Asia Pacific

The World This Week: Explosions in China Rock the World


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August 15, 2015 13:05 EDT

Tragic explosions in China caused seismic shocks 160 kilometers away, and the devaluation of the renminbi has sent shockwaves worldwide.

Tianjin is the biggest port in northern China. It is the maritime gateway to Beijing and the fourth largest urban center in the Middle Kingdom. In 2013, Tianjin handled more than 500 tons of cargo that included coal, oil products, mineral ores, steel and chemical products. It is a classic example of the ambition of modern China that has enabled the country to achieve the fastest and biggest industrialization in history. The recent explosions in Tianjin are a chilling reminder that Chinese success has come at a price and at huge risk.

The causes of the blast are still unknown, but the BBC suggests that water might have been sprayed on calcium carbide to create the highly explosive acetylene. This acetylene blast might then have detonated ammonium nitrate. The initial explosion on August 12 was the equivalent of detonating three tons of TNT, while the following one was the equivalent of 21 tons. Satellites orbiting the Earth picked up the second explosion and so did the seismometer station in Beijing, which is 160 kilometers away.

The explosions destroyed goods worth millions of dollars. More than 100 people have already died and over 700 have been hospitalized. The real risk is air, water and soil contamination. Many fear that toxic chemicals released by the explosions might cause lasting damage to Tianjin residents. Incidents of cancer and birth defects might rise dramatically. Chinese authorities have ordered residents living within a three-kilometer radius of the blast site to leave. Even as an evacuation is taking place, Chinese soldiers of the National Nuclear Biochemical Emergency Rescue Team have launched a rescue mission at the core area of the explosion site.

The tragic Tianjin explosions are a spectacular example of the catastrophic environmental damage currently taking place in China. As Berkeley Earth observes, 1.6 million people die every year because of air pollution in the Middle Kingdom. The Chinese Environment Ministry has admitted that about 60% of underground water and a third of surface water in China is unfit for human contact. Heavy metals in China’s soil are now entering the country’s food supply. What people eat on a daily basis is damaging their health and wellbeing.

It is little wonder that President Xi Jinping has urged authorities to learn from the “extremely profound” lessons of the Tianjin explosions. He has called for “safe development” and asked authorities to put “people’s interest first.” The truth is that China is going through much soul-searching. As pointed out by this author earlier, Zhu Rongji’s Shanghai has abandoned the gross domestic product (GDP) growth target. Furthermore, the current Chinese economic model might have reached its limits. China cannot grow as it used to and the costs of growth have become too high.

China’s dash for growth was inaugurated by Deng Xiaoping. Deng initiated reforms in 1979 after his 1978-visit to Bangkok, Kuala Lumpur and Singapore. He took Lee Kuan Yew’s advice and turned to markets, abandoning communes. In 1992, Deng famously embarked on Nanxun, which literally means southern tour. During this tour, Deng called for radical reform and the opening up of the Chinese economy. The rest is history.

In 2015, the Chinese economic juggernaut set into motion by Deng has stalled. Chinese property values have fallen dramatically and stock prices have dived to new depths. Both property firms and stock market investors are deep in debt. Therefore, the government has been bailing out both property firms and the stock market to maintain some semblance of confidence in the economy.

These bailouts have not quite worked. Hence, this week the Chinese decided to devalue their currency. On August 11, the renminbi dropped by 1.9% against the dollar. The next day it fell by a further 1%. The aftershocks of the devaluation are being felt in all parts of the world.

In 2010, Brazilian Finance Minister Guido Mantega declared that the world was witnessing an “international currency war.” In his view, this game of competitive devaluation in which each country lowered the value of its currency to boost exports was a de facto trade war. His comments came in the aftermath of Japan, Taiwan, South Korea and the US devaluing their currencies. German Finance Minister Wolfgang Schäuble was not happy with the US policy of quantitative easing, which is simply buying assets from commercial banks and financial institutions to release more money into the economy. Schäuble was of the view that the US policy did not make sense and increased “uncertainty to the global economy.”

Fair Observer - World News, Politics, Economics, Business and CultureMantega and Schäuble were onto something. If every country was to devalue its currency, then no one would be any better off. Existing asset price bubbles would worsen and inflation would eventually rear its ugly head. Devaluations are only short-term measures that mitigate the immediate blow of a crisis. This is what Chinese authorities are trying to do. By lowering the renminbi, China is obviously attempting to boost exports by making them cheaper. It is also trying to stimulate domestic consumption of its products. For instance, shares of companies making luxury products such as Burberry have fallen because their products will now cost more for Chinese consumers. Authorities hope the Chinese will now buy domestic replacements instead.

The devaluation of the Chinese currency is affecting countries differently. The Federal Foreign Office of Germany states that China is the fourth biggest buyer of German exports. The Middle Kingdom will certainly be purchasing less Porsches and other German goods going forward. Latin America, Africa and Australia have flourished recently by sating ravenous Chinese hunger for natural resources. Between 2000 and 2012, Sino-Brazilian trade alone increased by 2,550%, from little over $10 billion to $255.5 billion. These China-dependent economies will suffer. The Chinese devaluation will hurt other economies seeking to boost manufacturing such as India and Vietnam. With a cheaper renminbi, China has become just a touch more seductive for companies competing to cut costs.

