Where does it lead?
Vincent HSU,
International Socialist Forward Taiwan,
04/01/2022
In mid-July, 2021, The Economist published a number of articles pointing out that Trump and Biden have contributed to the most dramatic change in US foreign policy regarding China in 50 years- a shift from cooperation to confrontation.
These articles criticise and cast doubt on the effectiveness of the US recruiting allies to take sides in its“zero-sum game”, and suggest that Biden may have overestimated the influence of the US and underestimated the possibility of allies abandoning the US for China.
The Economist also calls on Biden to promote the political philosophy of the West by planning a global infrastructure project capable of taking on China’s Belt and Road Initiative, a global vaccine aid project, and tackling environmental issues, to restore “globalisation and openness”, so as to prevent China from changing the international order.
Argurably, The Economist’s“manifesto” is a futile attempt to reverse history. The irony is that since the Trump administration launched its anti-China strategy, China has been calling on the US not to revert to the Cold War mindset and stating that it should continue to respect the old rules of international relations such as “globalisation , free trade and openness”.
Before Biden won the election, there were parts of the establishemnt that hoped Biden would revive US-China cooperation instead of continuing Trump’s anti-China approach. However, they were dissapointed. The Biden administration’s anti-China strategy is in some ways more aggressive and systematic than Trump’s, and is actively seeking to recruit allies in order to contain China. In contrast to Trump’s indiscriminate attacks, the Biden administration has systematically targeted the key factor in China’s rise – technology. This is the locomotive of China’s productive force and economic development. In this way, Biden wants to put a stranglehold on China’s plan to “transform and upgrade” its economy. Whether he can succeed in this aim is a different matter.
Every political position and ideology represents the interests of different social groups and classes. Over the past thirty years, China, the United States, Europe, Hong Kong, and Taiwan have all had their share of political, business, academic, and media figures who have gained a lot of benefits and wealth from US-China cooperation [1]. Some of them have already realigned themselves or tried to swing between the two for profit, while others have tried to revive the corpse of US-China peaceful cooperation, hoping for a miracle. The Economist, belongs to another, more discreet group which subtly casts doubt on the anti-China trend, and echoes China’s call for the US to “comply with the old order of globalisation and openness” [2].
However, the “old order” makes it easier for China to embark on its technological upgrading and industrial transformation [3] (e.g., to develop domestic microchip manufacturing by acquiring the relevant technology and machinery from Holland without US interference [4]), and thus continue on its course to make a bid for becoming the world’s strongest superpower. But, of course, it is unrealistic to expect that the US will just resign from its dominant position without a fight.
The Nature and Origin of the US-China imperialist conflict
There is an old Chinese saying, “One mountain cannot contain two tigers.” This saying is in a way illustrative of the way power relations work in capitalism. Within a national economy, there can never be two political entities with supreme power. In modern Chinese history, the most famous historical period where two governments coexisted was during the Chinese Civil War; in modern US history, the period where two governments coexisted was the American Civil War. The situation on a global scale is different from that on the national scale, but still, the struggle for world domination is bound to be a ferocious one. US domination is today threatened by the rise of China.
There is countless objective evidence for China’s ambition to replace the United States, as the unquestioned dominant capitalist power. For nearly a century China has attempted to bring its economic and national strength closer to that of the United States, as well as attempting to increase its geopolitical and diplomatic influence, and the expansion of its military power, etc.
After abandoning the bureaucratically planned economy and moving to a model of state capitalism (i.e. basing economic growth on market forces and profit, but with strong state intervention in the economy) the CCP relied on two pillars to keep people submitting to its dictatorial rule: one was the real growth of the economy and relative improvement in living standards [5], and the other was nationalism/patriotism. In other words, the material and the ideological foundation to rally mass support.
However, even though China became a world centre for industrial production, its economic growth and the rise of the living standards have started to slow down, as is natural for all capitalist economies. This has driven Xi Jinping to push through various plans for industrial upgrading, economic transformation, the boosting of domestic demand and of capital exports [6] since taking office.
