The Bear and the Dragon - Tom Clancy [288]
"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,