The Peninsula Foundation

Tag: USA

  • China and the Sunset of the International Liberal Order

    China and the Sunset of the International Liberal Order

         

    Rise of Multipolar World Order – www.newsvoyagernet.com

           The irrational amounts that the Soviet Union allocated to its defense budget not only represented a huge burden on its economy, but imposed a tremendous sacrifice on the standard of living of its citizens. Subsidies to the rest of the members of the Soviet bloc had to be added to this bill.

             Such amounts were barely sustainable for a country that, as from the first half of the 1960s, was subjected to a continuous economic stagnation. This situation became aggravated by the strong decline of oil prices, USSR’s main export, since the mid 1980s. The reescalation of the Cold War undertaken by Jimmy Carter and Ronald Reagan, particularly the latter, put in motion an American military buildup, that could not be matched by Moscow.

             With the intention of avoiding the implosion of its system, Moscow triggered a reform process that attained none other than accelerating such outcome. Indeed, Mikhail Gorbachev opened the pressure cooker hoping to liberate, in a controlled manner, the force contained in its interior. Once liberated, however, this force swept away with everything on its path. Initially came its European satellites, subsequently Gorbachev’s power base, and, finally, the Soviet Union itself. The Soviet system had reached the point where it could not survive without changes, but neither could assimilate them. In other words, it had exhausted its survival capacity.

              Without a shot being fired, Washington had won the Cold War. The exuberant sentiment of triumph therein derived translated into the “end of history” thesis. Having defeated its ideological rival, liberalism had become the final point in the ideological evolution of humanity. If anything, tough, the years that followed to the Soviet implosion were marred by trauma and conflict. In the essential, however, the idea that the world was homogenizing under the liberal credo was correct.

             On the one hand, indeed, the multilateral institutions, systems of alliances and rules of the game created by the United States shortly after World War II, or in subsequent years, allowed for a global governance architecture. A rules based liberal international order imposed itself over the world. On the other hand, the so-called Washington Consensus became a market economy’s recipe of universal application. This homogenization process was helped by two additional factors. First, the seven largest economies that followed the U.S., were industrialized democracies firmly supportive of its leadership. Second, globalization in its initial stage acted as a sort of planetary transmission belt that spread the symbols, uses, and values of the leading power.

             The new millennium thus arrived with an all-powerful America, whose liberal imprint was homogenizing the planet. The United States had indeed attained global hegemony, and Fukuyama’s end of history thesis seemed to reflect the emerging reality.

    But things turned out to be more complex than this, and the history of the end of history proved out to be a brief one. In a few years’ time, global “Pax Americana” began to be challenged by the presence of a powerful rival that seemed to have emerged out of the blue: China. How had this happened?

             Beginning the 1970s, Beijing and Washington had reached a simple but transformative agreement. Henceforward, the United States would recognize the Chinese Communist regime as China’s legitimate government. Meanwhile, China would no longer seek to constrain America’s leadership in Asia. By extension, this provided China with an economic opening to the West. Although it would be only after Deng Xiaoping’s arrival to power, that the real meaning of the latter became evident.

             In spite of the multiple challenges encountered along the way, both the United States and China made a deliberate effort to remain within the road opened in 1972. Their agreement showed to be not only highly resilient, but able to evolve amid changing circumstances. The year 2008, however, became an inflexion point within their relationship. From then onwards, everything began to unravel. Why was it so?

             The answer may be found in a notion familiar to the Chinese mentality, but alien to the Western one – the shi. This concept can be synthesized as an alignment of forces able to shape a new situation. More generally, it encompasses ideas such as momentum, strategic advantage, or propensity for things to happen. Which were, hence, the alignment of forces that materialized in that particular year? There were straightforward answers to that question: The U.S.’ financial excesses that produced the world’s worst financial crisis since 1929; Beijing’s sweeping efficiency in overcoming the risk of contagion from this crisis; China’s capability to maintain its economic growth, which helped preventing a major global economic downturn; and concomitantly, the highly successful Beijing Olympic games of that year, which provided the country with a tremendous self-esteem boost.

             The United States, indeed, had proven not to be the colossus that the Chinese had presumed, while China itself turned out to be much stronger than assumed. This implied that the U.S. was passing its peak as a superpower, and that the curves of the Chinese ascension and the American decline, were about to cross each other. Deng Xiaoping’s advice for future leadership generations, had emphasized the need of preserving a low profile, while waiting for the attainment of a position of strength. In Chinese eyes, 2008 seemed to show that China was muscular enough to act more boldly. Moreover, with the shi in motion, momentum had to be exploited.

             Beijing’s post-2008 assertiveness became much bolder after Xi Jinping’s arrival to power in 2012-2013. China, in his mind, was ready to contend for global leadership. More to the point within its own region, China’s centrality and the perception of the U.S. as an alien power, had to translate into pushing out America’s presence.

    Challenged by China, Washington reacted forcefully. Chinese perceptions run counter to the fact that the U.S.’ had been a major power in East Asia since 1854, which translated into countless loss of American lives in four wars. Moreover, safeguarding the freedom of navigation in the South China Sea, a key principle within the rules based liberal international order, provided a strong sense of staying power. This was reinforced by the fact that America’s global leadership was also at stake, thus requiring not to yield presence in that area for reputational reasons. The containment of Beijing’s ascendancy, became thus a priority for Washington.

             However, accommodating two behemoths that feel entitled to pre-eminence is a daunting task. Specially so, when one of them feels under threat of exclusion from the region, and the other feels that its emergence is being constrained. On top, both remain prisoners of their history and of their national myths. This makes them incapable of looking at the facts, without distorting them with the subjective lenses of their perceived sense of mission and superiority.

             War ensuing, under those circumstances, is an ongoing risk. But if war is a possibility, Cold War is already a fact. This implies a multifaceted wrestle in which geopolitics, technology, trade, finances, alliances, and warfare capabilities are all involved. And even if important convergent interest between them still remains in place, ties are being cut by the day. As a matter of fact, if in the past economic interdependence helped to shield from geopolitical dissonances, the opposite is the case today. Indeed, a whole array of zero-sum geopolitical controversies are rapidly curtailing economic links.

             The U.S., particularly during the Biden administration, chose to contain China through a regional architecture of alliances and by way of linking NATO with Indo-Pacific problems and selective regional allies. The common denominator that gathers them together is the preservation of the rules based liberal international order. An order, threatened by China’s geostrategic regional expansionism.

     

     

     

    However, China itself is not short of allies. A revisionist axis, that aims at ending the rules based liberal international order, has taken shape. The same tries to throw back American power and to create its own spheres of influence. This axis represents a competing center of gravity, where countries dissatisfied with the prevailing international order can turn to. Together with China two additional Asia-Pacific powers, Russia and North Korea, are part of this bloc.

    Trump’s return to the White House might change the prevailing regional configuration of factors. Although becoming more challenging to Beijing from a trade perspective, he could substantially weaken not only the rules based liberal international order, but the architecture of alliances that contains China. The former, because the illiberal populism that he represents is at odds with the liberal order. The latter, not only because he could take the U.S. out of NATO, but because his transactional approach to foreign policy, which favors trade and money over geopolitics, could turn alliances upside down.

    The rules based liberal international order, which became universal over the ashes of the Soviet Union, could now be facing its sunset. This, not only because its main challenger, China, may strengthen its geopolitical position in the face of its rival alliances’ disruption, but, more significantly, because the U.S. itself may cease to champion it.

    Feature Image Credit: www.brookings.edu

     

  • China and the US: Conventional and Nuclear Military Strategies

    China and the US: Conventional and Nuclear Military Strategies

    Occasional Paper: 9/2024

    China and the US: Conventional and Nuclear Military Strategies

    Abstract

    China’s military strategy focuses on developing asymmetric capabilities to counter the United States’ technological advantages and superior military budget by investing in precision missiles, advanced targeting systems, and system destruction warfare. The US initiated the Defence Innovation Initiative to prioritise autonomous learning systems and high-speed projectiles; however, it diminished under the Trump administration, leaving the US reliant on legacy weapons systems vulnerable to new-generation autonomous and hypersonic weapons. Despite China’s advancements, the US maintains a significant advantage in nuclear warheads, with 5,800 compared to China’s 320 in 2020, consistent with Mao’s “minimum deterrent” strategy. While China’s nuclear arsenal primarily comprises strategic weapons, the US possesses both tactical and strategic types. The US complacency regarding China’s military challenge may stem from its nuclear superiority; however, as China progresses technologically, the US risks falling behind by relying on outdated weapons systems, often maintained due to their economic significance in key congressional districts.

    Key Words: #nuclear warheads, #hypersonic weapons, #precision weapons, #asymmetric capabilities, #system destruction warfare, #autonomous learning systems 

     

    Introduction

    Since the beginning of the millennium, China has decided to outsmart the United States’ military strength through a very particular strategy. It aimed at overcoming America’s technological advantages and much superior military budget by investing significant resources in asymmetrical capabilities. As Mark Leonard wrote, China was attempting to become an “asymmetric superpower” outside the realm of conventional military power (Leonard, 2008, p. 106).

    Asymmetric superpower

    Conscious that the Soviet Union had driven itself into bankruptcy by accepting a ruinous competition for military primacy with the US, China looked for cheaper ways to compete. As a result, it invested billions in an attempt to make a generational leap in military capabilities, able to neutralize and trump America’s superior conventional forces. In other words, instead of rivalling the United States on its own game, it searched to engage it in a different game altogether. It was the equivalent of what companies like Uber, Netflix, Airbnb or Spotify did in relation to the conventional economic sectors with which they competed. A novel by P.W. Singer and August Cole depicts how, through surprise and a whole array of asymmetric weapons, China defeats the superior forces of the United States (Singer and Cole, 2016).

    In essence, these weapons are dual-focused. On the one hand, they emphasize long and intermediate-range precision missiles and advanced targeting systems, able to penetrate battle network defences during the opening stages of a conflict. On the other hand, they aim at systems destruction warfare, able to cripple the US’ command, control, communication and intelligence battle network systems. The objective in both cases is to target the US’ soft spots with weapons priced at a fraction of the armaments or systems that they strive to destroy or render useless. The whole notion of asymmetric weapons, indeed, is based on exploiting America’s military weaknesses (like its dependence on information highways or space satellites) while neutralizing its strengths (like its fleet of aircraft carriers). Michael Pillsbury describes this situation in graphic terms: “For two decades, the Chinese have been building arrows designed to find a singular target – the Achilles’ heel of the United States” (Pillsbury, 2015, p. 196).

    America’s military legacy systems

    To counter China’s emerging military threat, the Obama administration put in motion what it called the Defence Innovation Initiative. This was also known as the Third Offset Strategy, as it recalled two previous occasions in the 1950s and the 1970s when, thanks to its technological leaps, the US could overcome the challenges posed by the Soviet military. Recognizing that the technological superiority, which had been the foundation of US military dominance for years, was not only eroding but was being challenged by China, the Pentagon defined a series of areas to be prioritized. Among them were the following: Autonomous learning systems, human-machine collaborative decision-making, network-enabled autonomous weapons, and high-speed projectiles (Ellman, Samp and Coll, 2017).

    However, as with many other initiatives representing the Obama legacy, this one began fading into oblivion with Trump’s arrival to power. As a result, the vision of significantly modernizing America’s military forces also faded (McLeary, 2017). This implied reverting to the previous state of affairs, which still lingers nowadays. In Raj M. Shah and Christopher M. Kirchhoff’s words: “We stand at the precipice of an even more consequential revolution in military affairs today. A new way of war is bearing down on us. Artificial-intelligence-powered autonomous weapons are going global. And the US military is not ready for them (…). Yet, as this is happening, the Pentagon still overwhelmingly spends its dollars on legacy weapons systems. It continues to rely on an outmoded and costly technical production system to buy tanks, ships and aircraft carriers that a new generation of weapons – autonomous and hypersonic – can demonstrably kill” (Shah and Kirchhoff, 2024).