China is in an era of transition from a poor underdeveloped country to a world superpower. But this transition under capitalism is full of contradictions. One is that the higher living standards that economic growth is expected to bring contradicts the low-wage model that “China’s miracle” was based on. Also, the fact that Chinese economic growth is still based to a large degree on foreign investment, means that foreign and domestic capitalists both want a share of the surplus created by workers, which squeezes incomes. Another contradiction is evident in the housing market. The rich speculate in the housing market, while the poor take on debt to buy houses or pay high rents if they cannot afford to buy [7]. These trends explains how “involution” and “lay-flat lifestyle” have become buzzwords in China, reflecting the despair, especially of the youth, but also a certain degree of social consensus for a period of time.
In this conjuncture, the Chinese government has no other option but to try to push the Chinese economy to move beyond being a place for western corporations to build their factories, for China to to become a leader of the global economy and to rise to the top of the global economic “food chain”If the Chinese regime does not want to be “devoured” by its competitors, it should strive to “devour” them first.
If the Communist Party does not achieve this goal by promoting industrial upgrading and economic transformation, its authoritarian rule will also become unstable and fragile [8] .
Furthermore, if the CCP is to maintain its current political authority, which is based on the rise of nationalism, it cannot allow the nationalist narrative to lose its “legitimacy” and “correctness”. This narrative can be summarized in a few sentences:
- The CCP has led the Chinese people to free themselves from being bullied by foreign
- colonisers and domestic compradors, to realize national independence and establish a
- republic;
- the CCP has helped the Chinese people earn food and clothing and to live a modern and peaceful life;
- the CCP will lead the Chinese people to make China a world power that no one dares to
- bully”[9].
Except from national independence and the establishment of a unified state apparatus, the other two goals of the narrative are still unfulfilled. Although Xi Jinping claims that China has already achieved a “well-off society” (Xiaokang shehui in chinese), the Premier Li Keqiang publicly pointed out last year that as many as 600 million people in China earned less than 1,000 RMB (138€) per month, which in essence cancels Xi Jinping’s proclamations.
At this year’s Centennial Celebration of the founding of the Communist Party of China, Xi declared:
“The Chinese people will not allow any foreign power to bully, oppress, or enslave us. Anyone who attempts to do so will be met with a bloodbath in front of the Great Iron Wall built with the flesh and blood of 1.4 billion Chinese people!”.
These words reflect an attempt to whip up nationalist sentiments aimed to boost confidence in the face of the US government’s repeated offensives.
To maintain the efficiency and the legitimacy of the nationalist campaign underpinning the CCP’s dictatorial rule, the regime is forced to push for the “completion” of its promised nationalist vision – even if it is not yet realised, it must seem to move closer. The completion of such a political vision, under the capitalist system, means that the Chinese economy needs to climb to the top of the capitalist hierarchy.
In the long run, if world domination is not “realised”, the regime will not be able to keep its current status. Economic stagnation [10] will make it difficult to maintain it’s rule, leading to a general decline and a crisis in its authoritarian regime.
It is a basic fact that the big multinational corporations in the West, which are in control of industrial production and the markets, are constantly looking for the next and better source of cheap labour. Even Chinese companies are moving their production towards the inland provinces or to other countries in Southeast Asia, South Asia, and Africa, where cheaper labour is available [11]. In the process of raising the living standards of the domestic population in general, the cheap labour of China will be becoming less cheap. It is an inevitable trend for industries and enterprises that depend on cheap labour to search for other places with lower labour costs [12].
Since the 2008 economic crisis, the Western world –both the EU and the United States– have become increasingly turbulent and weakened. Underpinning this fact is the general trend of decline of these previously dominant superpowers in the context of interimperialist competition. The crisis rapidly enriched many in the elite and large companies in the Western world, and also accelerated the expansion of social inequality .
The weakness of the traditional capitalist powers’ economic foundation manifests itself in different forms: the backwardness and obsolescence of infrastructure, the relative decline in population growth and living standards, political turmoil and polarisation, the rising doubt about the traditional liberal system, the never-ending series of social conflicts in recent years, and the rise of populism.
