The US policy to counter the growing economic and political strengths of China have taken a dangerous turn, says Chris Nineham

Donald Trump’s recent claim that the World Health Organisation is a puppet of China is just one more outrage in a China-baiting campaign that has reached new depths during the Corona crisis. It has included accusing the Chinese of a cover-up and of deliberately spreading the disease and a threat to cut all ties with the country. In one particularly surreal ramble, Trump claimed that China’s behaviour over the Coronavirus was ‘worse than Pearl Harbour…worse than the World Trade Center. There has never been an attack like this’. Unsurprisingly given the shambles in the US, China has responded by claiming the US president is deflecting the blame for his handling of the coronavirus crisis at home.

Many western commentators are also explaining these outbursts as blame-shifting and characteristically xenophobic contributions to Trump’s election bid. It is true the US Republican Party views the China question as key to winning in November. It plays to jingoism and is, ironically, also regarded by party leaders as a way of deflecting attention from Trump’s increasingly bizarre behaviour. In April the party went as far as sending out a memo whose central message was “Don’t defend Trump, other than the China Travel Ban — attack China.”

There is, however much more to this than electioneering or passing the buck for the Corona catastrophe. Trump may have turned up the volume recently, but he has been insulting the Chinese since late 2017 when the relationship with President Xi fell apart. And this isn’t just bluster. The administration has been pursuing a serious anti-Chinese trade agenda for nearly two years now.

Serious business

The scale and impact of the tariffs indicates that the confrontation with China goes way beyond rhetoric. Trade between the two countries remains high. US carmakers for example, sell more cars in China than they do in the US. But while Trump spent a good deal of the first two years in the White House trying to forge closer ties with China, Trump’s two waves of tariffs beginning in 2018 have encompassed around $400bn worth of goods shipped between the two countries. One estimate by a New York-based consultancy suggests that total Chinese investment in the US fell from $45bn in 2016 to just $5 billion last year. Statistics from China show that US-China trade was 14% lower during the first half of 2019 as compared to the same period a year earlier. Threats to leave the World Health Organisation, ban on US companies supplying Chinese telecoms giant Huawei and regular and provocative attacks on the record of the Chinese leadership are causing consternation in Beijing and contributing to turbulence in global markets and deep concern in multilateral institutions.

Tellingly there have recently been two massive hikes in US military expenditure justified by the Chinese threat. First a $1.3 trillion investment in new ‘low yield’ nuclear warheads, the militarisation of the space race and much more. Second, a call for an additional $20.1 billion in a report from the U.S. Indo-Pacific Command. The first line of the report, titled Regain the Advantage is, ‘The Indo-Pacific is the Department of Defense’ s priority theater’. Section one starts with the line, ‘The most important action we can take is to increase the lethality of the Joint Force’. Funds are apparently required for new radar warning systems and cruise missiles, more exercises with allies, deployments of additional forces, and new intelligence-sharing centers. The measures are designed to persuade potential adversaries that ‘any pre-emptive military action will be extremely costly and likely fail by projecting credible combat power’.

Agitation against China is bi-partisan. Not to be outdone in the Sinophobia stakes, in April US Democratic Party presidential candidate Joe Biden released an attack video accusing Trump of being soft on the Chinese. Anti-Chinese sentiment is strengthening across the US political class. Bonnie Glaser, a China expert at the Washington based Center for Strategic and International Studies, argues that pressure is growing across the political spectrum for Washington to take a tougher stance on Beijing.

“There really is an unprecedented anti-China view in Congress,” she said. “We have never seen so many [critical] resolutions put forward. It’s rare to hear anything positive about what China is doing.”

A tipping point

The broad-based ramping up of anti-Chinese action and rhetoric is a response to changes in the relationship between the two powers. These have quantitative and qualitative aspects. Earlier this century the relationship could be presented as one of mutually beneficial interdependence. Trade between the two countries was growing. China produced large amounts of cheap goods that were bought mainly by the west. Higher tech US companies provided industrial support and sold to China’s expanding domestic market. Meanwhile China’s large holding of dollar bonds helped to offset the trade deficit between the two countries. But in the 2000s, China’s gross domestic product began to grow faster than the US’s.

In the last decade, China’s GDP calculated in terms of purchasing power outstripped that of the US. In absolute terms the gap is narrowing fast. The result is that China has gradually overtaken the US as the major supplier of goods to Europe, Asia, Africa and South America.

