In the 18th century, the Chinese market remained a mystery for Britain, which was dependent on imports of Chinese tea, silk, textiles and porcelain. China's demand for payment in gold bullion and silver sucked Britain's reserves dry.
The British tried everything to reverse the trade imbalance. Experiments in new trade instruments ensued. Knives and forks were exported to China in the hope that every Chinese would abandon chopsticks. But it didn't work. Piano exports also failed; nobody wanted to play them.
Finally, the British found a commodity that worked - opium. After a war to open China's trading ports, the addiction worked. The trade deficit began to reverse, and Britain's silver reserves once again grew. Is something similar happening today?
China's media reported during last month's Group of 20 meeting that America's assistant trade representative had stated that 'China is America's bank' - a profound thought.
Certainly, there has been little substantive progress following congressional approval of America's US$700 billion bailout plan. America is technically bankrupt as a country and has no cash. It can issue more Treasury bonds, but it needs a buyer.
Large European economies such as Germany, France, Britain and Spain have all come out with their own bailout plans for their financial institutions.
Total commitments from European countries amount to some US$2 trillion, to be financed almost entirely by new bond issues. Add America's bailout package and assorted debt issues, and the total amount of the black hole for sale is US$3.4 trillion. But who wants to buy it?