In contrast, although there are even greater inequalities in China, compared with the development of the Western world over the past three decades, there is no doubt that the gap between China and the West has been closing in terms of overall economic and geopolitical strength. China’s economic strength has surpassed that of all imperialist countries except the US, which leads to increased antagonisms. This makes it possible and realisable for China to seek hegemony, and also constitutes the motive behind the hostility and the attempt to contain China by the United States and the western world today.
In summary, for the continuation and stability of the CCP regime over Chinese society, the government has been forced to seek hegemony over the capitalist world. If it fails to do so, its dictatorial rule will gradually face turmoil and collapse, and Chinese society will enter a new era. At the same time, the internal problems faced by the Chinese regime could hamper their fight for worldindomination.
The US will not give up its hegemony without a fight
Since the end of the first imperialist World War, the US has played the role of the dominant power of the capitalist world. After WWII, it led the capitalist countries in the fight to contain the Stalinist regimes – that was the era of the Cold War. After the Cold War, it played the role of the flagship leading its allies to pursue profit in the global market, heralding a period of victory for the capitalist system and advancing the process of globalisation.
At the beginning of the ‘90’s, professor Francis Fukuyama asserted that this would be the “end of history”, that “capitalist democracy” is the final evolution for the social systems in human history [13]. Ironically, Fukuyama has retracted his assertions in recent years. Fukuyama backtracked because he witnessed the economic crises, the political turmoil and the social conflicts developing in capitalist “democracies” across Europe and the United States.
In the US, the concrete manifestation on the right was the rise of Trumpism and reactionary trends as well as the revival of the ideas of white supremacy. Tthe concrete manifestation on the left was the growth of Sanders, the emergence of the Democratic Socialists of America (DSA), and the movements of mass resistance (Occupy, 15now, feminst struggles, workers struggles, BLM, ect).
In society at large, the prevailing feeling is that the American dream has failed, and the same goes for the traditional political establishment. The growing wealth gap, the relative deterioration of living standards for working class people, racial discrimination and sexist oppression, adds to social discontent. It is clear that the dream that underpinned the stability of American capitalism, that through individual efforts one could afford a comfortable life, middle-class housing, cars, overseas vacations, and retirement, is no longer within reach for most people.
In this situation, if the US does not take drastic steps, if it passively watches China catch up with it in terms of economic, political, and military power, it will eventually lose the 21st century and world hegemony [14] . People may not be able to imagine “Alibaba, Tencent, Baidu, Huawei” to replace the FANG (Facebook, Amazon, Netflix, Google), but theoretically this is not impossible.
Of course, parts of the ruling class possibly still hope that the US will return to the course of close cooperation with China. But it is clear that the majority of US capitalists understand that they have no way but to try to battle China’s growth. US bourgeois politicians who are more far-sighted understand that once US imperialism loses its hegemony, the US working and middle class’ attitude towards the status quo will also change. Dissatisfaction over the fall of living standards will also become more serious. The wealth, status, and power of the US ruling class will decline. Overall, the US society will face a major destabilisation and class struggles will rise.
It is clear that behind the recent announced plans of the Biden administration to invest in key sectors of the economy (even though the initial proposals have been slashed and it even seems that it will be difficult to pass them through Congress- let alone implement them) is the fear of China’s rise.
Biden’s plans are not dictated by a “worker-friendly attitute” but by the fear of an economic decline, the fear of social destabilisation and the needs of imperialist competition and domination. This is not to underestimate of course the pressure of social movements and class struggle which are rising significantly in the recent period. Regardless, this is just the beginning of an era of world politics that will be shaped by the US-China conflict, until the moment it is settled.
The workers’ movement and revolutionary Marxists around the world, must take a position independent of the two major and competing imperialist powers, analyze and examine the impact that the US-China imperialist conflicts will have on the world, and try to find ways to respond to it.
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[1] An example of this is the Foxconn Group, founded by Guo Taiming, which relies on Original Equipment Manifacturing orders from US electronics companies -primarily Apple- while operating on cheap labour in China. Or “pro-China politicians” who rely on the US-China cooperation and who use their political power in the country to pander to the CCP’s state policy, thereby receiving favors from the CCP.