At the same time, the established division of labour between the two countries is breaking down. The Chinese have developed the capacity to produce hi-tech goods in artificial intelligence, telecoms, drones, and entertainment to a higher and higher standard. This is a direct challenge to the US in some of its key markets. One widely watched indicator of national competitiveness is the number of Patents in Force (PiFs) from a particular country. In 2007 China recorded 15% of the number of PiFs registered by the US, just over a decade later China and the US-registered almost exactly the same number of patents internationally.

China’s fast growing internal market — one of the attraction to many foreign investors — has become key to its growth, as exports have dropped to about 18 percent of GDP versus 36 percent at their peak in 2006. During the economic crisis, China shifted to markets in the developing countries of Asia, Africa, and Latin America, and now exports a smaller percentage to the United States and Europe. The overwhelming dominance of the U.S. market for China — although still large — has fallen. Now the two countries are in direct competition for the key markets in the highest value-added sectors. To make matters more serious, this also means China is in a position to control the complete production cycles of most goods.

US global dominance depends more than ever on its overwhelming military superiority. For this reasons its elites regard the improvements in China’s high tech industries as not just an economic challenge, but as a military and security problem. On the one hand, the US can no longer automatically assume it has the edge in weapons and cyber technology, on the other they make the much praised interdependence a potential security issue. In the words of Obama’s top Asia advisor Evan Medeiros, ‘American interests now diverge (from China’s) more than they converge on a broad set of issues and the areas where we can co-operate are shrinking’.

More generally, the fact that the rapid development of Chinese technology will soon allow China’s multinationals to compete with and replace Western TNCs in means that their dependence on Western finances and services will decline. At this point China can challenge the United States and Europe for the leadership of the world economy. As leading tech market analyst Rebecca Fannin, puts it, ‘No matter your perspective, it’s clear where this trend is leading.’

On to the attack

The bulk of the US ruling class now accepts the need for a tougher approach to China. There are two main factions . The first is made up of deficit hawks who want a deal with China but want to level up the terms of trade. The deficit hawks, Trump among them, see the trade deficit in simple terms as a measure of “winning” and “losing.” However simplistic this may be the goal of trade hawks is to balance the terms of trade by increasing U.S. exports to China and cutting China’s exports to the United States.

The second are the China-threat hawks who are pushing for a much more confrontational approach. This group of continuity neo-cons including John Bolton and current Trump advisor Peter Navarro, see China’s rise as a challenge to U.S. hegemony in the world. According to former State Department spokesman Richard Boucher

‘They want to drive manufacturing out of China, cripple Chinese technology industries, and keep China from growing globally. This explains the overblown enforcement actions against ZTE and Huawei, their attempts to keep Huawei out of 5G in the United States and Europe, limits on licensing of U.S. technology, and actions to keep Chinese firms from acquiring U.S. assets. This group would just as soon not have a deal; they’d rather build a wall around China.’

So far the two factions have in effect been in sync: as trade deficit negotiators come up with new tactical moves, China hawks pile in in an attempt to isolate the country. The result has been, despite Trump’s rhetoric in his election campaign, the administration has developed a radically activist approach to foreign relations. In the words of the National Security Strategy document from December 2017:

“These competitions require the United States to rethink the policies of the past two decades—policies based on the assumption that engagement with rivals and their inclusion in international institutions and global commerce would turn them into benign actors and trustworthy partners. For the most part, this premise turned out to be false.”

The document goes on to say, “An America that is safe, prosperous, and free at home is an America with the strength, confidence, and will to lead abroad.” It continues, “we learned the difficult lesson that when America does not lead, malign actors fill the void to the dis-advantage of the United States.”

The Chinese ruling class’s strategy has been to welcome integration into the world market, even under American hegemony. This has been one of the factors that has helped them to generate enormous levels of profit and sustain one of the longer periods of capitalist growth in history. Others include an enormous pool of cheap labour and a political regime that allows almost completely unchecked exploitation. China’s rulers continue to facilitate foreign direct investment but now show much less willingness to accept US global leadership.

