The Soviet communist empire, never an economic success, was bankrupt to death, both ideologically and financially, but the China communist empire is an economic success, and is being enriched by the world.

China’s trade surplus with the rest of the world tripled to $102 billion in 2005 from $32 billion in 2004. Its exports rose by 28% from 2004 to the figure of $762 billion in 2005. Total foreign trade in 2005 topped $1.4 trillion, making China, after the US and Germany, but ahead of Japan, the world’s third-largest foreign trading country. A decade ago, the value of China’s foreign trade was only $289 billion.

The US trade deficit with China is expected to have been over $200 billion for 2005, compared with $163 billion for 2004. The annual trade deficit of the US with China was $20 billion when President Clinton took office in 1992. This figure is now almost surpassed in a month. Senator Max Baucus said last week in Beijing that freer trade with China saves US households $600 per year. In effect, there is the feeling that “globalization” has become effectively tantamount with “China-lization”.

China’s foreign currency reserves at the end of December 2005 were $818.9 billion compared to $769 billion at the end of September 2005, and $610 billion a year earlier. They are surpassed only by Japan’s foreign-exchange reserves that stood at $824 billion at the end of November 2005, and were estimated at $828 billion at the end of December 2005.

China has been investing its reserves in US government debt and held $247 billion in US treasury bonds at the end of October 2005, making the nation the largest investor after Japan. Economists estimate that China’s reserves of foreign currency are between 70% and 80% in US dollars and have almost tripled since the end of 2002, lifted by about $170 billion of foreign investment, a cumulative trade surplus of $160 billion, and billions of dollars of capital inflows betting on a rising yuan. China revalued its currency by 2.1% against the dollar in July 2005, and is under pressure from the US, Europe, and Japan, to let the yuan appreciate some more.

Further, China announced last month that its gross domestic product figure was underreported by $280 billion. This leads to an estimated annual economic growth for China of as much as 10% annually in the past few years.

China’s currency regulator said January 5, 2006, that the government is looking for new ways to invest the money reserves and to seek higher returns. It becomes obvious that the higher the reserves get the more nervous the Chinese will be about keeping them predominantly in dollars. It can be expected that in the future they will be putting smaller portions of the new reserves into dollars. Will now the US find new investors in the government papers? Also, the Chinese are now interested in direct investments in foreign companies - specially in the energy sector. Will the US be able to continue blocking their way, as it was done when they wanted to buy into a US oil company?

China is also increasing its foreign aid activities. One interesting example occurred just now when they provided locomotives and buses to Fidel Castro’s Cuba. Mr. Castro thanked them for helping improve transportation on the island. In his laudatory, yesterday, Mr. Castro called China - “the principal locomotive of economic development in the world” - and you know what? He was actually right!

Having said the above, we did not intend a second laudatory for China’s resourcefulness, but rather, we want to express our hope that with economic success will come also responsibility for the environment. We understand that for the “have-nothing”, even though they are the bigger victim from the neglect of the environment, but they also do miss the focusation on the problems. It is the “haves” who can afford to look for what is in need of correction. China is moving fast over to the category of a “have” and they will simply not want to lose their investments. If the US rejects the role of global leader, perhaps an economically successful China will be ready to enter the arena instead. Do not be fooled by their rhetoric - the truth is that the government in China seems to worry already now about environmental impacts more then the government of the US. China will be most probably the future supplier of sound technology to the world.