[2] In a July 17 article titled “Biden’s China doctrine”, The Economist argues that if the United States is serious about preventing China from reshaping the international order as they see fit, it must defend a model of globalisation that is always consistent with the needs of the current order. The contemporary globilalisation model is centred on trade and multilateralism, which strengthens the belief in openness of nations and enhances the exchange of ideas to promote innovation.
[3] After the US government launched a technology war against China, China was forced to take the path of “technological autonomy”. The following excerpt, taken from Huawei Chairman Ren Zhengfei’s op-ed “The Starlight Does Not Ask the Roadrunner,” illustrates the enormous difficulties facing China’s technology industry after the US broke the old order:
“US sanctions prevent the full implementation of our globalisation strategy, we may not be able to rely on some of the globalisation platforms, or at least the most advanced US platforms will not support us… Now we have to build products all by ourselves, which is a huge mismatch between our capabilities and strategies, and is our weakest link, forcing us to start from elementary school, and to jump quickly to Phd. We are neither smart daughters-in-law, nor do we have rice… The times have proven that our past strategies were skewed and not entirely correct, and our capabilities are very much not in line with the real needs of survival and development… I do not agree with the one-sided reference to independent innovation, only in those non-leading, non-frontier areas, self-reliance is possible… When we tried to take the first step, just lighting a match and attempting to light up a lighthouse, we were hit by an uncomprehending and irrational bat from the US. At first we really thought that we had made some mistake in compliance and were investigating and correcting ourselves; then the second and third bats came down, one after another, and we realised that they were trying to kill us…”
In many places in the article, he again emphasizes the benefits of “globalisation” for China and the world’s technological development, but, he says, it is not good for the US imperialism to maintain its hegemony.
[4] According to data from the SEMI last December, China has become the largest market for wafer and wafer production equipment. Even so, there is no indication that the Biden administration policy will change. The Trump administration lobbied the Dutch government to ban sales of the most advanced semiconductor production equipment to China in 2019. Georgetown University’s Center for Security and Emerging Technologies estimates that it will be at least a decade before China can manufacture similar equipment on its own. Recently, the Wall Street Journal again reported that China asked the Dutch government to allow ASML to sell a key piece of equipment needed to produce cutting-edge microprocessor chips to Huawei, SMIC and other technology companies. But the US government blocked it and the deal collapsed – China did not get to buy a single microprocessor. Even if ASML executives did not want to comply, they could not go against the US directive.
[5] “At the beginning of the Open Door Policy in 1978, China’s economy was only RMB 367.9 billion worth, while in 2018 the GDP was already more than RMB 82.7 trillion. During these 40 years (1978-2018), China’s GDP grew at an average annual nominal rate of 14.5%, and taking into account an average annual inflation rate of 4.8%, the real annual growth rate was 9.3%. This growth made China the second largest economy in the world. According to the World Bank, the global economy has grown at an annual rate of about 2.91% since 1979 (Source: World Economic Forum). Also according to the World Bank’s database, China’s GDP per capita (US$) has grown from US$156 in 1978 to US$10,500 in 2020; of course, the income distribution is extremely unequal and uneven.
[6] The “China Dream”, “Belt and Road Initiative”, “RCEP”, “International and Domestic Dual Cycle/Domestic Cycle”, “Carbon Neutral”, “New Infrastructure”, etc. The “projects” are too numerous to mention.
[7] In China, there are many stories of wealthy property speculators, including, of course, the tragedy of the bankruptcy caused by government policies that led to the suspension of the debt leverage. Today, high housing prices and the housing problem remain a priority for the CCP’s central government, as high housing prices suppress the growth of consumer spending through the rise of debt. According to CHFS 2019 survey data, as of 2018, China has a housing vacancy rate of more than 20%; and up to 65% of housing loans are used for investment and asset speculation. Among the lowest 20% of indebted households, the total debt-to-income ratio is as high as 11 times, with housing loans accounting for the largest share; by 2020, personal housing loans in China will reach 35% of the population. As of 2020, the balance of personal housing loans in China reached RMB 35.67 trillion, an increase of 14.5% year-on-year.
