China Containing the United States
By: Dr. Sam Vaknin
Also published by United Press International (UPI)
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Written March 17, 2003
Updated March 9, 2005, August 2011
In the 18th century, Europe’s powers shifted their mercantilist and geopolitical attentions from the Americas to the Pacific, to the East. It is ironic that, 200 years or so later, it is America (from the USA to Brazil) which is withdrawing from an anemic Europe to a resurging India, China, and Japan. This tilt is not as new as it sounds. It started in the 1860s, when the USA overtook Great Britain as the largest economy on Earth. The first wave of globalization lasted till the Great War in 1914 and had swept the globe, encompassing a reluctant China and Japan. It took two European (world) wars to disrupt the natural gravitation of the United States towards its largest trading partners and potential competitors in the Far East. But, history is now resuming its ineluctable course: the USA’s manifest destiny lies between Melbourne and Beijing, not between Kyiv and London.
In the early years of the 21st century, European intellectuals yearned for the mutually exclusive: an America contained and a regime-changed Iraq. The Chinese are more pragmatic - though, bound by what is left of their Marxism -they still ascribe American behavior to the irreconcilable contradictions inherent in capitalism.
The United States is impelled by its economy and values to world dominion, claimed in March 2003 an analysis titled "American Empire Steps Up Fourth Expansion" in the communist party's mouthpiece People's Daily. Expansionism is an "eternal theme" in American history and a "main line" running through its foreign policy.
The contemporary USA is actually a land-based empire, comprising the territorial fruits of previous armed conflicts with its neighbors and foes, often one and the same. The global spread of American influence through its culture, political alliances, science and multinationals is merely an extrapolation of a trend two centuries in the making.
How did a small country succeed to thus transform itself?
The paper attributes America's success to its political stability, neglecting to mention its pluralism and multi-party system, the sources of said endurance. But then, in an interesting departure from the official party line, it praises US "scientific and technological innovations and new achievements in economic development". Somewhat tautologically, it also credits America's status as an empire to its "external expansions".
The rest of the article is, alas, no better reasoned, nor better informed. American pilgrims were forced westward because "they found there was neither tile over their heads nor a speck of land under their feet (in the East Coast)". But it is the emphases that are of interest, not the shoddy workmanship.
The article clearly identifies America's (capitalistic) economy and its (liberal, pluralistic, religious and democratic) values as its competitive mainstays and founts of strength. "US unique commercial expansion spirit (combined with the) the puritan's 'concept of mission' (are its fortes)", gushes the anonymous author.
The paper distinguishes four phases of distension: "First, continental expansion stage; second, overseas expansion stage; third, the stage of global contention for hegemony; and fourth, the stage of world domination." The second, third and fourth are mainly economic, cultural and military.
In an echo of defunct Soviet and Euro-left conspiracy theories, the paper insists that expansion was "triggered by commercial capital". This capital - better known in the West as the military-industrial complex - also determines US foreign policy. Thus, the American Empire is closer to the commercially driven British Empire than to the militarily propelled Roman one.
Actually, the author thinks aloud, isn't America's reign merely the successor of Britain's? Wasn't it John Locke, a British philosopher, who said that expansion - a "natural right" - responds to domestic needs? Wasn't it Benjamin Franklin who claimed that the United States must "constantly acquire new land to open up living space" (the forerunner of the infamous German "Lebensraum")?
The author quotes James Jerome Hill, the American railway magnet, as exclaiming, during the US-Spanish War, that "If you review the commercial history, you will discover anyone who controls oriental trade will get hold of global wealth". Thus, US expansion was concerned mainly with "protecting American commercial monopoly or advantageous position". America entered the first world war only when "its free trade position was challenged", opines the red-top.
American moral values are designed to "serve commercial capital". This blending of the spiritual with the pecuniary is very disorienting. "Even the Americans themselves find it hard to distinguish which matter is expanding national interests under the banner of 'enforcing justice on behalf of Heaven' and which is propagating their ideology and concept of value on the plea of national interests."
The paper mentions the conviction, held by most Americans, that their system
and values are the "best things in human society". Moreover,
Americans are missionaries with a "manifest destiny" and "the
duty and obligation to help other countries and nations" and to serve as
the "the beacon lighting up the way for the development of other countries
and nations". If all else fails, it feels justified to "force its
best things on other countries by the method of Crusades".