    Legacy systems -aircraft carriers, fighter jets, tanks – are deliberately manufactured in key congressional districts around the country so that the argument over whether a weapons system is needed gets subsumed by the question of whether it produces jobs

    Indeed, as Fareed Zakaria put it: “The United States defence budget is (…) wasteful and yet eternally expanding (…). And the real threats of the future -cyberwar, space attacks- require different strategies and spending. Yet, Washington continues to spend billions on aircraft carriers and tanks” (Zakaria, 2019). A further quote explains the reason for this dependence on an ageing weapons inventory: “Legacy systems -aircraft carriers, fighter jets, tanks – are deliberately manufactured in key congressional districts around the country so that the argument over whether a weapons system is needed gets subsumed by the question of whether it produces jobs” (Sanger, 2024, p. 193). Hence, while China’s military advances towards a technological edge, America’s seems to be losing both focus and fitness.

    Minimum deterrence nuclear strategy

    Perhaps this American complacency concerning China’s disruptive weapons and overall military challenge could be explained by an overreliance on its nuclear superiority. Indeed, in 2020, in the comparison of nuclear warheads, the United States possessed overwhelming superiority with 5,800 against China’s 320 (Arms Control Association, 2020). This was consistent with the legacy of Mao’s “minimum deterrent” strategy. Within the above count, two kinds of nuclear weapons are involved – tactical and strategic. The former, with smaller explosive capacity, are designed for use in battlefields. With a much larger capacity, the latter aims at vital targets within the enemy’s home front. In relation to tactical nuclear weapons, America’s superiority is total, as China doesn’t have any. Nonetheless, in terms of long-range, accuracy, and extensive numbers, China’s conventional ballistic missiles (like the DF-26, also known as the Guam killer) can become an excellent match to the US’ tactical nuclear weapons (Roblin, 2018). The big difference between both countries, thus, is centred on America’s overwhelming superiority in strategic nuclear warheads.

    China’s minimum deterrent nuclear strategy was based on the assumption that, within cost-benefit decision-making, a limited nuclear force, able to target an adversary’s strategic objectives, could deter a superior nuclear force. This required retaliatory strike capacities that can survive a first enemy attack. In China’s case, this is attainable through road-mobile missiles that are difficult to find and destroy, and by way of missiles based on undetectable submarines. Moreover, Beijing’s hypersonic glide vehicle -whose prototype was successfully tested in July 2021- follows a trajectory that American systems cannot track. All of these impose restraint in the use of America’s more extensive arsenal and undermine its ability to carry out nuclear blackmail.

    there is no US defence that “could block” China’s hypersonic glide vehicle “not just because of its speed but also due to its ability to operate within Earth’s atmosphere and to change its altitude and direction in an unpredictable manner while flying much closer to the Earth’s surface”

    For the above aim, Beijing has developed new nuclear ballistic missiles, cruise missiles, and a sea-based delivery system. These include the DF-41 solid-fuel road-mobile intercontinental ballistic missile (with a range of 15,000 kilometres) or the submarine-launched JL-3 solid-fuel ballistic missile (whose range is likely to exceed 9,000 kilometres). To launch the JL-3 missiles, China counts with four Jin-class nuclear submarines, with an upgraded fifth under construction, each armed with twelve nuclear ballistic missiles (Huang, 2019; Panda, 2018). On top of that, there is no US defence that “could block” China’s hypersonic glide vehicle “not just because of its speed but also due to its ability to operate within Earth’s atmosphere and to change its altitude and direction in an unpredictable manner while flying much closer to the Earth’s surface” (Sanger, 2024, p. 190). All of this shows that America’s overwhelming superiority in terms of strategic nuclear warheads results in more theoretical than practical. What might justify a first American strategic nuclear strike on the knowledge that a Chinese retaliatory one could destroy New York, Chicago, Los Angeles, or all of the three together?

    Matching the US’ overkill nuclear capacity

    Being an asymmetric superpower while sustaining a minimum but highly credible deterrent nuclear strategy implied much subtility in terms of military thinking. One, in tune with the best Chinese traditions exemplified by Sun Tsu’s The Art of War and Chan-Kuo T’se’s Stratagems of the Warring States. However, in this regard, as in many others, Xi Jinping is sowing rigidity where subtility and flexibility prevailed. A perfect example of this is provided by its intent to match the US in terms of strategic nuclear warheads. In David E. Sanger’s words: “But now, it seemed apparent, Chinese leaders had changed their minds. Xi declared that China must ‘establish a strong strategic deterrence system’. And satellite images from near the cities of Yumen and Hami showed that Xi was now ready to throw Mao’s ‘minimum deterrent’ strategy out of the window” (Sanger, 2024, p. 200).

    Three elements attest to the former. Firstly, 230 launching silos are under construction in China. Secondly, these silos are part of a larger plan to match the US’ “triad” of land-launched, air-launched, and sea-launched nuclear weapons. Thirdly, it is estimated that by 2030, China will have an arsenal of 1,000 strategic nuclear weapons, which should reach 1,500 by 2035. The latter would imply equalling the Russian and the American nuclear strategic warheads (Sanger, 2024, p. 197; Cooper, 2021; The Economist, 2021; Hadley, 2023). 

    Xi Jinping is thus throwing overboard the Chinese capability to neutralize America’s strategic nuclear superiority at a fraction of its cost, searching to match its overkill capacity. In essence, nuclear arms seek to fulfil two main objectives. In the first place, intimidating or dissuading into compliance a given counterpart. In the second place, deterring by way of its retaliatory capacity, any first use of nuclear weapons by a counterpart.

    As seen, the second of those considerations was already guaranteed through its minimum deterrence strategy. In relation to the first, China already enjoys a tremendous dissuading power and the capacity to neutralize intimidation in its part of the world. Indeed, it holds firm control over the South China Sea. This is for three reasons. First, through its possession and positioning there, of the largest Navy in the world. Second, by way of the impressive firepower of its missiles, which includes the DF21/CSS-5, capable of sinking aircraft carriers more than 1,500 miles away. Third, via the construction and militarization of 27 artificial islands in the Paracel and Spratly archipelagos. All of this generates an anti-access and denial of space synergy, capable of being activated at any given time against hostile maritime forces. In other words, China cannot be intimidated into compliance by the United States in the South China Sea scenario (Fabey, 2018, pp. 228-231). Nor, in relation to Taiwan, could America’s superior nuclear forces dissuade Beijing to invade if it so decides. The US, indeed, would not be willing to trade the obliteration of Los Angeles or any other of its major cities by going nuclear in the defence of Taiwan.

    Simultaneously confronting two gunfighters

    It was complicated enough during the Cold War to defend against one major nuclear power. The message of the new [Chinese] silos was that now the United States would, for the first time in its history, must think about defending in the future against two major nuclear powers with arsenals roughly the size of Washington’s – and be prepared for the possibility that they might decide to work together

    Matching the US’ nuclear overkill capacity will not significantly alter the strategic equation between both countries. If anything, it would only immobilize in easy-to-target silos, the bulk of its strategic nuclear force. However, Xi’s difficult-to-understand decision makes more sense if, instead of thinking of two nuclear powers, we were to think of a game of three. This would entail a more profound strategic problem for the United States that David E. Sanger synthesizes: “It was complicated enough during the Cold War to defend against one major nuclear power. The message of the new [Chinese] silos was that now the United States would, for the first time in its history, must think about defending in the future against two major nuclear powers with arsenals roughly the size of Washington’s – and be prepared for the possibility that they might decide to work together” (Sanger, 2024, p. 201). This working together factor should be seen as the new normal, as a revisionist block led by China and Russia confronts America’s system of alliances and its post-WWII rules-based world order.

    Although the United States could try to increase the number of its nukes, nothing precludes its two competitors from augmenting theirs as well, with the intention of maintaining an overwhelming superiority. According to Thomas Schelling, leading Game Theory scholar and Economics Nobel Prize winner, the confrontation between two nuclear superpowers, in parity conditions, was tantamount to that of two far-west gunfighters: Whoever shot first had the upper hand. This is because it can destroy a significant proportion of its counterpart’s nuclear arsenal (Fontaine, 2024). In the case in point, Uncle Sam would have to simultaneously confront two gunfighters, each matching his skills and firepower. Although beyond a certain threshold, there wouldn’t seem to exist a significant difference in the capacity of destruction involved, nuclear blackmail could be imposed upon the weakest competitor. In this case, the United States.

    Conclusion

    From an American perspective, overreliance on its challenged nuclear power makes no sense. Especially if it translates into a laid-back attitude in relation to the current technological revolution in conventional warfare. If Washington doesn’t go forward with a third offset military strategy, it could find itself in an extremely vulnerable position. Just two cases can exemplify this. Aircraft carriers are becoming obsolete as a result of the Chinese DF21-CSS5 missile, able to sink them 1,500 miles away, in the same manner in which war in Ukraine is showing the obsolescence of modern tanks when faced with portable Javelins and drones. If the US is not able to undertake a leap forward in conventional military weapons and systems, it will be overcome by its rivals in both conventional and nuclear forces. For Washington, no doubt about it, this is an inflexion moment.

     

    References:

    Arms Control Association (2020). “Nuclear weapons: Who has what at a glance”, August.

    Cooper, Helene (2021). “China could have 1,000 nuclear warheads by 2030, Pentagon says”. The New York Times, November 3.

    Ellman, Jesse, Samp, Lisa, Coll, Gabriel (2017). “Assessing the Third Offset Strategy”. Center for Strategic & International Studies, CSIS, March.

    Fabey, Michael (2018) Crashback: The Power Clash Between US and China in the Pacific. New York: Scribner.

    Fontaine, Phillipe (2024). “Commitment, Cold War, and the battles of self: Thomas Schelling on Behavior Control”. Journal of the Behavioral Sciences, April.

    Hadley, Greg (2023). “China Now Has More ICBM Launchers than the US”. Air & Space Forces Magazine. February 7.

    Huang, Cary (2019). “China’s show of military might risk backfiring”. Inkstone, October 19.

    Leonard, Mark (2008). What Does China Think? New York: HarperCollins.

    McLeary, Paul (2017). “The Pentagon’s Third Offset May be Dead, But No One Knows What Comes Next”. Foreign Policy, December 18.

    Panda, Ankit (2018). “China conducts first test of new JL-3 submarine-launched ballistic missile”. The Diplomat, December 20.

    Pillsbury, Michael (2015). The Hundred-Year Marathon. New York: Henry Holt and Company.

    Roblin, Sebastien (2018). “Why China’s DF-26 Missile is a Guam Killer”. The National Interest, November 9.

    Sanger, David E. (2024). New York: Crown Publishing Books.

    Shah, Raj M. and Kirchhoff, Christopher M. (2024). “The US Military is not Ready for the New Era of Warfare”. The New York Times, September 13.

    Singer, P.W. and Cole, August (2016). Ghost Fleet: A Novel of the Next World War. Boston: Eamon Dolan Book.

    The Economist (2021). “China’s nuclear arsenal has been extremely modest, but that is changing”, November 20.

    Zakaria, Fareed (2019). “Defense spending is America’s cancerous bipartisan consensus”. The Washington Post, July 18.

     

    Feature Image Credit: NikkeiAsia

    Text Image: AsiaTimes.com

  • Globalisation’s Sunset

    Globalisation’s Sunset

    Are we witnessing the end of globalisation and the rise of economic nationalism? Who is responsible for this state of affairs? For many, the villain is clearly the US and its allies in the West. The reason is the rise of China as the world’s manufacturing and technology superpower. China is beating the West at its own game, and the US is shaken by the visible signs of the end of its hegemony and the dominance of the West.  Globalisation is being throttled by the West in a futile attempt to end China’s rise. The result will be catastrophic for the Global South in its aspirations for accelerated development. Former Venezuelan ambassador and Princeton scholar Alfredo Toro Hardy analyses what he sees as the sunset of globalisation.

