Japan is using both yen and yuan in its bilateral trade with its huge Asian neighbor. The fact is that there's already an unacknowledged Asian free-trade zone in the making, with China, Japan, and South Korea on board.
What's ahead, even if it includes a BRICS-bright future, will undoubtedly be very messy. Just about anything is possible (verging on likely), from another Great Recession in the US to European stagnation or even the collapse of the eurozone, to a BRICS-wide slowdown, a tempest in the currency markets, the collapse of financial institutions, and a global crash.
And talk about messy, who could forget what Dick Cheney said, while still Halliburton's CEO, at the Institute of Petroleum in London in 1999: "The Middle East, with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies." No wonder when, as vice president, he came to power in 2001, his first order of business was to "liberate" Iraq's oil. Of course, who doesn't remember how that ended?
The Chinese are expanding Iran's fleet of oil tankers, a deal worth more than US$1 billion, and that other BRICS giant, India, is now purchasing even more Iranian oil than China. Yet Washington won't apply its sanctions to BRICS members because these days, economically speaking, the US needs them more than they need the US.
The world through Chinese eyes
Which brings us to the dragon in the room: China.
The usual self-description of the system there as "socialism with Chinese characteristics" is, of course, as mythical as a gorgon. In reality, think hardcore neo-liberalism with Chinese characteristics led by men who have every intention of saving global capitalism.
At the moment, China is smack in the middle of a tectonic, structural shift from an export/investment model to a services/consumer-led model. In terms of its explosive economic growth, the last decades have been almost unimaginable to most Chinese (and the rest of the world), but according to the Financial Times, they have also left the country's richest 1% controlling 40%-60% of total household wealth. How to find a way to overcome such staggering collateral damage? How to make a system with tremendous inbuilt problems function for 1.3 billion people?
Enter "stability-mania." Back in 2007, Prime Minister Wen Jiabao was warning that the Chinese economy could become "unstable, unbalanced, uncoordinated, and unsustainable." These were the famous "Four Uns."
Today, the collective leadership, including the next Prime Minister, Li Leqiang, has gone a nervous step further, purging "unstable" from the Party's lexicon. For all practical purposes, the next phase in the country's development is already upon us.
It will be quite something to watch in the years to come.
The Obama administration, expressing its own anxiety, has responded to the clear emergence of China as a power to be reckoned with via a "strategic pivot" -- from its disastrous wars in the Greater Middle East to Asia. The Pentagon likes to call this "rebalancing" (though things are anything but rebalanced or over for the US in the Middle East).
Before 9/11, the Bush administration had been focused on China as its future global enemy number one. Then 9/11 redirected it to what the Pentagon called "the arc of instability," the oil heartlands of the planet extending from the Middle East through Central Asia. Given Washington's distraction, Beijing calculated that it might enjoy a window of roughly two decades in which the pressure would be largely off. In those years, it could focus on a breakneck version of internal development, while the US was squandering mountains of money on its nonsensical "Global War on Terror."