The Bear and the Dragon

“Probably not-at least not yet,” van Damm thought. “If I were they, I wouldn’t exactly mind, but I wouldn’t need to play with this. They’ll probably increase their efforts to distinguish themselves from the mainland-and that amounts to the same thing. Look for the networks to do stories about the Republic of China, and how upset they are with all this crap in Beijing, how they don’t want to be tarred with the same brush and all that,” the Chief of Staff said. “You know, ‘Yes, we are Chinese, but we believe in human rights and freedom of religion.’ That sort of thing. It’s the smart move. They have some good PR advisers here in D.C. Hell, I probably know some of them, and if I were on the payroll, that’s what I would advise.”

That’s when the phone rang. It was Ryan’s private line, the one that usually bypassed the secretaries. Jack lifted it. “Yeah?”

“Jack, it’s George across the street. Got a minute? I want to show you something, buddy.”

“Sure. Come on over.” Jack hung up and turned to Arnie. “SecTreas,” he explained. “Says it’s important.” The President paused. “Arnie?”

“Yeah?”

“How much maneuvering room do I have with this?”

“The Chinese?” Arnie asked, getting a nod. “Not a hell of a lot, Jack. Sometimes the people themselves decide what our policy is. And the people will be making policy now by voting with their pocketbooks. Next we’ll see some companies announce that they’re suspending their commercial contracts with the PRC. The Chinese already fucked Boeing over, and in the full light of day, which wasn’t real smart. Now the people out there will want to fuck them back. You know, there are times when the average Joe Citizen stands up on his hind feet and gives the world the finger. When that happens, it’s your job mainly to follow them, not to lead them,” the Chief of Staff concluded. His Secret Service code name was CARPENTER, and he’d just constructed a box for his President to stay inside.

Jack nodded and stubbed out the smoke. He might be the Most Powerful Man in the World, but his power came from the people, and as it was theirs to give, it was also sometimes theirs to exercise.

Few people could simply open the door to the Oval Office and walk in, but George Winston was one of them, mainly because the Secret Service belonged to him. Mark Gant was with him, looking as though he’d just run a marathon chased by a dozen armed and angry Marines in jeeps.

“Hey, Jack.”

“George. Mark, you look like hell,” Ryan said. “Oh, you just flew in, didn’t you?”

“Is this Washington or Shanghai?” Gant offered, as rather a wan joke.

“We took the tunnel. Jesus, have you seen the demonstrators outside? I think they want you to nuke Beijing,” SecTreas observed. The President just pointed at his bank of television sets by way of an answer.

“Hell, why are they demonstrating here? I’m on their side-at least I think I am. Anyway, what brings you over?”

“Check this out.” Winston nodded to Gant.

“Mr. President, these are the PRC’s current currency accounts. We keep tabs on currency trading worldwide to make sure we know where the dollar is-which means we pretty much know where all the hard currency is in the world.”

“Okay.” Ryan knew about that-sort of. He didn’t worry much about it, since the dollar was in pretty good shape, and the nonsqueaky wheel didn’t need any grease. “So?”

“So, the PRC’s liquidity situation is in the shitter,” Gant reported. “Maybe that’s why they were so pushy in the trade talks. If so, they picked the wrong way to approach us. They demanded instead of asked.”

Ryan looked down the columns of numbers. “Damn, where have they been dumping all their money?”

“Buying military hardware. France and Russia, mostly, but a lot went to Israel, too.” It was not widely known that the PRC had spent a considerable sum of money in Israel, mainly paid to IDI–Israel Defense Industries-to buy American-designed hardware manufactured under license in Israel. It was stuff the Chinese could not purchase directly from America, including guns for their tanks and air-to-air missiles for their fighter aircraft. America had winked at the transactions for years. In conducting this business, Israel had turned its back on Taiwan, despite the fact that both countries had produced their nuclear weapons as a joint venture, back when they’d stuck together- along with South Africa-as international pariahs with no other friends in that particular area. In polite company, it was called realpolitik. In other areas of human activity, it was called fuck your buddy.

“And?” Ryan asked.

“And they’ve spent their entire trade surplus this way,” Gant reported. “All of it, mainly on short-term purchase items, but some long-term as well, and for the long-term stuff they had to pay cash up front because of the nature of the transactions. The producers need the cash to run the production, and they don’t want to get stuck holding the bag. Not too many people need five thousand tank guns,” Gant explained. “The market is kinda exclusive.”

“So?”

“So, China is essentially out of cash. And they have real short-term cash needs. Like oil,” TELESCOPE went on. “China’s a net importer of oil. Production in their domestic fields falls well short, even though their needs are not really that great. Not too many Chinese citizens own cars. They have enough cash for three months’ worth of oil, and then they come up short. The international oil market demands prompt payment. They can skate for a month, maybe six weeks, but after that, the tankers will turn around in mid-ocean and go somewhere else-they can do that, you know-and then the PRC runs out. It’ll be like running into a wall, sir. Smack. No more oil, and then their country starts coming to a stop, including their military, which is their largest oil consumer. They’ve been running unusually high for some years because of increased activity in their maneuvers and training and stuff. They probably have strategic reserves, but we don’t know exactly how much. And that can run out, too. We’ve been expecting them to make a move on the Spratly Islands. There’s oil there, and they’ve been making noises about it off and on for about ten years, but the Philippines and other countries in the area have made claims, too, and they probably expect us to side with the Philippines for historical reasons. Not to mention, Seventh Fleet is still the biggest kid on the block in that part of the world.”

“Yeah.” Ryan nodded. “If it came to a showdown, the Philippines appear to have the best claim on the islands, and we would back them up. We’ve shed blood together in the past, and that counts. Go on.”

“So, John Chinaman is short of oil, and he may not have the cash to pay for it, especially if our trade with them goes down the toilet. They need our dollars. The yuan isn’t very strong anyway. International trading is also done in dollars, and as I just told you, sir, they’ve spent most of them.”

“What are you telling me?”

“Sir, the PRC is just about bankrupt. In a month or so, they’re going to find that out, and it’s going to be a bit of a shock for them.”

“When did we find this out?”

“That’s my doing, Jack,” the Secretary of the Treasury said. “I called up these documents earlier today, and then I had Mark go over them. He’s our best man for economic modeling, even whacked out with jet lag.”

“So, we can squeeze them on this?”

“That’s one option.”

“What if these demonstrations take hold?”

Gant and Winston shrugged simultaneously. “That’s where psychology enters into the equation,” said Winston. “We can predict it to some extent on Wall Street-that’s how I made most of my money-but psychoanalyzing a country is beyond my ken. That’s your job, pal. I just run your accounting office across the street.”

“I need more than that, George.”

Another shrug. “If the average citizen boycotts Chinese goods, and/or if American companies who do business over there start trimming their sails-”

“That’s damned likely,” Gant interjected. “This has got to have a lot of CEOs shitting their pants.”

“Well, if that happens, the Chinese get one in the guts, and it’s going to hurt, big time,” TRADER concluded.

And how will they react to that? Ryan wondered. He punched his phone button. “Ellen, I need one.” His secretary appeared in a flash and handed him a cigarette. Ryan lit it and thanked her with a