Yet the devaluation has its downsides even for China. Chinese entities have borrowed $1.6 trillion in foreign currencies, 80% of which is denominated in dollars. A more expensive dollar could mean companies defaulting on their payments and even going out of business. This would entail either loss of capital for foreign investors or bailouts from the Chinese government to save jobs, or a bit of both. The global economy is now infernally inextricably interlinked. The dragon has sneezed and the rest of the world has caught a cold.

*[You can receive “The World This Week” directly in your inbox by subscribing to our mailing list. Simply visit Fair Observer and enter your email address in the space provided. Meanwhile, please find below five of our finest articles for the week.]

[seperator style=”style1″]Questioning Sandra Bland’s Unexplained Death[/seperator]

Sandra Bland

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A detailed look at the Sandra Bland case raises tens of questions about her arrest and death.

On July 10, the vibrant #BlackLivesMatter activist Sandra Bland was pulled over after changing lanes without using her turn signal. She was threatened and arrested by a police officer. Three days later on July 13, the 28-year-old was found hanging in her jail cell in Waller County, Texas. What followed was the usual cycle of spin: egregious vilification of her behavior and repeated deception of the public.

Unfortunately, we don’t have the time to investigate the 700 Americans killed by police this year—who are disproportionately black—or the five black women who died in jail over two weeks in July. Yet a look at Bland’s case highlights major inconsistencies shared through an all-too-common communications strategy.

Early accounts described her as pulled over for illegally changing lanes, “very combative” and… Read more

[seperator style=”style1″]Doublespeak: Radical Right Rhetoric Today[/seperator]

Marine Le Pen

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How do radical political movements mask their racist rhetoric?

Let us depart from a truism: Modern politics relies enormously upon shaping “the message” toward targeted groups and constituencies. Whether it’s the Labour Party’s “Controls on Immigration” or the Tories’ “blue collar cabinet,” on either side of the recent 2015 General Election in Britain, reaching beyond a core “base” of activists is now widely recognized as the key ingredient to political success. This is no less true of the radical right in Europe and the United States since 1945, albeit manifested in a much different way.

The issue is ultimately a simple one. Radical right activists have long tended to be racist or xenophobic, sympathetic to fascism and anti-Semitic deceptions like Holocaust denial. In post-war Europe and the US, these are scarcely vote-winners, meaning that the transnational radical right has had to go much further in manipulating “the message” than mere political triangulation—something perhaps better described as “fifth column discourse,” a radical right rhetoric that… Read more

[seperator style=”style1″]The Real Threat of American Extremism[/seperator]


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Fundamentalist Christianity is a danger to both the global image and the future development of America.

In the aftermath of the Paris attacks in January, the world stage has been rife with discussion about the dangers of Islamist extremism. That fateful word, “extremism,” has always carried a charge, but in the long shadow of 9/11 it has become especially sinister. In many cases, the response to perceived extremism is itself quite radical, often involving violent racism against those with alleged connections to extremist groups.

For many, since 2001, the word “extremism” has largely become associated with “terrorism,” and with radical Islam in particular. Due to the tragic events of September 11, 2001, and President George W. Bush’s unforgivable response to them, many Americans equate the words “extremist” and “Muslim.” The unceasing atrocities committed on all sides in the Middle East have fortified this architecture of hatred, strengthening bigoted mindsets with each new act of violence. America has proven itself to be fertile ground for racial hatred… Read more

[seperator style=”style1″]After Iran, is North Korea Next?[/seperator]

North Korea

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The Obama administration has concluded deals with Iran and Cuba. Will North Korea round out the trifecta?

During the George W. Bush years, pundits and journalists were constantly speculating over whether North Korea would be next in line for regime change. After all, President Bush had included North Korea in his “axis of evil” speech in 2002. One year later, the Pentagon invaded Saddam Hussein’s Iraq, a member of the trio of tyranny. Perhaps North Korea would be the next undemocratic domino to fall.

But the Bush administration didn’t invade North Korea. The neoconservatives in ascendance in Washington were largely focused on the Middle East. With its many artillery positions, North Korea could quickly retaliate against any attack by destroying much of the densely populated South Korean capital. And there was no government-in-exile that could plausibly take over in Pyongyang if US troops managed to dislodge the Kim dynasty.

Jump ahead a decade and the question again arises: Will North Korea be next? But this time, pundits… Read more

[seperator style=”style1″]Donald Trump Rescues America and Finds MH370[/seperator]

Donald Trump

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Trump has singlehandedly turned the Republican presidential race into a reality show that stars only him and has a supporting cast of “bit players.”

The ongoing Republican presidential nomination circus has caused me to delay a trip to Reunion Island to help with the search for parts of the missing Flight MH370 that are not in Kazakhstan. Faithful readers of mine will remember that early-on, and with good reason, I suggested that the missing plane was in Kazakhstan.

I still believe this to be true. I think the wily Kazakhs who have the plane decided it was time to throw folks like me off the scent by hurling a “flaperon” from the wing of the plane into the Caspian Sea.

For those of you with an interest in geography, the Caspian Sea borders Kazakhstan and flows nowhere. But Iran borders the Caspian Sea and the Persian Gulf, which flows into the Arabian Sea and on to the Indian Ocean and Reunion Island. The best speculative evidence available… Read more

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

Photo Credit: Leo Wolfert /

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