    – Team TPF

     

    Economic globalisation was the offspring of the neoliberal ideology that prevailed after the collapse of the Soviet Union. The globalisation process took off in the mid-nineties, as was identified by the firm support given to it by leaders such as Bill Clinton and Tony Blair, particularly the former, who commanded the world’s largest economy.

                Its most emblematic expressions would be the Washington Consensus, the creation of the World Trade Organization in 1995, and China’s entry into these organisations in 2001. The first resulted from the convergence of positions between the U.S. Treasury Department and International Financial Organizations based in Washington. It would translate into a ten-point recipe called to set in motion the economic liberalisation of distressed and closed economies, chiefly the previous communist ones. The second involved the global homogenisation of rules in matters as diverse as manufacturing, agriculture, services, labour standards or intellectual property, as well as the abandonment by its members of industrial policies and protectionism. The third represented the insertion into the global labour market of more than a billion human beings whose working costs were but a fraction of those in developed countries. This would be accepted and even promoted by the United States under the assumption that a China open to the world’s economy would eventually open itself to the values of liberal democracy as well.

                The importance of neoliberal ideology, as a determining factor of this process, would be key. As a matter of fact, for a long time the leading force in the world economy, America’s economy, was characterised by its industrial policies, protectionism, and vertical integration of its corporations. The federal government’s industrial policies became a catalyst for economic development, either through direct investments and engagement or through incentives for the private sector to follow a particular course of action. The countless products and services incorporated into the American technological repository resulting from NASA’s R&D efforts exemplify these policies. They still represent the broad shoulders on which the country’s private technological sector stands. Protectionism expressed itself through tariffs and non-tariff barriers to protect domestic production from foreign competition. Vertical integration, on its part, involved direct control by U.S. corporations in their production and distribution channels. Hence, outsourcing did not figure in their strategies. It is worth adding that even President Reagan, despite his deregulatory crusade, supported his country’s industrial policies and imposed protective barriers against Japanese competition (Foroohar, 2022).

    Globalization in question

                For decades, globalisation has represented an unchallenged paradigm. Under its course, China reached the anteroom of world economic supremacy, numerous cheap labour economies, particularly in Asia, emerged strongly, and large corporations relying on the revolutions in information technology, communications and transports outsourced and dispersed their production and services (again mainly in Asia). Actually, it was in the emerging Asian countries where, in nine of every 10 cases, the great beneficiaries of globalisation were concentrated. Moreover, it was estimated that between 2020 and 2030, the global middle class would jump from 3,300 million to 4,900 million people, with 80% of that jump taking place in Asia (Milanovic, 2018, p. 19; OCDE, 2010). However, for some time now, globalisation has been under serious questioning. Among the reasons behind this, the following should be outlined: the emergence of powerful populist movements in the Western World; climate change distortions upon trade and the impact on climate itself, resulting from maritime trade over long distances; and economic and political nationalism in China.

                Populism is, to a large extent, directly related to the immense social upheavals caused by the massive outsourcing of jobs to the cheapest labour economies. In 2000, Clinton predicted that globalisation would allow the export of products without exporting jobs. Exactly the opposite happened, though, seriously affecting the social fabric of the United States and its European counterparts. This significantly eroded their democratic systems. Climate change, with hurricanes, floods, and other incidents, has increased the risk of global supply chains, resulting in annual revenue losses of up to 35% for companies. (McKinsey and Company, 2020).

    Conversely, the massive mobilisation of supertankers worldwide generates up to 14% of the total greenhouse gas emissions affecting the planet. (Prestowitz, 2022). Indeed, “the ultimate buyer [of final products] remained an ocean or a continent away” (O’Neil, 2022, p. 113). In addition, contrary to what American promoters of China’s emergence had suggested, the country’s economic prosperity has led to an increasingly nationalistic and authoritarian model. Far from getting closer to U.S. values, China has emphasised its economic nationalism and geopolitical aggressiveness within the context of a growing rivalry with the United States.

    The triggering elements

                However, even if disappointment with globalisation continued to grow, the triggering elements that would end up clearly tilting the balance against it were still missing. COVID and Russia’s invasion of Ukraine took care of it. Twenty trillion U.S. dollars in goods rely on global supply chains. Especially so as the disaggregation of production translates into millions of components, parts and final manufacturers moving in every direction. (McKinsey and Company, 2020). This vertiginous dissemination of productive processes led to unexpected, sudden, and massive disruptions during the pandemic. As a result, global economic interdependence choked. The endless Zero COVID policy implemented in China, the geographic nerve centre for global trade, exponentially aggravated this situation. The result was none other than inflation that brought to mind the seventies and has not yet been controlled.

                This was joined shortly afterwards by the impact of the invasion of Ukraine by Russia. One that not only disrupted vital energy and food supply chains but fundamentally brought geopolitics back to the global scenario through the main door. As if the emerging Cold War between China and the U.S. had not already been enough to undermine faith in globalisation, events in Ukraine made security the central component of the international order. It was a sort of fall of the Berlin Wall in reverse. One that brought down the relevance of economics and propelled that of politics. Olaf Scholz’s “global zeitenwende” clarified that a new strategic culture and national strategy would become his country’s new priority (Scholtz, 2023). Under such circumstances, placing economic security in distant and potentially hostile hands was no longer a rational option.

    Back to the past

                Not surprisingly, the United States began reverting to policies that preceded globalisation. That is, to industrial policies, to protectionism, and the vertical integration of its corporations. Indeed, before losing the House of Representatives to Republicans in November 2022, Biden’s Democrats passed several laws that embody industrial policies. A perfect example is the so-called energy revolution, with 490 billion dollars being involved in incentives to guide private investment towards generating clean energy sources. It also allowed the federal government to intervene in medicine prices through direct negotiations with the pharmaceutical industry. In the same direction went the laws that stimulated competitiveness and innovation, the superconductors industry, and infrastructural development. In parallel, the “Buy American” policy, subsidies to the domestic industry, and the maintenance of the tariffs imposed by Trump represented an evident protectionist impulse. Meanwhile, American corporations, in tune with these policies and in reaction to the risks of dismembering their production and services on a global scale, are opting for vertical integration and direct control of their activities. This implies, by its very nature, a production centred on the local or the regional.

    Getting back home

                All of the above factors contribute to industries’ onshoring and supply chains. In 2021, of the 709 large U.S. manufacturing corporations consulted, 83% responded that they would very likely or probably return their production operations to the United States. (Ma, 2021). Numerous leading American and foreign corporations are opting to produce in the U.S. to benefit from the new incentives put in motion by the Biden administration. This list includes, among many others, Intel, GM, US Steel, Taiwan Semiconductor Manufacturing (TSMC), Toyota, Samsung and Micron Technology. The amount of their investments, in tens of billions of dollars in many cases, speaks for itself. The motivation behind this impressive move was well reflected in the words of the larger-than-life founder of TSMC, Morris Chang: “Globalization and free trade are almost dead and unlikely to return”. (Cheng, 2022; Doherty and Yardeni, 2022). However, together with this on-shoring move, there are also parallel movements of near-shoring or friendly shoring nature, where manufacturing and supply chains are being circumscribed to neighbours or traditional allies that do not represent a security risk. With the world’s largest economy becoming protectionist, it will be difficult for globalisation to retain its influence, especially as Europe rapidly evolves in the same direction.

    Globalization last hope

                Until recently, an area of globalisation seemed to be relatively protected from these kinds of upheavals: the digital ecosystem. According to a 2016 report, the rapid flows of international trade and finance that characterised the 20th century appear to have flattened (…), yet globalisation has not reversed. Indeed, digital flows are growing very quickly.” (McKinsey Global Institute 2016). However, a few months ago, Brookings published a highly pessimistic report regarding the future of this sector. According to it: “Historically, the arrival of the global web created an opportunity for the interconnection of the world under a global digital ecosystem. However, mistrust between nations has led to the emergence of digital barriers, which imply their focus on controlling their digital sovereignty (…). These developments threaten current forms of interconnectivity, causing high-tech markets to fragment and retract, to varying degrees, upon national states”. (Brookings, 2022). Thus, the last sector of globalisation, which still showed significant dynamism, is also reversing under the impact of geopolitics. Globalisation, no doubt about it, seems to be experiencing sunset.

     

     

    References

    Brookings (2022). “The geopolitics of AI and the rise of digital sovereignty”, December 8.

    Cheng, Ting Fang (2022). “TSMC founder Morris Chang says globalization is ‘almost dead’, Nikkei, December 7.

    Doherty, J. and Yardeni, E. (2022). “Onshoring: Back to the USA”, Predicting the Markets, February 5.

    Foroohar, Rana (2022). Homecoming. New York: Crown.

    Ma, Cathy (2021). “83% of North American Manufacturers are Likely to Reshore Their Supply Chains”, Thomas, June 30.

    McKinsey & Company (2020). “Could climate change become the weak link in your supply chain”, August 6.

    McKinsey Global Institute (2016). “Digital Globalization: The New Era of Global Flows”, March.

    Milanovic, Branko (2018). Global Inequality. Cambridge, Mass.: The Belknap Press of Harvard University Press.

    OCDE (2010). “The Emerging Middle Class in Developing Countries”, Working Paper Number 285.

    O’Neil, Shannon K. (2022). The Globalization Myth. New Haven: Yale University Press.

    Prestowitz, Clyde (2022). “Is the U.S. Moving Out from Free Trade? Industrial Policy Comes Full Circle”, Clyde’s Newsletter, December 12.

    Scholz, Olaf (2023). “The Global Zeitenwende”. Foreign Affairs, January/February.

     

    Feature Image Credit: worldcrunch.com (Globalization as Ideology is Dead and Buried).

    Image Credit: Gulliver’s Travails (Paresh Nath, The Khaleej Times, UAE) www.uncommonthoughts.com

  • The Perils and Promise of the Emerging Multipolar World

    The Perils and Promise of the Emerging Multipolar World

    The world economy is experiencing a deep process of economic convergence, according to which regions that once lagged the West in industrialisation are now making up for lost time.

    We are therefore entering a post-hegemonic, multipolar world.

    The World Bank’s release on May 30 of its latest estimates of national output (up to the year 2022) offers an occasion to reflect on the new geopolitics. The new data underscore the shift from a U.S.-led world economy to a multipolar world economy, a reality that U.S. strategists have so far failed to recognize, accept, or admit.The World Bank figures make clear that the economic dominance of the West is over. In 1994, the G7 countries (Canada, France, Germany, Italy, Japan, U.K., U.S.) constituted 45.3% of world output, compared with 18.9% of world output in the BRICS countries (Brazil, China, Egypt, Ethiopia, India, Iran, Russia, South Africa, United Arab Emirates). The tables have turned. The BRICS now produce 35.2% of world output, while the G7 countries produce 29.3%.

    As of 2022, the largest five economies in descending order are China, the U.S., India, Russia, and Japan. China’s GDP is around 25% larger than the U.S.’ (roughly 30% of the U.S. GDP per person but with 4.2 times the population). Three of the top five countries are in the BRICS, while two are in the G7. In 1994, the largest five were the U.S., Japan, China, Germany, and India, with three in the G7 and two in the BRICS.

