But there is a difference between the potential to, the capability to, or even the desire to. China certainly wants to have a greater say in the structure of the global system that is now emerging, a system that from China's perspective should be multilateral, without a single dominant global power. China's drive toward "big power" status is not the same as seeking the central role of a global system. The reality is that the cost to maintain a central global role is just too high. The British, the French, the Spanish and Portuguese, the Americans, even more regional powers like Japan, Germany and the various guises of Russia, all showed that maintaining central power over a vast empire is simply exhausting. A hegemony mustrespond to challenges, no matter how small, or risk losing its power and influence. China may be a big country, but it is far from ready to take on the role of global balancer.

The Center of a Regional System

Which is why it may be useful to look back into history to see how China has managed power in the past. For some 2,000 years, prior to European imperial advancements in the early 19th century, China sat at the center of a regional imperial system of its own, where China was clearly seen as first among unequals. Imperial China developed a system of maintaining influence while limiting the need for direct action. China, in many respects, retained passive influence rather than direct positive control. Power moved out in rings from the core. There was China proper, protected by an integrated shell of buffer states. For some of these, from Xinjiang to Tibet to Manchuria, China was not always dominant, but when outside powers swept across the buffers to change Chinese empires, they at times found themselves ultimately integrated into the Chinese system.

Beyond that were tributary powers, kingdoms that nominally respected China's role at the center of a Sinacized region. These included areas such as Korea, the Shan state of Burma or even what is now Vietnam -- areas where China attempted to expand but reached the limits of its power. Beyond these were so-called barbarian powers, ones that required minimal contact and were generally regarded as inferior (and thus not needing integration). These not only included places like the Ryukyu Islands, parts of the Malay Peninsula and some of the Central Asian ethnic tribes, but also the more distant European civilizations at times.

China could influence the behavior of its neighbors, but it did so as often as possible through passive means, demonstrating power but rarely using it. Instead, so long as the neighbors did not fundamentally counter China's core interests, they were largely left to their own devices. In this manner, China could remain central to a regional system while expending little in time, effort or resources to enforce its will -- particularly when imperial expansion proved unachievable. Neighbors including Korea and Vietnam paid tribute and adopted the written language, governing systems and social structures from the Middle Kingdom. This cultural and political influence reduced the need for military action by either side of the arrangement.

In short, most countries, most of the time, largely accepted the arrangement, both for cultural reasons and because the cost of direct challenge was often too high. This did not prevent various challenges -- the Mongols and Manchu, for example, or Japan's attempted usurpation of the Chinese imperial throne in the late 16th century. But these invaders more often sought to insert themselves at the center of the Sinitic order, rather than completely overturn it. Even the failed invasion by Japan's Toyotomi Hideyoshi in the last decade of the 1500s, which devastated Korea but failed to reach China proper, was an attempt to move Hideyoshi to China, allowing him to place his young son on the throne in Japan, linking the two empires but leaving China the physical and political center.

China's crisis with Western imperialism through the 1800s occurred at a time of dynastic and imperial weakness, and China was further weakened by Japanese occupation beginning in the 1930s and then by civil war from 1945 to 1949. The early Mao years were about reconstituting Chinese unity, but also showed the stirrings of Chinese foreign interest in a modern era. Although China under Mao played a role in the overall international Communist drive, providing money, manpower and materiel to various insurgencies, this was paired with a longer-term and more passive strategy. China made friends. Not necessarily with leaders, but with individuals who could ultimately prove influential, and perhaps nudge them to victory.

In part in keeping with its historical management strategy, China retained influence through its backing of leaders, from the king of Cambodia to the Nepalese monarchy to the Kim family in North Korea. But China also acted by retaining relations with many alternatives in and out of governments. The idea was that, no matter who came to power, China would have at least some existing relationship to draw on. Where China was drawn into regional conflict -- with Vietnam and in Korea -- it saw a potential threat to its buffer, and acted out of self-interest.