This is a patently non-Orthodox, non-Marxist interpretation of history and of the role of the United States - the prime specimen of capitalism - in it. Economy, admits the author, plays only one part in America's ascendance. Tribute must be given to its values as well. This view of the United States - at the height of an international crisis pitting China against it - is nothing if not revolutionary.
American history is re-cast as an inevitable progression of concentric circles. At first, the United States acted as a classic colonial power, vying for real estate first with Spain in Latin America and later with the Soviet Union all over the world. The Marshall Plan was a ploy to make Europe dependent on US largesse. The Old Continent, sneers the paper, is nothing more than "US little partner".
Now, with the demise of the USSR, bemoans the columnist, the United States exhibits "rising hegemonic airs" and does "whatever it pleased", concurrently twisting economic, cultural and military arms. Inevitably and especially after September 11, calls for an American "new empire" are on the rise. Iraq "was chosen as the first target for this new round of expansion".
But the expansionist drive has become self-defeating: "Only when the United States refrains from taking the road of pursuing global empire, can it avoid terrorists' bombs or other forms of attacks befalling on its own territory", concludes the opinion piece.
What is China up to? Were this - and similar - articles a signal encrypted in the best Cold War tradition?
Another commentary published a few days later may contain the public key. It is titled "The Paradox of American Power". The author quotes at length from "The Paradox of American Power - Why the World's Only Superpower Can't Go It Alone" written by Joseph Nye, the Dean of the John F. Kennedy School of Government at Harvard and a former Assistant Secretary of Defense:
"Hard power works through coercion, using military sticks and economic carrots to get others to do our will. Soft power works through attraction ... Our attractiveness rests on our culture, our political values and our policies by taking into account the interests of others."
As it summarizes Nye's teachings, the tone of the piece is avuncular and conciliatory, not enraged or patronizing:
"In today's world, the United States is no doubt in an advantageous
position with its hard power. But ... power politics always invite resentment
and the paradox of American power is that the stronger the nation grows, the
weaker its influence becomes. As the saying goes, a danger to oneself results
from an excess of power and an accumulation of misfortunes stems from lavish of
praises and favors. He, whose power grows to such a swelling state that he
strikes anybody he wants to and turns a deaf ear to others' advice, will
unavoidably put himself in a straitened circumstance someday. When one indulges
oneself in wars of aggression under the pretext of 'self security' will
possibly get, in return, more factors of insecurity ... Military forces cannot
fundamentally solve problems and war benefits no one including the war
Nor are these views the preserve of the arthritic upper echelons of the precariously balanced Chinese Communist party.
In the same month, in an interview he granted to Xinhua, the Chinese news agency, Shen Jiru, chief of the Division of International Strategy of the Institute of World Economics and Politics, Chinese Academy of Social Sciences, reiterated his conviction that "the United States aims to create a unipolar world through the Iraq issue".
Mirroring the People's Daily, he did not think that the looming Iraq war can be entirely explained as a "dispute on oil or economic interests". It was, he thought, about "the future model of international order: a multipolar and democratic one, or the US strategic goal of a unipolar world". China has been encouraged by dissent in the West. It shows that the "multipolar international community" is an "inevitable" momentum of history.
Why this sudden flurry of historiosophic ruminations?
According to Stratfor, the strategic forecasting consultancy, "for Beijing, the only way to stymie the fourth phase is through promoting multilateralism; barring that, China must be prepared to confront the United States in the future, and U.S. history can give some guidance ... Thus, Beijing continues to focus on the concept of multilateralism and the legitimacy of the United Nations as the best ways to slow or even disrupt U.S. expansionism. At the same time, Beijing is preparing to face a future confrontation with the United States if necessary."
When its economy matures, China wants to become another United States. It has started emulating America two decades ago - and never ceased. Recent steps include painful privatization, restructuring of the banking system, clamping down on corruption and bad governance, paring down the central bureaucracy, revamping the military and security apparatus and creating mechanisms for smooth political transitions.
China sent a man to the moon. It invests heavily in basic science and research and development. It is moving gradually up the manufacturing food chain to higher value added industries. It is the quintessential leapfrogger, much of its cadre moving straight from the rustic to the plastic - computers, cellular phones, wireless and the like.
