for the Promotion of Culture; the Institute of American Studies of the Chinese Academy of Social Sciences; and the Alliance for the Reunification of China.

LaRouche's keynote address was delivered before approximately 70 members and guests of the Institute of Sino Strategic Studies. He was introduced by the conference co-chairman, Dr. Wenji Victor Chang, who said he has been reading the Executive Intelligence Review for six years, and had been impressed by LaRouche's foresight in forecasting the 1997 collapse of the Asian economies. Dr. Chang reported being warned of a more recent forecast by LaRouche last March, of a blow-out of the stock markets in the next three to four months. By August, LaRouche's forecast had been proven to be accurate, as the market lost 25% of its value. "But I was not a good student," Dr. Chang said, "because, if I had listened to Mr. LaRouche, I would not have lost so much money in the stock market. Now, he warns us that the next bubble to explode is the U.S. real estate bubble. So, I just sold my condo."

LaRouche was asked several questions by the enthusiastic audience. "In addition to finance," one asked, "you mentioned the spiritual." LaRouche had concluded his speech by addressing the uniquely human desire and understanding that each human being has the potential to live on powerfully after death, in the contribution that person has made to a change for the better. "Will your philosophy," the questioner asked, "materialize in this country?"

The U.S. population is terrified, LaRouche answered, not by the events of Sept. 11, but by the failure of the economic system, which they were told repeatedly would not fail. This has led to openness to his ideas among youth, ages 18-25, in particular. "Every great revolution in history comes about by the youth, who inspire their parents and grandparents. They have a sense that they have no future. If you look at what they've been taught in the schools, they've been cheated."

But the crisis, he continued, is forcing changes to occur. "The obligation of a leader is to point to the problem, and also the solution. There is no guarantee of success, but I am confident that we can succeed."

LaRouche also was asked, by the owner of a local radio station, if he had presented this speech to Bush, and if he can win the nomination for President. He answered by saying that there is no one, other than himself, who is presently qualified to be President in the economic and strategic crisis which this President must face. Since there are some talented people in the United States, he can move things so that the United States can solve these problems. To do this, however, "We've got to make a revolution in thinking." LaRouche's campaign has been engaged for a month in an intense, 5 million-leaflet campaign precisely to enable the President to act seriously in this crisis, in the one way possible: by making LaRouche himself the front-runner for the Democratic nomination for 2004.

After the formal session of the ISSS conference, the candidate had a series of private meetings with leading activists and scholars in the Chinese community.

Earlier in the day, the conference heard a presentation prepared by Helga Zepp-LaRouche, "The Eurasian Land-Bridge as an Alternative." Mrs. LaRouche was unable to attend, due to her own ongoing political campaign as head of the Civil Rights Solidarity Movement's slate of parliamentary candidates in Germany's national elections; her speech was read by Leni Rubinstein, who is well-known to the conference sponsors for her long-time work in this area. A speech was also read which had been submitted by Dr. Jonathan Tennenbaum, "Reflections on a New Basis for Economic Relations between the United States and China."

The following keynote address was delivered to a special meeting of the Institute of Sino Strategic Studies in Whittier, California on August 17, 2002. The meeting was called by the institute specifically to hear the views of Lyndon LaRouche directly, as they have been already for some time widely discussed in the Chinese-language press in the United States, and in China. The Consul General of the Peoples Republic of China in Los Angeles attended, as did leading political and intellectual figures of the Chinese-American community, and representatives of the media, who had also attended a press conference called by the Institute for Mr. LaRouche the previous day.

The People's Republic of China is now reassessing the impact of a rapidly changing world upon its future for the decades ahead. The questions posed include the combined effects of an accelerating crisis of both the monetary-financial and economic systems of the world, a crisis which was already in progress before the January 2001 inauguration of U.S. President George W. Bush. China is also faced with ominous, continuing shifts in the general strategic situation, since Sept. 11, 2001.

Even if solutions for the present global monetary-financial crisis are put into effect, the decade ahead will be a difficult one for all of the world's national economies. The world could never return to the recent past. We can, and must rebuild the world economy, but rebuilding means adopting new policies, and moving in different directions than the U.S.A. and International Monetary Fund have led the world during recent decades.

