BU received an email from an anonymous mailer yesterday which highlights the barring of the Dalai Lama from attending a peace conference in South Africa. The Dalai Lama is recognize as the Head of State of Tibet and its spiritual leader. Since the middle of the twentieth century the Tibetan people have been displaced from their lands by the powerful rampaging Chinese.

The growing China influence in the world has not gone unnoticed among those who monitor world affairs. The refusal by South Africa to disallow the entry of Dalai Lama illustrates the rising influence which China has spawned on Africa and elsewhere. We have blogged our observations before. The insatiable demand caused by China’s massive economy forces the government to identify sustainable supplies of raw material.

Coincidental with the news about the Dalia Lama there has been another interesting development which involves China. Within recent days news reports emanating from China has been the growing concern regarding the ‘safeness’ of its US investments. The concern has been driven by the current global financial crisis. USA appetite for printing of money and the creation of a double digit trillion dollar deficit has the potential to devalue the US dollar.

Interestingly based on our understanding there continues to be “inherent vulnerabilities and systemic risks in the existing international monetary system,” and unless addressed will continue to undermine global financial markets.

The big question which China appears to be ready to advocate to the world is: why should the US dollar continue to be used by world countries as the key reserve currency? The current global monetary arrangement gives advantage to the USA to leverage the situation by running huge deficits through overseas borrowing which could threaten the value of US Treasuries held by the China government and other investors in the US financial market.

BU’s analysis of the current global political play maybe that China is ready to pounce on the current weakness of the United states. Commonsense suggests that while there would be risk to the Sino-USA partnership if China pursues the option to support a new money reserve currency, the long-term benefit maybe to predict a more stable global financial market.

BU is cognizant that if China and others from the non-G7 bloc get their way this would give rise to a new economic powerbase in world dominion. The pages of history continue to unfold!