Ironically, it could never have made it even this far without its ostensible foe. Thousands of bright Chinese students train in the United states. American technologies, management, knowledge, capital and marketing permeate Beijing's economic fabric. Bilateral trade is flourishing. China enjoys the biggest share of the world's - in large part American - foreign direct investment flows. Should the United states disintegrate tomorrow - China would assuredly follow.
Two Down (Europe, USA), One to Go (China): The Chinese Ponzi Scheme and the Oncoming Global Depression
Mounting sovereign debts crises in Europe and an anaemic rebound in America's economy were more than offset by the emergence of Asia – and, in particular China and India - as a global powerhouse. Yet, the warning signs are there: China's economic "miracle" has long been based on an artificial rate of exchange for its currency, the yuan (RMB); on unsustainable dollops of government largesse and monetary quantitative easing which led to the emergence of asset bubbles (mainly in real-estate) and to pernicious inflation; and, frankly, on heavily-redacted statistics.
Real wages have been declining in China for quite a few years now as rural folk moved to burgeoning cities, bad loans proliferated, and consumption remained subdued as savings rates reached malignant, self-defeating levels. In an effort to sanitize humungous export proceeds, China amassed trillions of dollars worth of foreign exchange reserves, mostly invested in American treasury bonds, creating a dangerous exposure to the vicissitudes of the increasingly-more decrepit US dollar and to America’s downgraded sovereign credit rating.
The Chinese authorities' attempts to clamp down on rampant speculation and price gouging are too little, too late, not to say irrelevant. The economy will screech to a shuddering halt in the mother of all hard landings. The Chinese house of cards and hall of mirrors will collapse ominously and swiftly. This will bring the entire global economic edifice into disarray with mounting imbalances and increased risk-aversion among investors. The second phase of the global crisis will resemble closely the Great Depression with massive write-offs in the values of equities, across-the-board crumbling of entire banking systems, and mounting, two-digit, unemployment rates everywhere.
How to reconcile this doomsday prognosis with China’s uninterrupted string of decades of stellar (often two-digit) annual growth figures?
By seeing China for what it is: the world’s greatest-ever Ponzi scheme. Behind the hype, spin, propaganda, and outright confabulations, China’s economic miracle is founded in its entirety on a simple premise, a breathtakingly audacious prestidigitation: a large (equal to two-fifths of GDP) and steadily soaring balance of payments (current account) surplus (mainly with the USA, its addict-partner in this danse macabre) serves to disguise and directly underwrite the fetid outcomes of an all-pervasive state. These include a mountain-range of rotting credits in the state-owned banks and local government; neglected sectors of the lopsided economy; and egregiously misallocated economic resources (mainly in the construction and retail sectors and via huge stimulus packages.) In many countries government spending translates into GDP “growth” – but China is a special case: most of the seemingly inexorable mushrooming of its GDP had been faked this way in 2007-9.
Indeed, it is China’s very dependence on a weary and wary US consumer which spells its doom when the American music stops. Once it does, China’s investment-driven economy will revert to crippling overinvestment, overcapacity, hidden unemployment and underemployment. In one word: history’s worst deflation (or, worse yet, stagflation.) We have seen it all before with Japan. The only difference being that Japan had a real and thriving private sector while China doesn’t: its “private” sector – albeit officially accounting for three-fourths of its GDP - is mostly foreign-owned, export-oriented, or immersed in non-productive operations (read: speculation.)
Large swathes of China’s economy – including and especially the mission-critical financial sector - are in the incompetent and venal hands of China’s decidedly uncivil service and are “managed” (mismanaged rather) by bumbling and provincial party apparatchiks. To this toxic brew one should add a devastated environment, a dysfunctional judicial system, shoddy accounting practices (including by Western multinationals), stunted capital markets, an obliterated countryside and dying agriculture, and a demographic time bomb: owing to the “one child” policy, China’s population is ageing faster than any other major country’s. This is not to mention political risk in an age of Facebook-driven Tweeted revolutions.
John Craig, “China’s Development: Assessing the Implications” ( http://cpds.apana.org.au/Teams/Articles/china_as_economic_engine.htm#Bubble )
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