While they are conducting an increasingly repressive policy against minorities and dissenters at home they are also pursuing a more and more aggressive policy of carving out geographical spheres of influence abroad. This became very clear when Mr Xi told Mr Obama in 2015 that China would not build military fortifications on several artificial islands in the South China Sea, Asia’s main maritime thoroughfare. One year later satellite photographs showed that Mr Xi had lied; large anti-aircraft guns and other weapons systems had been deployed on the islands. The government’s commitment to crushing the democracy movement in Hong Kong has elements of both. It is partly designed to deter any would be reformers on the Chinese mainland and partly to insist on China’s authority throughout the region.

Interdependence or decoupling?

The future of geopolitics is often seen as a choice between continued globalisation involving trade and manufacturing interdependence (and, it is implied, peaceful co-existence) or a ‘decoupling’ leading to the creation of distinct and competing spheres of influence. There are of course different directions of travel, but to see these as two distinct outcomes is in fact to create a false opposition.

In reality, capital’s search for international markets and the struggle over spheres of interest always co-exist. The world system is driven by the interests of competing multinational corporations and financial organisations on the one hand, and by national states that support the operation of particular capitals on the other. The backing of a major state is essential for any large segment of capital. It underpins a banking and financial system, provides the basis for research and development, a skilled workforce in the base country but also fights for the interests of its capitalists abroad, inside international institutions, and physically on the ground.

The growth of world trade and so-called interdependence until around 2015 did not stop regional wars. Post-Cold War ‘globalisation’ was in fact always the opening up of the world to trade and manufacture on the terms of the US and its allies, backed up with exemplary military action. Trade rules favouring the big corporations of the west were imposed by the international financial institutions like the IMF and the World Bank. Wars in Iraq and the former Yugoslavia in the 1990s and in Afghanistan, Iraq and later Libya and Syria in the next decade coincided with very high levels of world trade. The US fought those wars to take maximum advantage of what was regarded as its unipolar moment. The fact that the US still has a strong military presence in the world’s largest oil production areas in the middle east helps ensure that the profits from oil production are recycled through the US financial system.

Despite this, sometimes voices on the left can overstress the extent to which ‘globalisation’ represented a total victory for the US and therefore suppressed the possibility of inter-imperialist rivalry. In the words of Leo Panitch and Sam Gindin, ‘the all too common misinterpretation of the world today in terms of China (let alone Russia) as an alternative hegemon challenging the United States…ignores what the making of global capitalism has entailed by way of interpenetrations of production and finance with profound structural effects”. US elites themselves have no such certainty about continued US leadership or confidence in the link between trade and peace. From the start of the ‘War on Terror’ neoconservative strategy was driven by a mix of hubris and an anxiety at the dangers inherent in long term economic decline. The National Security Strategy document from 2002, for example, is explicit:

‘We will strongly resist aggression from other great powers – even as we welcome their peaceful pursuit of prosperity, trade and cultural advancement…We are attentive to the possible renewal of old patterns of great power competition. Several potential great powers are now in the midst of internal transition – most importantly Russia, India, and China’.’

The threat of war

China’s subsequent rapid rise has hugely increased anxieties. So much so that many foreign policy experts in the west are advocating a New Cold War with China. Writing in the New York Times last December, Niall Ferguson suggested that “if Cold War II confines itself to an economic and technological competition between two systems — one democratic, the other not — its benefits could very well outweigh its costs.” A turn towards permanent nuclear armed confrontation is of course alarming in itself. But it is also a recognition of how dramatically the world balance of power is shifting. The Western powers are having to face the nightmare reality implied in the Cold War paradigm, the emergence of a contender.

The moment we consider the new situation however, the Cold War analogy starts to look shaky. The ‘Cold War’ refers to the period between 1947 and 1991 when Russia and the US faced off as the world’s indisputable superpowers. The Cold War is sometimes idealised as a period of stability and peaceful co-habitation. The US and Russia were in fact involved in a series of military confrontations away from the heartlands of the system that occasionally threatened direct confrontation. The US was troubled by competitors and challengers. Problems became clear at the end of the 1960s when US elites realised they could not afford the growing costs of achieving an all-out victory in Vietnam. Its attempts to overcome them have involved alternating periods of reducing and increasing arms spending. The US was from the start and always the bigger economy, even if Russia was growing faster for some of the period. Nevertheless much of the period was marked by rough military parity between the two powers. This tended to discourage direct, conventional military confrontations.