Let us consider three points, briefly. First, the world crisis. Second, the available systemic solutions for that crisis. Third, what those solutions would mean as opportunities for China.

First, consider the principal features of the way in which the present world crisis occurred.

Over the period 1933-1945, the United States led by its President Franklin Roosevelt, steered through both a general economic recovery and a great war. Shortly after the untimely death of that President, the U.S.A. emerged from that war as, in fact, the only world power of that moment. Although President Roosevelt's intention to decolonize the world was not carried out by his successors, the Americas, Western Europe, and Japan benefitted greatly from those aspects of President Roosevelt's policies which were built into the 1945-1964 phase of the Bretton Woods monetary system. There were many injustices within that world system, but the system produced great net growth in the world's real economy.

From about the same time as the onset of the U.S.A.'s 1964-1972 war in Indo-China, U.S. policy began a series of dramatic shifts away from both the economic policies of 1933-1964 and the traditional military policies applied during 1941-1945. Over the interval 1964 through January 1981, three radical shifts were introduced to the policies of the United Kingdom and U.S.A. The first, was a shift from a producers' society toward a so-called "post-industrial," "consumer" society, led by the U.K.'s Harold Wilson government. The second was the destruction of the 1945-1964 Bretton Woods monetary system, by the action of President Nixon, creating a "floating-exchange-rate" system, on Aug. 15, 1971. The third, was the drastic shift to destruction of the U.S.A.'s own infrastructure, agriculture, and manufacturing, launched under National Security Advisor Zbigniew Brzezinski during 1977-1981. This process was accelerated following the 1989-1991 collapse of Soviet power.

To illustrate the results of these three shifts, I have provided five charts, as follows.

Figure 1 is one I first introduced to a 1995 Rome conference. This is a purely pedagogical showing of the general characteristics of the changes in the economy of the Americas, Europe, and Japan over the interval from the 1966-1967 monetary crises of British sterling and the U.S. dollar, to approximately the present time. The chart is described as follows.

From left to right, the chart represents the interval from 1966 to approximately 2000.

The lower, downward-sweeping curve, represents a net decline in per-capita rates of physical output of the combined economies. The upper of the three curves, represents increase of nominal valuation of financial aggregates. The middle curve represents the infusion of sundry varieties of monetary aggregates used to facilitate the inflation of the financial bubble.

Figure 2 is also pedagogical. However, it reflects a change, estimated to have occurred during the Spring of 2000, in the relations between rates of growth of monetary and financial aggregates. From that point on, to the present, the amount of monetary aggregate supplied to support financial assets, must exceed the valuation of the financial assets subsidized in this way. This cross-over is of the same type as that which occurred in Weimar Germany during the interval of approximately June-July 1923. This cross-over was the launching of the hyper-inflationary skyrocket which destroyed the reichsmark in October-November of that same year.

Figure 3, represents actual data for a period corresponding to the portrait given in the second chart.

Figure 4 shows, simply the curve of hyperinflation in 1923 Germany. Figure 5 compares 1923 Germany with trends in the U.S. dollar today.

That illustrates the core of the causes for the world's presently exploding monetary-financial and economic crises. The present crisis is not conjunctural; it is systemic. It is the present system itself which has created this world crisis, over a period of about thirty-five years. There is no solution for this crisis without replacing that system. So, similarly, empires and dynasties have fallen in the past, and entire cultures have even disappeared.

If the system is not changed, the following world scenario is virtually inevitable.

When we consider the ratio of combined regular and irregular financial indebtedness, including all categories of financial derivatives and so-called "junk bonds" built into world finances as a whole, the ratio of financial debt to real value added in the world today is comparable to the debt-ratios which collapsed the Lombard banking system during the middle of Europe's Fourteenth Century. The effort of financiers then, to collect the full value of the financial debt, plunged Europe into what historians study as a "New Dark Age," during which an estimated one-third of Europe's population was wiped out. When that comparison to today's world is made, two facts should be clearly seen. First, that only a change from the world's present monetary-financial system would save civilization. Second, why some powerful financial special interests are desperate in their determination to resist establishing a new monetary-financial system.

There is a solution for this crisis. In my view, there are three steps which must be taken to find a way out of the presently deepening, combined, monetary-financial, economic, and strategic world crisis.