An Alternate Vision for the World

As we move into the current era, China is seeking to re-establish itself at the center of the region, politically, economically and strategically. The One Belt, One Road initiative is a key component of China's foreign strategy, to link itself into the emerging economic patterns around the region, placing China in the center of an integrated regional trading system. It also reflects a broader ambition -- one where China takes hold of the so-called strategic pivot of the European landmass. China's establishment of the AIIB in late 2015 is part of a broader initiative intended to place China at the center of a regional financial system, one that breaks free from what Beijing sees as the economic hegemony of the Bretton Woods system that established the U.S. dollar as the global reserve.

Politically, China is continuing to offer a counter to the United States, positioning itself as a country that does not try to assert a specific political system upon others, but that rather is willing to work with whatever government a country may have. Militarily, China has asserted itself as the central power in the Western Pacific and argues that Japan is an imperial threat because of history, and the United States is a foreign interloper. China can provide regional security for all, so long as all accept China's central role.

At a time when Russia is working to reassert its influence around its periphery, when Europe is struggling to define its own future (greater integration, or disassociation into its constituent parts), and when the United States, at least temporarily, appears ready to step back from the role of global hegemon, the global system is in flux. What China is seeking on a global level is to fill an opening, to reshape the global system into one where spheres of influence among the dominant powers are recognized and respected. This is neither globalism nor hegemony. It is perhaps more akin to the period of European empires, though more regionally arranged. It is a world divided among great powers, each the relatively benign center of its own region.

China's curtailment of coal imports from North Korea is thus a reminder to an increasingly defiant semi-ally that it must behave against the contours of regional power. It should not be seen as the ultimatum of a would-be global hegemon.

This article was originally published by Stratfor, a leading global intelligence and advisory firm based in Austin, Texas.

Spain Sets Massive Precedent – Charges Its Central Bankers in Court

First, Iceland, and now Spain has taken on the Big Bankers responsible for financial calamity, as the country’s highest national court charged the former head of Spain’s central bank, a market regulator, and five other banking officials over a failed bank leading to the loss of millions of euros for smaller investors.

This, of course, markedly departs from the mammoth taxpayer giveaway — commonly referred to as the bailout — approved by the U.S. government ostensively to “save” the Big Banks and, albeit unstated, allow the enormous institutions to continue bilking customers without the slightest fear of penalty.

Errant bankers and financiers, it would seem, typically manage to either evade actually being charged, or escape hefty fines and time behind bars.

Spain’s Supreme Court last year ruled “serious inaccuracies” in information about the listing led investors to back Bankia in error, thus the bank has since paid out millions of euros in compensation.

But Spanish authorities could not abide the telling findings of a yearslong investigation into the failed listing, as Wolf Street explains,

“As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel Ángel Fernández Ordóñez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV [National Securities Market Commission] (the Spanish equivalent of the SEC in the US).

“The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain’s own team of inspectors that the banking group was ‘unviable.’”

As AFP reports, “The National Court validated conclusions made by prosecutors who concluded that when ‘an unviable entity has been listed on the stock market, its administrators or auditor should not shoulder all the responsibility.’”

Specifics of the charges have not yet been made apparent, but asThe Economist reports:

“The court is questioning why they allowed Bankia to sell shares in an initial public offering in 2011, less than a year before Bankia’s portfolio of bad mortgage loans forced the government to seize control of it. It said there was evidence the regulators had ‘full and thorough knowledge’ of Bankia’s plight. After its nationalisation, it went on to report a €19.2bn ($24.7bn) loss for 2012, the largest in Spanish corporate history.”

Internal emails and documents played a crucial role in ultimately bringing the central banking officials to task for the failure of Bankia — inspectors bringing issues to the attention of superiors were allegedly ignored. One email cited by the Economist came from an inspector who warned Bankia was “a money-losing machine,” for which an IPO would not solve.

Another report, deemed “devastating by the court,” saw an inspector advise Bankia to seek a private buyer rather than proceed with the listing.

An inquiry into “the participation of other players, such as officials in the central bank,” was also urged by the National Court.

As the Economist points out, Spanish judges are generally reluctant to sentence first-time financial criminals to prison; though five Novacaixagalicia executives had five-year suspended sentences — levied for embezzlement in 2015 — abruptly enforced in January.

Meanwhile, taxpayers in the United States have yet to see Big Bankers criminally responsible for the financial ruin of so many Americans brought to any semblance of justice for their wrongdoing.


Waking Times