    The core U.S.-led alliance, which includes the U.S., Canada, U.K., European Union, Japan, Korea, Australia, and New Zealand, was 56% of world output in 1994, but now is only 39.5%. As a result, the U.S. global influence is waning.
    As the shares of world output change, so too does global power. The core U.S.-led alliance, which includes the U.S., Canada, U.K., European Union, Japan, Korea, Australia, and New Zealand, was 56% of world output in 1994, but now is only 39.5%. As a result, the U.S. global influence is waning. As a recent vivid example, when the U.S.-led group introduced economic sanctions on Russia in 2022, very few countries outside the core alliance joined. As a result, Russia had little trouble shifting its trade to countries outside the U.S.-led alliance.
    The world economy is experiencing a deep process of economic convergence, according to which regions that once lagged the West in industrialization in the 19th and 20th centuries are now making up for lost time. Economic convergence actually began in the 1950s as European imperial rule in Africa and Asia came to an end. It has proceeded in waves, starting first in East Asia, then roughly 20 years later India, and for the coming 20-40 years in Africa.These and some other regions are growing much faster than the Western economies since they have more “headroom” to boost GDP by rapidly raising education levels, boosting workers’ skills, and installing modern infrastructure, including universal access to electrification and digital platforms. The emerging economies are often able to leapfrog the richer countries with state-of-the-art infrastructure (e.g., fast intercity rail, 5G, modern airports and seaports) while the richer countries remain stuck with aging infrastructure and expensive retrofits. The IMF’s World Economic Outlook projects that the emerging and developing economies will average growth of around 4% per year in the coming five years, while the high-income countries will average less than 2% per year.

    It’s not only in skills and infrastructure that convergence is occurring. Many of the emerging economies, including China, Russia, Iran, and others, are advancing rapidly in technological innovations as well, in both civilian and military technologies.

    China’s capacity for innovation and low-cost production is underpinned by enormous R&D spending and its vast and growing labor force of scientists and engineers.

    China clearly has a large lead in the manufacturing of cutting-edge technologies needed for the global energy transition, including batteries, electric vehicles, 5G, photovoltaics, wind turbines, fourth generation nuclear power, and others. China’s rapid advances in space technology, biotechnology, nanotechnology, and other technologies is similarly impressive. In response, the U.S. has made the absurd claim that China has an “overcapacity” in these cutting-edge technologies, while the obvious truth is that the U.S. has a significant under-capacity in many sectors. China’s capacity for innovation and low-cost production is underpinned by enormous R&D spending and its vast and growing labor force of scientists and engineers.

    Despite the new global economic realities, the U.S. security state still pursues a grand strategy of “primacy,” that is, the aspiration of the U.S. to be the dominant economic, financial, technological, and military power in every region of the world. The U.S. is still trying to maintain primacy in Europe by surrounding Russia in the Black Sea region with NATO forces, yet Russia has resisted this militarily in both Georgia and Ukraine. The U.S. is still trying to maintain primacy in Asia by surrounding China in the South China Sea, a folly that can lead the U.S. into a disastrous war over Taiwan. The U.S. is also losing its standing in the Middle East by resisting the united call of the Arab world for recognition of Palestine as the 194th United Nations member state.

    Yet primacy is certainly not possible today, and was hubristic even 30 years ago when U.S. relative power was much greater. Today, the U.S. share of world output stands at 14.8%, compared with 18.5% for China, and the U.S. share of world population is a mere 4.1%, compared with 17.8% for China.
    The trend toward broad global economic convergence means that U.S. hegemony will not be replaced by Chinese hegemony. Indeed, China’s share of world output is likely to peak at around 20% during the coming decade and thereafter to decline as China’s population declines. Other parts of the world, notably including India and Africa, are likely to show a large rise in their respective shares of global output, and with that, in their geopolitical weight as well.

    We are therefore entering a post-hegemonic, multipolar world. It too is fraught with challenges. It could usher in a new “tragedy of great power politics,” in which several nuclear powers compete—in vain—for hegemony. It could lead to a breakdown of fragile global rules, such as open trade under the World Trade Organization. Or, it could lead to a world in which the great powers exercise mutual tolerance, restraint, and even cooperation, in accord with the U.N. Charter, because they recognize that only such statecraft will keep the world safe in the nuclear age.

     

    This article was published earlier in commondreams

    Feature Image Credit: The World Financial Review

  • Xi Jinping: Assessing his Foreign Policy

    Xi Jinping: Assessing his Foreign Policy

    All foreign policies must aim at attaining purpose, credibility, and efficiency. Purpose defines the main objectives that the country wishes to achieve through its international relations. Credibility comes from international recognition of its actions in this field. And efficiency allows implementation, at the lowest possible cost, of the desired purpose. These three notions, although interwoven and influencing each other, keep their own specificity.

             How does Xi Jinping’s foreign policy qualify in these three areas?

    Purpose

    Its purpose, in tune with that of the Chinese Communist Party before his arrival to power, is sufficiently clear. By 2049, the centenary of the founding of the People’s Republic, China should have achieved a prominence commensurate to its glorious past. According to former Australian Prime Minister Kevin Rudd, China marches towards the perception of its global destiny with a clear strategy in mind. Such destiny is none other than the resurrection of its historical glory (Rudd, 2017). Projects such as the Chinese Dream of National Rejuvenation, Made in China 2025, and the Belt and Road Initiative, converge in defining concrete goals that lead in that direction. This includes China’s “Great Unification” with Taiwan, the consolidation of a hegemonic position within the South China Sea, making China the epicentre of an Asian-led world economic order, and creating a global infrastructure and transportation network with China at its head. Xi Jinping visualizes the next ten to fifteen years as a window of opportunity to shift China’s correlation of power with the United States. Hence, Beijing seeks the convergence of energies and political determination towards this window of opportunity. The strategic compass of Xi’s foreign policy could not be more precise. Few countries show a clearer sense of its purpose.

    Credibility

             His foreign policy credibility presents a more mixed result. Vis-à-vis the Western World and several of its neighbours, China’s credibility is at a very low point. However, the situation is different in relation to the Global South, where Xi’s foreign policy promotes four interconnected initiatives to expand China’s influence. Besides the Belt and Road, whose objective is creating a China-led global infrastructure and transportation network, there is also the Global Development Initiative, the Global Security Initiative, and the Global Civilization Initiative. The first, the Global Development Initiative, aims to contrast the unequal distribution of benefits that characterize the West-led development projects with the inclusiveness and balanced nature of this China-led multilateral development project [Hass, 2023]. The other two initiatives, global security and global civilization, present rational and balanced options clearly differentiated from America’s overbearing approach to these areas. In the former case, China’s proposal promotes harmonious solutions to differences among countries through dialogue and consultation [Chaziza, 2023]. The Global Civilization Initiative, on its side, fosters cooperation and interchange between different civilizations, whereby the heterogeneity of cultures and the multiplicity of identities is fully respected [Hoon and Chan, 2023].

    The Hambantota Port in Sri Lanka is one of thousands project that China has helped finance in recent years – Image Credit: The Brussels Times (The so-called China’s debt-trap is a narrative trap).

           However, three dark areas emerge in Beijing’s credibility with respect to the Global South. Number one is the frustration prevailing in many of these smaller and underdeveloped nations, resulting from the contradiction between China’s openness as a lender and its severity as a creditor. This has given rise to the suspicion of a hidden agenda on its part and has led to the coining of the phrase “debt trap diplomacy”. Number two derives from the arrogance shown by Beijing towards the rights of several of its weakest neighbours, disregarding international law. This seems to delineate a tributary vision of its relations with them. Although this only affects China’s neighbourhood, it projects a haughtiness that contradicts its formulations about a more harmonious, equitable and inclusive world order. Number three is the apparent contradiction between Beijing’s proclamation regarding the value of the heterogeneity of cultures and the diversity of identities and its treatment of non-Han Chinese minorities at home. A feature susceptible to reproducing itself abroad. All the above generates a distance between words and deeds that casts a shadow of doubt concerning China’s sincerity. Hence, even within the Global South, China’s credibility shows a mixed result.

    Efficiency

    Finally, there is the area of efficiency. It is a very complex one, particularly given China’s over-ambitious purpose. It must be said that until 2008, Beijing succeeded in rising as a significant power without alarming neighbours or the rest of the world. It even attained the geopolitical miracle of doing so without alarming the United States. Indeed, few countries have made such a systematic and conscious effort to project a constructive international image as China has done to this date. This included the notion of “peaceful rise”, which implied a path different from that followed by Germany before World War I and Japan during World War II when they tried to overhaul the international political landscape. China’s path, on the contrary, relied upon reciprocity and the search for mutual benefit with other countries. It was a brilliant soft power marketing strategy that gave China huge goodwill dividends (Cooper Ramo, 2007).

    “Observe carefully; secure our position; cope with affairs calmly; hide our capacities and bide time; be good at maintaining a low profile; and never claim leadership” – Deng Xioping

    Regarding its reunification with Taiwan, it relied on “one country, two systems” and the economic benefits of their interconnection as the obvious means to propitiate their joining together. Regarding its maritime disputes in the South China Sea, after having deferred the resolution of this issue to a more propitious moment, it proposed a Code of Conduct to handle it in the least contentious possible manner. In general, similar approach was evident in Beijing’s handling of various contentious issues.  Beijing’s leadership followed Deng Xiaoping’s advice to his successors: “Observe carefully; secure our position; cope with affairs calmly; hide our capacities and bide time; be good at maintaining a low profile; and never claim leadership” (Kissinger, 2012, p. 441).

    “Like Europe, it has many twenty-first century qualities. Its leaders preach a doctrine of stability and social harmony. Its military talks more about soft than hard power. Its diplomats call for multilateralism rather than unilateralism. And its strategy relies more on trade than war to forge alliances and conquer new parts of the world” – Mark Leonard on China in 2008

    Writing in 2008, before the change towards a more assertive foreign policy materialized, Mark Leonard said about China: “Like Europe, it has many twenty-first century qualities. Its leaders preach a doctrine of stability and social harmony. Its military talks more about soft than hard power. Its diplomats call for multilateralism rather than unilateralism. And its strategy relies more on trade than war to forge alliances and conquer new parts of the world” (Leonard, 2008, p. 109). This phrase encapsulates well how China was perceived worldwide, including by the Western World. Not surprisingly, a 2005 world survey on China by the BBC stated that most countries in five continents held a favourable view of that nation. Even more significant was the fact that even China’s neighbours viewed it favourably (Oxford Analytica, 2005). It was a time when all doors opened to China.

    2008 represented a turning point. The convergence of several events that year changed China’s perception of its foreign policy role, making it more assertive. Among such events the most significant was the global economic crisis of 2008, the worst crisis since 1929, resulting from America’s financial excesses; other important events were the sweeping efficiency with which China avoided contagion; the fact that China’s economic growth was the fundamental factor in preserving the world from a major economic downturn; and the boost to Chinese self-esteem after the highly successful Beijing Olympic games of that year. In sum, the time in which China had to keep hiding its strengths seemed to have ended.

    Although this turning point materialized under Hu Jintao, changes accelerated dramatically after Xi Jinping’s ascend to power. He not only sharpened the edges of the country’s foreign policy but made it more aggressive, even reckless. Xi’s eleven years’ tenure in office has translated into a proliferation of international trouble spots. His overreach and overbearing style misfired, generating a concerted and strong reaction against China. As a result, the costs linked to attaining China’s purpose have skyrocketed. This deserves a more detailed analysis of China’s foreign policy efficiency under Xi.

    Intimidatory policies and actions

             Xi Jinping’s intimidatory policies and actions on international affairs have been extensive, bringing with them immense resistance.

    After dusting off a plan that had remained on paper for years, Xi decided to build seven artificial islands on top of the South China Sea coral reefs. After assuring President Obama they would not be militarized, he proceeded otherwise. Contravening international maritime law, he assigned 12 nautical miles of Territorial Sea and 200 miles of Exclusive Economic Zone to these artificial outposts.

    Under the protection of the People’s Liberation Navy, an oil rig was built in the waters claimed by Vietnam as its EEZ. Disrespecting the International Court of Justice’s ruling about the Philippines’ waters in the South China Sea, China has forcefully enforced its exclusionary presence in them. China’s Coast Guard is now authorized to use lethal force against foreign vessels operating within maritime areas under its jurisdiction claims. This, notwithstanding that China’s claimed jurisdiction, goes far beyond what is recognized by the U.N. Convention on the Law of the Sea or the International Court of Justice while disputed by several other countries.