Today the dynamic is different for two main reasons. First, the world system is much more fragmented than it was in the decades after World War 2. The US and China are far and away the biggest economies, but there are many more contenders for regional power today including India, Japan, Brazil, Russia and Germany. Many of them are involved in regional blocs which can amplify their influence.

Secondly, the relationship between the two biggest powers is markedly different from that in the Cold War. On the one hand, we are seeing a clear shift of economic influence from the US to China. Chinese economic power is set to surpass that of the US and it has started to impinge on what are regarded as sacrosanct areas of US influence. On the other hand the US remains overwhelmingly the stronger military power. This combination of relative economic decline and massive military superiority on the part of the US creates a strong temptation to use the military option. This effect is amplified by the steady growth in China’s military capacity.

There is a much closer historical parallel with the years before World War I. The period from the late nineteenth century to 1914 saw a very high level of international trade on the one hand and on the other sharpening competition between Britain as the established imperial superpower and Germany its challenger, a relative latecomer to capitalist development. Crucially it involved a profound challenge to the existing geopolitical structure of power. As Markus Brunnermeier, Rush Doshi and Harold James write in a fascinating new article on those years, neither Britain’s historic dominance nor high levels of economic interdependence stopped the rush to war. Conflicts over trade, technology and finance proved in fact to be the prelude to military conflict:

“The rivalry between China and the United States in the twenty-first century holds an uncanny resemblance to the one between Germany and Great Britain in the nineteenth. Both rivalries take place amidst the emergence of economic globalization and explosive technological innovation. Both feature a rising autocracy with a state-protected economic system challenging an established democracy with a free-market economic system. And both rivalries feature countries enmeshed in profound interdependence wielding tariff threats, standard-setting, technology theft, financial power, and infrastructure investment for advantage.”

Just like amongst the future belligerents in the run up to World War 1, few leaders on either side today actually seek direct military confrontation. The Cold War analogy is partly being deployed in the west to remind people that competition on arms spending helped to break the Soviet Union. Largely because the US remains the overwhelming military superpower, the dollar is still easily the strongest currency even under Trump. Nearly 90% of global financial transactions are dollar based.

Nevertheless, the perception in Washington is that the basis of that economic and institutional dominance is now directly under threat. The US’s resulting ‘activism’, including economic and institutional sanctions against China, is generating serious incidents at multiple levels. For one it is sharpening points of conflict around the globe. Trump’s February 2020 visit to India for example to bolster the US’s alliance with China’s leading Asian competitor has been followed by the first clashes between Indian and Chinese border forces in decades.

Covid-19 is exacerbating the situation by turning countries inward. Particularly in products related to health demand for self-sufficiency is rising. Other supply chains are inevitably going to be compromised or broken as international trade is reduced. The economic meltdown that looks set to effect most economies is already encouraging nationalist leaders other than Trump to blame foreigners.

Even in the conditions of the pandemic the US is accelerating the military pivot to the East launched by president Obama., the US has been enhancing and restructuring its force of 85,000 troops permanently stationed in the Indo-Pacific region. As former US Army colonel and State Department official Ann Wright explains:

‘The U.S. military force structure in the Pacific will be changed to meet the National Defense Strategy’s perceived threat from China, beginning with the U.S. Marine Corps creating new infantry battalions that will be smaller to support naval expeditionary warfare and designed to support a fighting concept known as Expeditionary Advanced Base Operations.  U.S. Marine forces will be decentralized and distributed across the Pacific on islands or floating barge bases…the Marines plan to invest in long-range precision fires, reconnaissance, and unmanned systems, doubling the number of unmanned squadrons.’

Steps like these are bound to lead to a response in kind from the Chinese government. The Chinese ruling class also has its divisions over how best to increase its power and influence. Within China there are also powerful voices who argue that Washington is trying to thwart its modernization and that China should take a much more robust approach to U.S. demands. Since 1992 Chinese arms spending has increased by 740% and it now stands second only to the US, accounting for fourteen percent of world arms spending as against its nearest rivals Saudi Arabia and India on roughly four percent each.

The Chinese government has also used the Coronavirus crisis as an opportunity to strengthen its regional influence by military means. At the end of April this year, Beijing announced that it had officially established two new districts in the South China Sea that covered dozens of contested islets and reefs. Chinese vessels and forces have been involved in new exercises in the South China Sea, it has made incursions into waters claimed by Indonesia and near the Natuna Islands, and, according to Hanoi, rammed and sunk a Vietnamese ship.

