In his piece, "China's European Shopping Spree," Blyth opens (in an article that should be read in full):
When Chinese Premier Wen Jiabao was on a tour of European capitals
last month, he stressed two things at each stop: that a stable eurozone
is vital to China and that China is Europe's friend. Indeed, from
Beijing's perspective, when it comes to Europe, self-interest and
altruism neatly coincide. If China were to buy only half of all
outstanding Greek sovereign debt (a bargain at around $220 billion, a
fraction of China's dollar assets), it would not only resolve the
eurozone crisis and add to Chinese prestige but it would help give
Beijing the sort of reserve asset that it needs to diversify its
holdings out of dollars. Currently, 70 percent
of China's reserves are in dollars, and China does not even make the
list of the top 40 holders of Greek debt. But why would China not take
such an opportunity?
For one, China probably has as little faith in the EU's ability to
solve its debt crisis over the long run as do the rest of the world's
financial markets, more bailouts notwithstanding. But another answer is
possible -- one that links the 2008 financial crisis and the 2011
European bond market crisis to a possible Chinese end run around the
2007 Foreign Investment and National Security Act. This U.S. law makes
it hard for China to diversify out of its $3 trillion-plus holdings of
U.S. dollars and buy sensitive U.S. assets such as aerospace,
technology, and defense-related companies.
As a result of the unintended consequences of U.S. and European
actions in financial markets, there is now the possibility that, even
with this latest bailout, China could buy such sensitive assets from
Europe, at fire-sale prices.
Blyth's EU-China scenario, which he admits may seem far-fetched to some and which is more developed in the balance of the article, makes a great deal of sense to me as China has demonstrated a high-octane strategic competence meshing economic and national security interests while the US and Europe's strategic course in these realms has become more inchoate and blurry.
China is able to do today what the US did yesterday -- which is to sequence and prioritize policy objectives across a great number of sectors and focus on achieving them, ignoring distractions, and not allowing events or passions to hijack national attention.
Today, the US, and I'd include Europe, are suffering from the lack of vision and strategy -- unable to resist the next big intoxicating, contrived battle in Washington or the desire to take on yet another complex national security challenge (Syria comes to mind possibly) that is a distraction from the larger geo-strategic challenges of the day.
China stays on track -- and the West seems to have gotten off at a rest stop and can't chart its way back to the onramp.