    The People’s Liberation Army (PLA) began to ignore the median line in the Taiwan Strait, which it had respected for decades. Frequent and increasingly bold incursions within Taiwan’s Air Defence Identification Zone and reiterated calls to the PLA to prepare for war in Taiwan have become the new normal. The Senkaku-Diaoyu islands, disputed with Japan, have been declared one of China’s core interests, thus closing the door to a negotiated solution. This has translated into the systematic incursion of Chinese maritime law enforcement ships and planes into the territorial and contiguous maritime space of these islands, currently occupied by Japan. Beijing unilaterally imposed an Air Defence Identification Zone over two-thirds of the East China Sea, forcing foreign aircraft to identify themselves under threat of “defensive measures” by the PLA Air Force.

             Since 2017, China has reneged on the quite borders with India and engaged in a series of border skirmishes. It has resorted to intrusions into border regions under dispute resulting in a major skirmish in Ladakh with significant casualties, the first since 1987. In 2023, China released an official standard map showing India’s state of Arunachal Pradesh in Northeast India and Askai Chin plateau in the Indian territory of Ladakh in the west, as official parts of its territory, despite India’s objections. At the same time, it renamed 11 places in Arunachal Pradesh with Chinese names. When South Korea decided to deploy the US Army’s THAAD (Terminal High-Altitude Area Defence) ballistic missile defence, as protection against the growing North Korean threat, China put in motion an economic boycott of South Korean products and services. When Australia and New Zealand protested against Chinese interference in their domestic political systems, Beijing openly threatened to impose economic sanctions on governments or private actors criticising China’s behaviour. A few years later, it effectively banned most Australian exports when Canberra proposed an international scientific investigation on the origins of COVID-19. When Canada detained Huawei’s heiress, Meng Wanzhou, answering an American judicial request, Beijing jailed and presented accusations against two Canadian businessmen based in China (releasing them hours after Meng was released).

    Antagonizing Americans and Europeans

             Xi’s rhetoric in relation to the U.S. has been highly aggressive. Reversing the terms of Deng Xiaoping’s advice to his successors to hide China’s strengths while bidding for right time, Xi has alerted America about its intent to challenge and displace it as the foremost power soon. He has repeatedly referred; to the primacy of China in the emerging world order as its most important objective, to the next ten to fifteen years as the inflexion point when a change in the correlation of power between the two countries should be taking place, to the need to overcome the U.S.’ technological leadership, to the necessity for the PLA to ready itself to wage and win wars, and to the next ten years as a time of confrontation and dangerous storms.

    Xi Jinping starts his European tour in Paris on May6, 2024, his first in five years as China-EU trade relation have hit a low. Picture Source: Sky News.

             China’s actions have also antagonized the Europeans. These relate to China’s refusal to use the term “invasion” when referring to Russia’s actions in Ukraine; supporting the arguments provided by Russia concerning the causes of the war; placing the responsibility of the conflict on the US and the NATO; abstaining from voting in the U.N. on the West’s resolutions against Russia; demonstrating its strong strategic relations with Russia that is described as “partnership without limits”; the conduct of military exercises with Russia while war rages on in Ukraine; and providing indirect support for Russia’s war effort through surveillance drones, computer chips, and other critical components for its defence industry. Though all of the above are sovereign decisions of China, Europe, as China’s major trading partner, expects some support to their position and a neutral approach to the conflict from China.

    For the most part, Beijing’s above foreign policy actions were duly accompanied by a bellicose so-called “wolf warrior diplomacy”. It aggressively reacted to perceived criticism of the Chinese government.

    Domestic actions impacting its Image Abroad

    However, with its aggressive display in the international arena, some domestic actions have negatively permeated abroad. Brushing aside Deng Xiaoping’s commitment to respect Hong Kong’s autonomy for a period of fifty years, Xi reclaimed complete jurisdiction over such territory since his arrival to power. Within a process of actions and reactions, accelerated by the progressive strangulation of Hong Kong’s liberties, Beijing finally imposed a National Security Law over the territory. This ended the Hong Kong Basic Law, which guaranteed its autonomy. By burying the principle of “one country, two systems” established by Deng, Beijing was, at the same time, closing out any possibility of Taiwan’s willing accession to the People’s Republic. Henceforward, only force may accomplish that result.

    On the other hand, the brutal Sinicization of Xinjiang Province has shaken the liberal conscience of Western countries, with particular reference to Europe. The Uyghur population re-education camps have been compared to the Soviet’s Gulag. Beijing’s combative reaction to any foreign criticism in this regard, has compounded China’s image crisis in Europe.

    Any remaining trace of the so-called peaceful emergence of China has completely disappeared under Xi Jinping. Under his rudder, China has brought to the limelight a revisionist and tributary vision of the international order. Not surprisingly, interwoven policies and decisions emanating from different geographical points have been converging to contain China. In an unnecessary way, Beijing under Xi has been instrumental in multiplying the barriers to realising its purpose.

    Keeping China at bay

    The number of initiatives to keep China at bay has multiplied. Its list includes the following. The U.S., Japan, Australia and India created a strategic quadrilateral forum known as the Quad, which is none other than a factual alliance aimed at the containment of China. More formally, Australia, the United Kingdom, and the United States gave birth to a strategic military alliance with the same goal. On its side, Japan and Australia signed a security cooperation agreement.

    Leaving aside its restrained post-war defence policy, Japan doubled its defence budget to 2 per cent of its GDP. This will transform Japan to number three position worldwide regarding military expenditure, just behind the U.S. and China. Within the same context, Japan and the U.S. established a joint command of its military forces while agreeing to create a shared littoral force equipped with the most modern anti-ship missiles. Meanwhile, Japan is set to arm itself with state-of-the-art missiles. Overcoming their longstanding mutual mistrust, Japan and South Korea, jointly with the U.S., established a trilateral framework to promote a rules-based Indo-Pacific region. On the same token, Japan, the Philippines, and the U.S. held a first-ever trilateral summit aimed at defence cooperation and economic partnership. They pledged to protect freedom of navigation and overflight in the South China and East China Seas. Several joint naval exercises have taken place in the South China Sea to defend the principle of freedom of navigation, with France participating in the latest one.

    After several fruitless years of attempting to mollify China’s position concerning their maritime dispute in the South China Sea, the Philippines decided to renew its Mutual Defence Treaty with the U.S., which had elapsed in 2016. Meanwhile, most Southeast and East Asian countries on China’s periphery are rapidly increasing their military spending while  still continuing to support the U.S. security umbrella. Although pledging to remain neutral, even Vietnam, a traditional de facto ally of China, decided to upgrade its diplomatic relations with Washington to the highest level.

    America’s several decades policy of “strategic ambiguity” in relation to Taiwan evaporates as a result of China’s increasing threats and harassment to the island. On top of unambiguous support to Taipei by the President and the Congress, the Pentagon has formulated a military doctrine for  Taiwan’s defence in case of invasion. The idea of defending Taiwan if invaded is also taking shape in Japan.

    The European Union adhered to the U.S., the United Kingdom and Canada in sanctioning the Chinese authorities involved in human rights abuses in Xinjiang (the first such European sanction since Tiananmen in 1989). Equally, and for the same reasons, the European Parliament refused to ratify the long-time negotiated investment agreement between China and the European Union. China’s aggressive reaction to such a decision only toughened the European position further. Significantly, European contacts with Taiwan have increased as its democratic nature, and China’s harassment of it are providing a new light on the subject. In that context, the European Parliament officially received Taiwan’s Minister of Foreign Affairs.

    A gigantic containment Bloc

    France and Germany sent warships to navigate the South China Sea in defiance of Beijing’s claimed ownership of 90 per cent of the Sea. NATO’s updated “Strategic Concept” document, which outlines primary threats to the alliance, identified China for the first time as a direct threat to its security: “The People’s Republic of China’s (PRC) stated ambitions and coercive policies challenge our interests, security and values (…) It strives to subvert the rules-based international order, including in the Space, Cyber and Maritime domains (…)The deepening strategic partnership between the People’s Republic of China and the Russian Federation and their mutually reinforcing attempts to undercut the rules-based international order run counter to our values and interests” (NATO, 2022). Not surprisingly, NATO’s last summit included the heads of state and governments of Australia, New Zealand, Japan and South Korea.

    As a result of Xi Jinping’s actions and policies, China is now being subjected to a gigantic geostrategic containment force—a true block integrated by nations and organizations from four continents. For a country like China, which traditionally identified with political subtlety and enjoyed universal goodwill until not so long ago, this change in its strategic environment is not a small development. Xi’s calculations that acting boldly had become possible as China was powerful enough, its economy big enough, its neighbours dependent on it, and the U.S. resolve as uncertain have proved wrong and grossly misfired. At this point, China’s conundrum might leave China with few options short of war. According to former Australian Prime Minister Kevin Rudd, the 2020s have become the “decade of living dangerously”, as, within it, a war between China and the U.S. will most probably erupt (Rudd, 2022, chapter 16).

    In sum

    An evaluation of Xi Jinping’s foreign policy, using the notions of purpose, credibility, and efficiency as bases, would present the following result. Its purpose is crystal clear, which translates into a high mark. Credibility, on its part, shows mixed results: Not entirely unsatisfactory nor satisfactory. In terms of efficiency, though, Xi Jinping has openly failed. The lack of efficiency associated with his outreach adversely affects the attainment of China’s foreign policy purpose, creating countless barriers to its fulfilment. This lack of efficiency affects the country’s credibility as well. The downturn has been dramatic when comparing the current situation of China’s foreign policy to the one that prevailed before 2008 and, more precisely, to Xi Jinping’s ascension to power.

     

     

    References:

    Chaziza, M. (2023) “The Global Security Initiative: China’s New Security Architecture for the Gulf”, The Diplomat, May 5.

    Cooper Ramo, J. (2007). Brand China. London: The Foreign Policy Centre.

    Hass, R. (2023) “China’s Response to American-led ‘Containment and Suppression’”, China Leadership Monitor, Fall, Issue 77.

    Hoon, C.Y. and Chan, Y.K., (2023) “Reflections on China’s Latest Civilisation Agenda”, Fulcrum, 4 September.

    Kissinger, H. (2012). On China. New York: Penguin Books.

    Leonard, M. (2008). What Does China Think? New York: Public Affairs.

    NATO (2022). “NATO 2022 Strategic Concept”, June 29.

    Oxford Analytica (2005). “Survey on China”, September 20th.

    Rudd, K. (2022). The Avoidable War. New York: Public Affairs.

    Rudd, K. (2017). “Xi Jinping offers a long-term view of China’s ambitions”, Financial Times, October 23.

     

    Feature Image: bloomberg.com – Xi Jinping on visit to Belgrade, Serbia on 07 May 2024 (Xi says China will “never forget” the U.S. bombing of its Embassy)

  • West Asian moves and countermoves: Challenges of them spinning out of control

    West Asian moves and countermoves: Challenges of them spinning out of control

    What will the complex calculus of the new Middle East crisis resolve into, and what will be the impact on India?

    ISRAEL has succeeded in diverting world attention from Gaza and Hamas to Iran. This is similar to how Hamas, in October 2023, successfully short-circuited US efforts at normalising relations between the Arab states and Israel under the Abrahams Accord.

    These moves and countermoves are ratcheting up the intensity of conflict in West Asia with serious global implications, including for India. The Indian approach seems to be similar to that in the case of the conflict in Ukraine— to play both sides.

    Countermoves

    Iran’s attack on Israeli soil is unprecedented. It is a response to the Israeli attack on its consulate in Syria on April 1, killing some of its top army commanders. It had warned of a retaliation and that gave Israel and its partners, the US, the UK, etc., time to prepare.