Washington’s plan A remains to damage China economically, isolate it geopolitically, and threaten it militarily, in the process forcing it to make more favourable deals with the US. But such an international strategy of tension contains the very real risk of creating new military flare-ups or blowing open existing local or regional wars. In the words of Harvard Professor Graham Allison :

‘as an unstoppable China approaches an immovable America and both Xi Jinping and Donald Trump promise to make their countries “great again”…unless China is willing to scale back its ambitions or Washington can accept becoming number two in the Pacific, a trade conflict, cyberattack, or accident at sea could soon escalate into all-out war”.

Internationalism starts at home

Given the context, the ideological barrage and the provocations against China will continue. Trump’s xenophobic instincts, the specific co-ordinates of the Coronavirus and the proximity of elections in the US have all contributed to the Sino-phobic surge. But it is being driven by much more fundamental factors. And it is already having an impact on public opinion. A Pew Research Centre survey in the US in March found that 66 percent of Americans now have an unfavourable view of China, up 20% since the beginning of the Trump administration and 60% saw China’s power as ‘a major threat’.

The anti-war movement and popular anti-war sentiment have had a very significant impact on foreign policy in the last two decades. Especially since the debacle of the Iraq War they have severely limited the military options of Western governments. Now the movement needs to respond decisively again. The increased level of tension generated is first and foremost an argument for permanent and serious anti-war organisation. To begin with we have to make it clear, against those who overstate the impact of economic integration, that military confrontation of various kinds is a real and present danger. Increased belligerence against Iran, growing support for India against Pakistan in Kashmir, even attempts to remove Maduro’s regime in Venezuela are all partly US responses to China’s increasing economic influence. In conditions of heightened rivalry, all such confrontations threaten wider conflict.

We have to be campaigning against all these dangers and understand that new flashpoints are likely. We also have to directly challenge the arguments and prejudices mobilised to justify hostility to China, because they are softening us up for conflict and because they risk increased racism. While remaining crystal clear about the oppressive and often brutal nature of the Chinese regime, and the fact that it is re-arming to promote its global interests, our main task is to call out our own side’s escalation. This is for two reasons. First, it is because of where we are. As we are situated in one of the centres of western imperialism only protests against western intervention can have any real impact on the situation. Second, in this case as in so many others, it is the western powers that are pushing hardest for confrontation.

In true Atlanticist form, the British government, which was happily praising China to the skies just months ago, has fallen into line with Trump. Foreign Minister Dominic Raab now insists “We can’t have business as usual” with China. British intelligence agencies are arguing that “strategic industries” believed to be vulnerable to Chinese infiltration now ought to be blocked from potential take-overs. There is even a new “China Research Group” within the Conservative Party headed up by Beijing critic Tom Tugendhat. In general voices eager for a “reckoning” with a Xi administration allegedly at risk of becoming a “pariah state” are getting louder fast.

The British media has effortlessly adapted to the ‘new reality’ of China as public enemy number one even though it emanates from the warped world view of Donald Trump. Demands for an urgent inquiry into the Chinese Corona ‘cover up’ are widely recycled without reference to the much more serious failings of many Western governments. The discredited reports that ‘the five eyes’ Western security services have evidence that Corona originated in a Wuhan Lab were taken seriously across media platforms, never mind that they originated in the hysterically anti-China Murdoch media.

As well as more Covid conspiracy and crude racism, expect attempts at a more comprehensive demonization of the Chinese and the fabrication of a democratic case for confrontation. White House official Matt Pottinger has already claimed that the anti-Chinese turn is motivated by concern for democratic opposition to China’s rulers. Other China ‘experts’ have been arguing that growing tensions are a result of a ‘fundamental difference in ideology’ and a return to communist orthodoxies under President Xi. None of this makes any sense when successive US administrations have been keen to develop the strongest possible ties with China and Trump himself spent much of his first two years in office trying to get close to President Xi and bragging about the two men’s “great chemistry”.

Most important of all we have to be clear that the current stand-off is not primarily the result of hostility, aggression, or meddling by the Chinese. The dangers in the situation flow mainly from the fact that the US, supported amongst others by its most servile ally the British Conservative Party, is responding to growing competition with China by dangerously confrontational means, in the process risking further war.