[8] As an independent scholar, I.W. Deng, put it, “Economic growth has been in a long-term contractionary path. However, in recent years, the high growth rate is no longer the case, and the downward trend of the economy will be difficult to mitigate in the coming years. China’s economic growth rate this year is set at 6 to 6.5 percent, which is a serious sign. Some economists believe that in China’s national conditions, the future economic growth cannot be less than 6%, otherwise there will be serious problems. The reason is that, although China’s economy is huge, it still needs a certain growth rate to solve the problems that can only be solved by growth. If the economic growth rate is too low, problems and conflicts previously hidden by high growth will be revealed and intensified, affecting employment, central and local fiscal revenues, social security, and various other expenditures, and weakening the Chinese government’s ability to solve problems.” Quoted in his 2019 article in the BBC.
[9] Such a nationalist political narrative is evident in Xi’s speech on the centennial of the Communist Party of China:
“In order to realise the great rejuvenation of the Chinese nation, the Communist Party of China led the Chinese people in unity, fought with blood and perseverance, and created the great achievements of the new democratic revolution… In order to realise the great rejuvenation of the Chinese nation, the Communist Party of China led the Chinese people in unity, fought with blood and perseverance, and created the great achievements of the socialist revolution and construction… In order to realise the great rejuvenation of the Chinese nation, the Communist Party of China led the Chinese people to be self-reliant, to be resilient, and to create the great achievements of the socialist revolution and construction… In order to realise the great rejuvenation of the Chinese nation, the Communist Party of China led the Chinese people to be emancipated, to be aggressive, and to create the great achievements of reform and opening up and the construction of socialist modernisation… In order to realise the great rejuvenation of the Chinese nation, the Communist Party of China has led the Chinese people to be self-confident and self-improving, to keep the righteousness and innovation, to unify the great struggles, great projects, great undertakings and great dreams, and to create the great achievements of socialism with Chinese characteristics in the new era… “
[10] As Yu Yongding, a well-known Chinese economist and member of the Chinese Academy of Social Sciences, said,
“China’s long-term economic growth has been declining, and after 2010, it has continued to fall, step by step, and this situation is not inevitable, but is related to our policies. China still has room for fiscal policy, with fiscal revenue growth of over 20% (in the first quarter) and expenditure growth of only 6%, which is not at all the economic policy to be adopted in a situation of insufficient effective demand.” See also note 8.
[11] “According to the Chinese Ministry of Commerce, Chinese private enterprises account for 90% of the total number of Chinese companies investing directly in Africa and 70% of total Chinese direct investment in Africa. 2013 saw a key shift for Africa, as China surpassed the United States as the continent’s largest direct investor in terms of FDI flows. Since 2000, total trade between China and Africa has increased 20-fold (surpassing $200 billion in 2019) and Chinese FDI in Africa has increased 100-fold (reaching $49.1 billion in 2019)… China’s FDI stock in Africa reached $110 billion in 2019, contributing more than 20% to Africa’s economic growth …As China’s industrial structure continues to upgrade, Chinese companies are actively responding to a restructuring of the industrial chain. Low-end, labour-intensive manufacturing companies are increasingly moving production lines to Asia and Africa. China’s SANY Group has successfully deployed in Africa for the past 10 years, localising African production for the local market. In 2019, SANY Group partnered with the Kenyan government to invest in the construction of 35,000 housing units. Considering the relatively high labour costs and logistics costs in China, a local production line in Africa will be more attractive.” The above is an excerpt from an article written by Chinese news host Yu Zechi.
[12] As the history of the development of capitalist industry has shown, as the level of technology and productivity increases, lower technology production, relatively high labour intensity and lower educational requirements of the industrial sector move to the relatively less developed capitalist countries.
[13] Francis Fukuyama, The End of History and the Last Man, 1992.
[14] As Biden said, without a major progress in infrastructure and economic growth, China will eventually “eat our lunch”. Biden also stated the importance for the US to maintain hegemony in scientific research and technology to compete with other nations in the 21st century. The US will never give up its hegemony to China without a fight.