    The US had already moved its forces and prepared its allies in the region to shoot down the projectiles from Iran. Even Jordan apparently participated in this. Israel could take care of the projectiles that managed to reach its territory. So, 99 percent of the projectiles were shot down in the air and there was little damage in Israel.

    The Indian approach seems to be similar to that in the case of the conflict in Ukraine— to play both sides.

    It provided a sense of victory to Israel, the US and their allies. This was US President Joe Biden’s message to Israeli Prime Minister Benjamin Netanyahu and to forestall any immediate Israeli retaliation.

    Did Iran need 15 days to prepare to attack Israel? Could it not have used many more than 300 projectiles to attack to overwhelm Israeli defences? Could the Iranian allies like the Hezbollah in Lebanon and the Houthis in Yemen not have fired a much larger number of projectiles?

    Clearly, Iran was making a show of avenging an attack on them but did not want to hit Israel. It did not want to provoke an attack on its territory from the much superior US and Israeli forces.

    The Iranian foreign minister stated in a press conference after the attack that the US, Turkey and some Arab neighbours were given advance information about the limited attack. The US has denied that it had advance information.

    Not only were 15 days given to Israel to prepare its defence, the timing of the attack was also conveyed in advance. The drones, which would take six–seven hours to reach Israel, and cruise missiles, which would take two–three hours, were bound to be neutralised given the advance preparations.

    Only ballistic missiles, which take only a few minutes to traverse the distance that exists between Israel and Iran, were a serious challenge, but due to the advanced notice and preparation, even they got neutralised.

    The Iranian army briefing after the attack also mentioned that the attack was a limited one and had achieved its objective and no more attacks would occur unless Israel attacked its territory. Thus, the Iranian attack was for show and not effect.

    The US and the G7 that met in the aftermath of the Iranian attack while condemning the Iranian attack suggested that Israel had won and that it should not retaliate against Iran.

    Some even argue that this presents an opportunity to take out Iran’s nuclear establishments and cripple its nuclear bomb capability.

    Indeed, Israel’s attack on the embassy in Syria was meant to draw the US and other allies into unequivocally supporting Israel. That support had been dwindling due to the ongoing genocide in Gaza which was inflaming world opinion. Israel has succeeded in this aim. Today, the attention has shifted from genocide in Gaza to the global implications of a wider war in West Asia.

    Pressures escalating

    The US, while saying it does not want an escalation and that it would not support an Israeli strike, has also said its support to Israel is “ironclad”. Just as Israel has defied US advice to avoid civilian casualties in Gaza and allow more humanitarian aid to enter, it can defy the current US advice to not escalate the conflict.

    Israel could attack, secure in the fact that the US and the allies would defend it if Iran retaliates substantially in response to the Israeli retaliation.

    Will Israel oblige by not attacking Iran? The ultra-right in Israel is pressurising the government to retaliate. They have been a part of the growing problem created by the displacement of Palestinians from the West Bank, coming up of new settlements and aggressive assertions in Jerusalem. All this has led to rising Palestinian resentment.

    Many Israelis and conservative Republicans in the US are arguing for Israeli retaliation. The Israeli war cabinet said the conflict is “not over yet” and we will “extract a price”.

    Even the moderate leader Benny Gantz wants retaliation, though at a time of Israel’s choosing. The ultras argue that Iran has crossed a red line by attacking Israeli soil and it must pay for that.

    Some even argue that this presents an opportunity to take out Iran’s nuclear establishments and cripple its nuclear bomb capability.

    Hamas’s action was a result of perceived subjugation and atrocities by Israel over a long period, which could not have been anticipated by Israel and the US.

    But, there are limits to such actions since there are other players who may be forced to intervene. Also, it could lead to a wider conflict in West Asia. The Sunni nations, though not allies of Iran, may also be forced to act. Already, some of these US allies have prohibited the use of their air space by the US.

    Limits of shadow fights

    Israel has a huge network of intelligence in not only Gaza but all over West Asia. It has been able to kill its opponents’ leaders in Gaza, Lebanon, Iran, Iraq and Syria. Recently, it could kill the sons and grandsons of Hamas leader.

    But, the October 7 attack by Hamas in Israel and Hamas still being able to fight in Gaza six months later lays bare the limits of their intelligence. The extensive network of tunnels in Gaza, the troop strength of Hamas and Israel’s inability to get hostages released for six months also point to the same limitation.

    All this points to the limits of shadow fighting in international relations. Hamas’s attack on October 7 destroyed an equilibrium because it was willing to accept the massive death and destruction in Gaza.

    Israel’s attack on the embassy in Syria knowing that Iranians would retaliate has further shifted the out-of-equilibrium position. These instabilities are feeding into each other since one cannot anticipate what nations may do under uncertainty no matter how well a powerful nation may plan.

    Hamas’s action was a result of perceived subjugation and atrocities by Israel over a long period, which could not have been anticipated by Israel and the US.

    The attack on the embassy in Syria was also unanticipated and a result of Israel’s perception that Iran is behind the Hamas, Hezbollah and Houthis. Iran’s attack on Israel is also a result of its perception of having been attacked on its soil which required an attack on Israeli soil.

    Conclusion: Rising global challenges

    Now that the world is divided into two blocs, the situation has become more worrisome. Iran is a part of the bloc consisting of Russia and China. It has been supplying drones to Russia for its war in Ukraine. Even though this bloc may not want a second front, it cannot but stand with Iran in case of a Western bloc attack on Iran.

    Its stand on the issue will be a crucial determinant of what happens next. The stance of G7 and NATO will be vital since they have been unsuccessfully trying to restrain Israel. Military mobilisation will rise in key nations. The beneficiary will be the military-industrial complex.

    War in West Asia will impact the petroleum products market. If Iran is attacked and it blocks the Hormuz Strait or attacks oil tankers, petro-goods prices will rise. Shipping through the Suez has already been impacted and may face further disruption.

    India imports 85 percent of its petroleum requirements so the outgo of foreign exchange may increase leading to a deterioration in the balance of payments (BOP), weakening of the Indian rupee and higher inflation.

    Thus, the post-pandemic easing of supply bottlenecks may reappear and create inflation globally, disrupting many economies.

    India imports 85 percent of its petroleum requirements so the outgo of foreign exchange may increase leading to a deterioration in the balance of payments (BOP), weakening of the Indian rupee and higher inflation.

    Foreign investments may slow down. A substantial number of Indians working in West Asia may be forced to return and that will reduce repatriation by non-resident Indians.

    Thus, capital flows may be impacted and further aggravate the BOP. India would need to prepare for these challenges in the midst of the fraught election season where the leadership’s attention is not where it should be.

     

    This article was published earlier in The Leaflet.

    Feature Image Credit: Wall Street Journal.

  • The United States as an Empire in Decline: A Talk by Jeremy Kuzmarov

    The United States as an Empire in Decline: A Talk by Jeremy Kuzmarov

    The Peninsula Foundation organised a webinar titled ” World Order Turmoil: The Reality of American Empire” on the 19th of January 2024. The main talk was given by the Chief Guest Jermey Kuzmarow and further comments was provided by the Discussant, Mohan Guruswamy. The event led to excellent discussions with critical comments from both the speakers. The discussions were moderated by Air Marshal M Matheswaran, President-TPF.

    Jeremy Kuzmarov is Managing editor of CovertAction Magazine and author of five books on U.S. foreign policy. His website can be accessed here. Mohan Guruswamy is our Governing Council member and a Distinguished Fellow and a prolific writer on economics, security, and geopolitics.

     

    Given below is the text of jeremy Kuzmarow’s talk, along with questions and answers.

     

    (Source: tunnelwall.blogspot.com)

    In September, I attended a talk sponsored by the Tulsa Committee on Foreign Relations by an inside-the-beltway pundit named Ali Wyne, a former senior fellow at the pro-NATO Atlantic Council and David Rockefeller fellow at the elitist Trilateral Commission.

    Wyne told the audience in so many words that the sun had not yet set on the American empire; that the Biden administration was outmaneuvering the evil Putin in Ukraine; and that the U.S. was still a beacon of hope for the rest of humanity.

    Toward the end, Wyne personalized the talk, discussing how his family had migrated to the U.S. from Pakistan with nothing, and that through hard work he was able to achieve the American dream.

    But Wyne seemed oblivious to the fact that that dream is increasingly unreachable for the majority of people in an increasingly stratified society marred by a decline in civilian manufacturing and public services and skyrocketing education costs.

    Wyne also failed to point out that the American dream historically was achieved at the expense of Third World nations that were looted by U.S. corporations, and by endless wars that killed millions of people.

    Wyne’s delusional worldview is underscored in a new book by Fadi Lama, Why the West Can’t Win: From Bretton Woods to a Multipolar World (Atlanta: Clarity Press, 2023), which shows that the American Century has ended and that a new multipolar world order has been established in which economic dynamism lies primarily in the East.

    Lama is an international adviser for the European Bank for Reconstruction and Development (EBRD) and geopolitical consultant with a Ph.D. in mechanical engineering from the Georgia Institute of Technology (Georgia Tech).

    He points out at the beginning of his book that in 1500, prior to the era of Western colonialism, there was a relatively fair political-economic world order with a close equilibrium between population and wealth generation. But by the end of World War II, the West accounted for only 30% of global population but 60% of global Gross Domestic Product (GDP).

    When many colonized nations gained their independence, the West imposed a neo-colonial framework that enabled their resources to be exploited by Western multinational corporations.

    Some countries on the front lines of the Cold War, such as West Germany, Japan and South Korea, were allowed unhindered development as part of a geopolitical strategy designed to keep them within the Western orbit and curb the advance of Communism. However, being pseudo-independent states, when the political necessity was removed, they were cut back to size.

    The liberation of China in the 1949 Communist-led revolution (an event known in the U.S. as the “loss of China”) was a historical turning point that began to reverse the Western monopolization of wealth and power and set the stage for the re-empowerment of the Global South.

    By 2017, China—known as the “sick man of Asia” in the 19th century following its de facto colonization of Great Britain following the Opium War—was the world’s number one economy with its real goods production amounting to 24% of global real goods production.

    Under CCP leadership, China regained its sovereignty and lifted 770 million people out of poverty, with homelessness now being practically non-existent.

    According to Lama, China’s staggering economic success resulted from a centralized political system in which commercial banking was dominated by the public sector. Central bank financial and monetary policies were further put under the control of the Chinese government, which implemented policies serving the national interest rather than those of the Western financial oligarchy.

    China’s economic success contrasts markedly with the growing economic stagnation in Western countries and the U.S. resulting from the neo-liberal economic model in which the private sector is elevated above the public sector.

    By 2014, the top 0.1% in the U.S. owned as many assets as the bottom 90%, an obscene inequality ratio accompanied by a dramatic rise in poverty, which had been reduced massively in China under more socialist-oriented policies.

    China’s superior state-centric economic model is currently being followed by Russia which has withstood record U.S. sanctions under Vladimir Putin’s leadership through a renewed commitment to economic autarky (self-sufficiency) and investment in local industries and technologies.

    Following the collapse of the Soviet Union, U.S. strategic planners saw a golden opportunity to reduce Russia’s status to that of a fourth-rate power and to enable the plunder of its bountiful natural resources.

    The overzealous policies backfired, however, pushing Russia into alliance with China that signifies the birth of a new multi-polar world order that holds the potential to restore the global economic parity from 1500—before Western colonization took root.

    Lama emphasizes the fact that Russia now provides food aid in Afghanistan and Africa and fertilizer to poor countries, and has forged growing relations with both China and Iran, the latter having gained independence from Western colonial tutelage in 1979 when the Shah was overthrown.