Step Number One: Use the relatively successful experience of the 1945-1964 Bretton Woods system as a model of reference for establishing a new world monetary system. This means a fixed-exchange-rate system, operating among economic-protectionist policies adopted as treaty-agreements between and among nations.

Such a proposal has been endorsed by groups of leading parliamentarians in Italy and elsewhere.

My personal estimate is that this might price monetary-reserve gold at somewhere between $800 and $1,000 a troy ounce; I may be underestimating the price, but the estimate illustrates the point. This means reorganizing the world's trade and physical economy around long-term credit in the order of a quarter-century in maturity and at borrowing costs not in excess of 1-2% simple-interest rate, for development of basic economic infrastructure and special-priority other projects.

Establishing such a new system would require intervention by, and cooperation among perfectly sovereign national governments, to put the existing monetary-financial system through government-directed bankruptcy-reorganization. This action would be governed, from the outset, as it was in President Franklin Roosevelt's measures, by the constitutional principle of natural law called variously "the general welfare" or "the common good." All essential employment and production, and payment of pensions, must continue in a customary form. Levels of production and distribution of physical goods and professional services must be sustained. Immediate measures to increase employment must be launched, with state-backed credit, especially in areas of basic economic infrastructure important for the present and future national interest.

Step Number Two. Technological measures must be taken as cooperation among nations, to raise the general net level of the physical-productive powers of labor globally, through flows of technology from technology-exporting localities to technology-deficit localities. Typical of such needed measures, is the proposal for a Eurasian Land-Bridge, proposed by my associates over the course of the recent ten years. Eurasian cooperation, probably pivotted on Europe's cooperation with a group of nations brought together by aid of strategic-economic cooperation among Russia, China, and India, is typical of the economic-growth programs which are required to match a return to something equivalent to the 1945-1964 Bretton Woods system.

Step Number Three. The time has been reached, at which we must surpass those relatively primitive levels of cooperation, in which peaceful cooperation has been treated merely as a form of mere negation of conflict. We must move toward the kind of policy which then-U.S. Secretary of State John Quincy Adams proposed for the future of the Americas: a community of principle among perfectly sovereign nation-states. Sovereignty requires that states be self-governed according to those national cultures by means of which the members of the nation are able to communicate ideas pertaining to what England's poet Shelley described as "profound and impassioned conceptions respecting man and nature." However, among such nations, our common purpose must be the same: the general welfare of each nation, and the general welfare which is positively promoted through cooperation among nations. Those nations which are prepared to adopt such a policy toward humanity should do so now. We should not seek to impose our will to that effect on other nations, but we should set the example we would hope they would come to admire.

All nations are, in fact, in one boat, a boat which is now sinking. We shall not save the boat without an energetic promotion of fundamental scientific and derived technological progress in the physical productive powers of labor. That means that that science and technology must be shared with those who have need of it. Without the adopted motive to benefit one's neighbor, for no different reason than the sake of the general welfare of humanity, we should probably not find the will needed to overcome the threats to the general welfare which now proliferate among the populations of the world.

Situate China in respect to that third consideration. See China through my eyes as an economist. See the crucial matters of the world's reciprocal relations with the nation of China, in the terms of my work as a long-range economic forecaster.

Progress is the fruit of the combination of a scientifically progressive culture, with the evolving cultural tradition through which a people chooses and implements its policies of practice. The fruit of such combined development of the culture, is to be estimated as the benefits which a present generation's work contributes to two, three, and four generations ahead. Since approximately a quarter-century is required, in technologically modern culture, to educate a newborn child to young-adult maturity as a working professional, we must judge the long-term effects of the present generation's decisions over a period of not less than fifty years ahead. What do we intend the condition of China and neighboring Asia to be fifty years from now? That should be the agenda for policy deliberation of the Americas and Europe with China today.

To motivate progress, we must provide the living individual with a sense of the meaning of his or her individual life and its outcome two or more generations ahead. An animal lives for today; a human being lives for that for which he or she should be remembered, and thanked, generations yet to come. If peoples of nations would think of themselves, their nation, and other nations, in that way, relations among peoples will have positive motives, the sense that we need one another to succeed, rather than merely negative desires to escape the penalties of conflict.

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