    Lama finds significant economic synergy and growing win-win cooperation in the economic, cultural, scientific and military fields between China, Russia and Iran, which he says are “de facto allies in the struggle for a ‘Fair World.’”

    Russia and China today are leading the way in space exploration, clean energy technologies as well as cutting-edge missile technologies at a time that U.S. weapons systems are proving to be extraordinarily costly and inefficient owing to a Byzantine Pentagon contracting system and under-skilled workforce due to the skyrocketing costs of higher education.

    Today’s shifting power balance can be compared with 1997 when “‘the empire’ had control over three of the top four energy reserves: Venezuela was a U.S. vassal, Russian energy resources were under control of the Money Powers (Western financial oligarchs) via their proxy Russian oligarchs, and Saudi Arabia was a compliant U.S. tributary. Of the top four, only Iranian reserves were out of the Money Powers’ control.”

    By 2022, Lama writes, “the Empire had lost control of the top three reserves, Venezuela, Iran and Russia, while Saudi Arabia is no longer as compliant as it was in 1997.”

    What happened in the interim was a period of heightened military intervention and imperial overreach resulting in a counter-mobilization that signifies the end of the era of Western empires dating back to the 16th century.

    Bretton Woods: From Military to Financial Colonialism

    The imperial framework after World War II was established through the Bretton Woods economic system, which Lama says was designed to “lock countries into a financial structure controlled by the West.”

    Lama writes that this structure “requires central bank governors be independent of their governments, but dependent on rules established by the Bank for International Settlements (BIS), at the top of the pyramid in the Bretton Woods system.

    Established in 1930 to handle reparations payments imposed on Germany at the Versailles Conference after World War I, BIS had helped finance Hitler’s rise to power and was owned by central banks, setting policies for them that directly influenced the global economy.

    Franklin D. Roosevelt had proposed liquidating the BIS due to its cooperation with Nazi Germany, though the resolution that he sponsored to that effect at the July 1944 Bretton Woods Conference at which the post-World War II monetary and political global structure was being set, was revoked after Roosevelt’s death.

    John Maynard Keynes addressing the July 1944 Bretton Woods Conference in New Hampshire. [Source: centerforfinancialstability.org

    According to Lama, when some newly decolonized countries tried to adopt an alternative economic arrangement to Bretton Woods, their leaders (Togo’s Sylvanus Olympio, Egypt’s Nasser; Indonesia’s Sukarno; Democratic Republic of Congo’s Lumumba; Iran’s Mossadegh; Ecuador’s Jaime Roldos; Panama’s Omar Torrijos) were eliminated by wars, coups or assassinations [over a 25-year span].

    Economic hit men would descend on developing countries offering loans for infrastructure projects whose real purpose was to plunge these countries into debt so they would become dependent on foreign creditors and their economies could be restructured along neo-liberal lines and in the service of multi-national corporations.

    A pillar of the Bretton Woods system was that the U.S. dollar was established as the international trade currency, which was convertible into gold at the fixed rate of $35 per ounce of gold.

    With the decline of U.S. competitiveness in the 1960s, the Nixon administration froze the convertibility of the U.S. dollar in gold and, instead, made it convertible to oil, provided that oil was sold only in U.S. dollars.

    This led to a dramatic increase in the price of oil and petrodollar arrangement with Saudi Arabia by which the U.S. provided military protection and weapons to the Saudis in exchange for the promise of them trading their oil in U.S. dollars and using income from oil to buy U.S. Treasury bills. Interest on these sales was then spent by the U.S. Department of the Treasury on infrastructure projects in Saudi Arabia to be executed by U.S. companies.

    The fact that other countries had to hold reserves in U.S. dollars to cover their oil imports allowed the U.S. to incur high trade deficits bred by deindustrialization in the neo-liberal era without causing a depreciation of the U.S. dollar.

    However, this is no longer sustainable in the long term and Russia and China are spearheading a shift in the global economy by which oil and other commodities are no longer being traded in U.S. dollars, ushering in the end of the American Century.

    The Money Power

    Lama’s book includes discussion of the growth of the Western financial oligarchy, or what he calls the Money Power, who are the major shareholders of the leading hedge funds (BlackRock, Vanguard and State Street) and have become the absolute rulers over society.

    According to Lama, the Money Power is well placed to control elections in Western democracies and control mass media in all its forms, print, TV and social media platforms.

    They support free trade agreements designed to usurp what little is left of national sovereignty and a neo-liberal vulture economy in which all aspects of the economy are privatized in order to maximize corporate profits.

    The U.S. decline has been fueled by the Money Power’s recognition that maintaining a strong manufacturing base was no longer necessary when trade deficits could be offset by currency manipulation owing to Nixon’s convertibility of the U.S. dollar to oil and the trade in oil around the world in U.S. dollars.

    The U.S. economy is increasingly dominated by the financial sector which flourishes at the expense of other vital economic sectors, leading to the high wealth concentration and impoverishment of society made worse by austerity measures entailing cutbacks in social and other government services.

    Russophobia, Sinophobia and the End of an Era

    The intense Russophobia cultivated in the U.S. media over the last decade is the result of the Money Power’s lust for Russia’s immense wealth, which it was starting to gain access to in the 1990s before Vladimir Putin reasserted national control over Russia’s economy.

    The anti-Russia propaganda has had the greatest impact on the educated classes, as 77% of Americans with post-graduate degrees considered Russia an enemy in a March 2022 poll, compared to 66% with high school education or less.

    Russophobia has been combined with an ascendant Islamophobia and Sinophobia, whose purpose is to mobilize public support for confronting the troika of powers (Russia, Iran and China), which threaten Western hegemony.

    According to Lama, if a date were to be identified for the end of the U.S. empire, it would be January 8, 2020, when Iran avenged the assassination of General Qasem Soleimani by attacking a U.S. air base in Iraq and displaying Iran’s weapons capability.

    Afterwards, the U.S. Central Command (Centcom) significantly relocated its headquarters from Doha, Qatar, just 125 miles from Iranian shores, to safety in Tampa, Florida.

    While the current U.S. war in Gaza has created a renewed pretext for expanded U.S. military intervention in the Middle East, Lama’s book makes clear that the U.S. could not win a war against Iran for regime change.

    Contrary to Wyne’s analysis, the U.S. has also been outmaneuvered in Ukraine, whose army is in a state of disrepair after a failed counteroffensive. It is further being outmaneuvered by China, which is winning hearts and minds through the Belt and Road Initiative (BRI) that provides low-interest loans to countries for infrastructural development with no strings attached.

    In sum, the Great Game for world domination appears to be up and the Money Power has lost. That is why they are behaving so erratically in manufacturing crisis after crisis as they desperately attempt to sustain a fading world order defined by profound inequality and injustice. For the rest of my talk, I will try and further answer some of the questions that were posed prior to the seminar:

    Question 1) This dealt with consistent U.S. war making as a tool in which the US tried to sustain its hegemony, and growing pushback with the rise of BRICS, Shanghai Cooperation Organization and Rise of China? How will all this shape the future world order?

    Answer: There is the threat of a world war breaking out provoked by the U.S. as the U.S. cannot tolerate geopolitical competition or being relegation to a second rate power, and will respond violently—as it is already doing. Currently, the U.S. is provoking wars simlutaneously with Russia, China and the Middle East, with catastrophic consequences already for the people of Ukraine, Russia and Gaza. The great Australian journalist John Pilger produced a documentary in 2016 warning about the U.S. military buildup in the Asia Pacific and coming war with China, which would be catastrophic for everyone involved.

    It is instructive to look back in history to the 1930s when Japan challenged U.S. and Western empires in the Asia Pacific with the establishment of the Greater Economic Co-Prosperity Sphere. This challenge and effort by Japan to establish an alternative yen bloc in Southeast Asia and to supplant the Western colonial powers led directly to the Pacific War. Records from the time reveal how the U.S. manuevered Japan into firing the first shot (an explicit goal of U.S. policy as outlined by Secretary of State Henry Stimson) by imposing a naval buildup in the South China sea and crippling oil embargo that threatened to cut off Japan’s oil supply and undermine its empire in the Asia-Pacific.

    There is evidence that FDR knew about the impending Pearl Harbor attacks but allowed them to take place because the American public would only support military intervention if America were attacked and the attack was made to look like a sneak attack by a dastardly enemy.

    History could easily repeat itself today; the U.S. military is in fact preparing for war in the Asia Pacific; building a new military base in Micronesia in the middle of the Pacific Ocean, and training soldiers in jungle warfare in Hawaii while studying military battles in the Pacific War, like the Battle of Guadalcanal.

    Gen. Charles A. Flynn, the commander of U.S. Army Pacific, was quoted in The New York Times stating that China had been on “an incremental, insidious and irresponsible path for decades.” Now more than ever, the “total Army,” he said, needs to prioritize relevant Pacific experience.

    U.S. soldiers being trained to fight a 21st Century Pacific War—this time against China. [Source: nytimes.com]

    After provoking a war with China, like with Japan in World War II, the U.S. would surely make it look like China started it and that it was somehow innocent. This has been a feature of US imperial wars going back to the era of the Indian Wars.

    Question 2: The first half of the 20th century was essentially a contest of empires. The two World Wars were fundamentally European wars or a contest of colonial empires. While the European empires were destroyed, the gain was for the U.S. as it emerged as the most powerful actor.

    Answer: Agreed. I would add that the U.S. defeated the Japanese empire in the Pacific theater of World War II, which enabled the U.S. to establish a chain of military bases in the Asia Pacific as a linchpin of U.S. imperialism. U.S. strategic planners had long considered the Asia Pacific key to world domination because of its economic vitality and rich resources and geography and this is why the U.S. cannot accept any rival powers there, including Japan, and now China.

    Question 3: Did the U.S. foresee this and plan its rise to a position as the pre-eminent power ensuring the destruction of the European powers?

    Answer: Yes, absolutely. As one example of dispacing European empires, I was just reading a book about U.S. policy in Congo in the 1960s by David Gibbs, The Political Economy of Third World Intervention. The book showed how U.S. mining tycoons (Maurice Templesman and Harold Hochschild) came to oppose Belgian colonialism so American corporations could replace Belgian ones in controlling and profiting from Congo’s lucrative mineral wealth. Templesman and Hochschild financed CIA front organizations and supported the murder of Patrice Lumumba who wanted to nationalize Congo’s mines after independence. They cultivated very close ties with Joseph Mobutu; Lumumba’s replacement and murderer, who cultivated the image of a Pan-Africanist devoted to African culture, but who sold out Congo and its economy to foreign interests. The CIA funded Mobutu’s security apparatus so he could crush a secessionist movement in the diamond rich Katanga province backed by the Belgians. The goal was for Mobutu to consolidate his control over Congo and for U.S. corporations to take over the mines from Belgians in Katanga. Here is U.S. neocolonialism at work, and muscling out of the Europeans.

    Question 4: The U.S.-led post-1945 world order rests on its control of the three pillars – political, economic, and security ( Allies/Vassals, Economic Control through Bretton Woods systems + USD as the global reserve currency, and the UN Security Council+NATO). Is Western Europe an Ally of the US or is it an unequal relationship?

    Answer: I would say its an ally of the U.S. to a point, as we see from the example of the Belgians in Congo. Many Europeans are starting to question alliance with the U.S. and whether the US has the best interests of European countries in mind. The U.S. involvement in Ukraine and destruction of the Nordstream II pipeline, for example, has been deterimental to European economies, including especially that of Germany that relied on cheap Russian natural gas imports. With the destruction of the pipeline, they were forced to purchase natural gas at a much higher cost from the Middle East and from U.S. natural gas suppliers in Texas and elsewhere who were financing politicians in the U.S. that supported the copious military aid to Ukraine along with the weapons contractors. European countries historically benefited from trade with Russia, so the war in Ukraine has generally hurt their economies and it is not clear for how much longer their populations will put up with this and just go along with the New Cold War.

    Question 5: Decolonisation was superficial as the U.S.-led West retained much of the colonial and imperial controls. Is it right to say that the U.S., in effect, has been an expanding empire since the American-Spanish War? The Cold War was a check on the American expansion.

    Answer: Decolonization was indeed superficial as the U.S. used clandestine and sometimes not so clandestine means toinfluence and control postcolonial leaders across much of the Third World and to sustain neocolonial economic relationships where Third World countries exported raw materials to the West and purchased products that were manufactured there, or had their resources owned and controlled by U.S. corporations.

    I would suggest that the U.S. was an expanding empire from the formation of the country. Historian Richard Van Alstyne wrote an important book in 1960 entitled The Rising American Empire. The book shows how the American founding fathers all conceived of the U.S. as an empire and had ambitions of eclipsing the British and Roman empires at their height. Van Alstyne also addresses how the pacification of the Native Americans and takeover of their resources and land and massacre of those who resisted previewed what the U.S. would do to other peoples around the world.

    As far as the Cold War, my book, The Russians are Coming, Again with John Marciano shows that rather than being a check on U.S. expansion, the Cold War served to validate heightened U.S. intervention across the Third World under the pretext of fighting and combatting communism. In fact the real communist threat, as Noam Chomsky has emphasized, was a threat to U.S. business interests and ability to encourage development of an alternative state-centered model of governance that would prevent corporate pillage and the kind of neoloconial arrangements that prevailed quite widely in this period and beyond.

    Question 6: The end of the Cold War and American unipolar dominance unleashed the push for the American Empire—through GWOT and a series of wars.

    Answer: Absolutely: We have the U.S. empire on steroids with the Global War on Terror. It has given a pretext for the U.S. to invade and bomb many Middle-Eastern countries. And it has been totally ridden with contradictions, as the U.S. has supported leading terrorist states like Saudi Arabia and committed large scale terrorist acts based on standard definitions of terrorism as acts of violence targeting civilians with the purpose of affecting a political goal or political change.

                                                                                                                                                              Source: goodreads.com

    Question 7: NATO Expansion – conflict with Russia and anti-China strategy – a clear case of imperial overstretch and suicidal?

    Answer: Yes I think so. Back in 1996, George Kennan, the father of the containment strategy and original Cold War, warned about NATO expansion, stating: that NATO expansion would amount to a “strategic blunder of epic proportions” and the “most fateful error of American policy in the entire post-Cold War era,” as it would “inflame the nationalistic, anti-Western and militaristic tendencies in Russian opinion, restore the atmosphere of the cold war to East-West relations,” and “impel Russian foreign policy in a direction decidedly not to our liking.”

    Kennan’s prediction proved to be true and look where we are today: in a new Cold War, with the U.S. having torn up the arms control treaties of the 1980s; initiated a proxy war with Russia that could lead to a full-blown war between the two countries and nuclear conflict. If the latter transpires, the NATO expansion surely will have been suicidal. Already it is diverting badly needed resources towards the military and a senseless new arms race, much like in the original cold war, where it produced heavy deficits and Third World type living conditions in the U.S. with astronimical inequality levels, underfunded edcuation and health care system, and abysmally poor public services, including in areas like mental health treatment, and programs to assist the homeless. One consequence is the extremely high crime rates in the U.S. and overcrowded prisons.

    George F. Kennan: if only U.S. leaders in the 1990s and 2000s had listened to him [Source: artsandculture.google.com

    As far as China, the provocations by the Biden administration may be even more insane than with regards to Russia, as a) the U.S. depends on Chinese purchasing of U.S. debt; b) the U.S. economy is quite dependant on China’s; and c) China has superior military technology capabilities that would give it the edge in any war with the U.S.

    Charles Freeman is a retired diplomat who served as Nixon’s translator when he famously visited China in theearly 1970s to reestablish U.S. diplomatic relations during the Cold War. Freeman told me when I interviewed him that China was in no way a military threat to the U.S., but the U.S. sees it as a threat because its economy has been growing and slowly surpassing that of the U.S. The U.S., however, should not view China as a threat of any kind, and should consider its economic growth an opportunity for the U.S. if it tried to harness China’s economic growth to its own. This would mesh well with the win-win strategy advocated for by Chinese Premer Xi Jinping in which China and the U.S. would cooperate to mutual economic benefit.

    Charles Freeman [Source: globaltimes.cn]

    Instead, the U.S. has sought to a) encircle China militarily, b) arm Taiwan to the teeth in violation of the “One China” policy and incite Taiwanese separatist elements, c) try and undermine Chinese interests throughout Southeast Asia, and d) provoke it by launching drone surveillance missions over its borders and in Chinese controlled waters off Taiwan, and e) sailing U.S. naval ships in Chinese waters.

    This is in addition to a) the propaganda directed against China in the U.S., b) the persecution of Chinese scientists; c) support for separatist elements in Xinjiang and Tibet; and d) the waging of an economic war on China and efforts to sabotage China’s economy—a policy that had been pursued by the FDR administration against Japan that directly provoked war with it.

    Question 8: Are current wars in Ukraine and Gaza—a sign of major turbulence in the World Order?

    Answer: Yes absoutely. These wars were both easily avoidable and were a direct result of U.S. foreign policy and its extremism.

    1. In the case of Ukraine, the U.S. was intent on using Ukraine as a battering ram directed against Russia. The U.S. orchestrated the 2014 Maidan coup and empowered and armed far right, Russophobic elements who triggered the war with Russia by a) attacking the ethnic Russian population in Eastern Ukraine; and b) reneging on any commitments in the Minsk peace agreements that would have given greater autonomy to the Luhansk and Donetsk provinces. The U.S. aim was similar to Afghanistan in the 1980s where they wanted to draw the Russians into a military quagmire and trap and discredit Putin and cripple his regime by ratcheting up economic sanctions against him (which it was believed would create disaffection with his rule and trigger a movement for regime change). This strategy was born of desperation because Putin was succeeding in strengthening Russia and blocking the neoconservative designs to control Eurasia and its rich oil and gas reserves, which was only possible with a weakened Russia.
    2. Gaza: The U.S. has long used Israel as an outpost of its power in the Middle East, recently establishing secret military bases in the Negev. The neocons in Washington have long sought regime change in Iran and see Israel as their vehicle to help achieve that. They also wanted regime change in Syria and to ensure Israeli control over the Golan Heights, where oil reserves have been discovered. U.S. weapons have emboldened hardliners in Israel and enabled Israeli aggression in Gaza and now Lebanon with disastrous human costs for the civilian population that people are comparing to a new Holocaust.

    Question 9:  With the rise of China, India, and the BRICS—is this a Power Transition moment?

    Answer: Yes. We are seeing major historical changes in real-time. China’s achievements through the One Belt, One Road initiative were so impressive they led to a copycat effort by the Biden and Boris Johnson admiinistrations that never really got off the ground. The SCO is enabling countries also to get around the World Bank and IMF by offering loans with no strings attached. China’s rise is epitlmized by its trading alliance with Russia and influence throughout Africa, where China is clearly winning the Great Game. While Chinese labor practices may be bad in many places, China is bringing tangible benefits to African countries through the building of impressive infrastructure, whereas all the U.S. offers is drone bases and IMF structural adjustment programs that push economic austerity measures and reinforce social inequality.

    Question 10: Is this a sign of the end of Western dominance of the last 500 years?

    Answer: I believe that yes, we are seeing major historical shifts. It may take some more time as empires often do have lasting power and can linger on even when their legitimacy has been eroded, but change is coming about.

    Question 11: In its entire history, the USA has been at war for all but 15-20 years. Is the USA a war-mongering state?

    Answer: Sadly, yes. It goes back to the founding of the country as a settler colonial state rooted in the military conquest and genocide of the Native Americans. The colonial mentality is so deep that the U.S. names a lot of its weapons systems after native tribes that were vanquished, like the Apache helicopter for example. The Operation to kill Osama bin Laden was called Operation Geronimo after the Apache chief who was vanquished in the 19th century. Noam Chomsky once asked; imagine the nazis had won World War II, and named weapons: “gypsys” and ‘Jews.”

    [Source: telegraph.co.uk]

    This reflects something rotten at the core of imperialism and a deep imperial mentality that is hard to vanquish and is passed on generation after generation. This mentality and the war like culture in the U.S. is seen in a hero worship of soldiers and the military at sporting events, and in the denigration and marginalization of peace activists in popular and intellectual culture.

    That the military culture is a largely top down phenomenon though should be emphasized as since Vietnam, the U.S. government has dared not reintroduce the draft, lest it face a societal revolt remniscent of the 1960s counter-culture movement. So a lot of Americans see through the lies and are not so hawkish—that’s why the government has to distance the public from the wars; lie to them repeatedly about what they are all about; and develop new technologies and AI that could ensure a reliance on machines in fighting wars rather than the American people who often see through the lies and will protest an unjust war—particularly if there are a large number of U.S. ground troops potentially being put in harms way (like in Vietnam).

    Question 12: What is the future of 21st century world order? Barry Posan says the era of Superpower is over. Has the multipolar world emerged? what would be its shape?

    Answer: I think we are indeed seeing the birth of a new multipolar world order in which the center of economic power in the world increasingly lies in the East and in which China is a powerhouse and Southeast Asia is a key motor of economic growth in the Global economy. The U.S. is sliding more towards authoritarianism and potentially even a civil war, and may be further weakened by domestic unrest as it loses its economic supremacy and the U.S. dollar ceases to be a main currency of global trade. U.S. military interventions may focus more on South America and Mexico (which some Republicans want to bomb now to stem the immigration tide) and the U.S. army may have to be deployed more often to contain domestic unrest and right wing estremists/neofascists and to control armies of homeless people who are a product of a failed economic model.

    Related to the last question about U.S. adaptation to the new realities, a great danger is that the U.S. won’t accept reality, and will attempt to violently reimpose its hegemony, triggering a new Pacific War or world war that would result in millions of deaths.

    The recent escalation of conflict in Ukraine and the Middle East as well as U.S. saber rattling towards China and over Taiwan, makes this threat all too real and ominous.

    Feature Image Credit: iai.tv

  • China’s economy is still far out growing the U.S. – contrary to Western media “fake news”

    China’s economy is still far out growing the U.S. – contrary to Western media “fake news”

    GDP data for China, the U.S., and the other G7 countries for the year 2023 has now been published. This makes possible an accurate assessment of China’s, the U.S., and major economies performance—both in terms of China’s domestic goals and international comparisons. There are two key reasons this is important.

    • First for China’s domestic reasons: to achieve a balanced estimate of China’s socialist economic situation and therefore the tasks it faces.
    • Second, because the U.S. has launched a quite extraordinary propaganda campaign, including numerous straightforward factual falsifications, to attempt to conceal the real international economic facts.

    The factual situation is that China’s economy, as it heads into 2024, has far outgrown all other major comparable economies. This reality is in total contradiction to claims in the U.S. media. This in turn, therefore, demonstrates the extraordinary distortions and falsifications in the U.S. media about this situation. It confirms that, with a few honourable exceptions, Western economic journalism is primarily dominated by, in some cases quite extraordinary, “fake news” rather than any objective analysis. Both for understanding the economic situation, and the degree of distortion in the U.S. media, it is therefore necessary to establish the facts of current international developments

    China’s growth targets

    Starting with China’s strategic domestic criteria, it has set clear goals for its economic development over the next period which will complete its transition from a “developing” to a “high-income” economy by World Bank international standards. In precise numbers, in 2020’s discussion around the 14th Five Year plan, it was concluded that for China by 2035: “It is entirely possible to double the total or per capita income”. Such a result would mean China decisively overcoming the alleged “middle income trap” and, as the 20th Party Congress stated, China reaching the level of a “medium-developed country by 2035”.

    In contrast, a recent series of Western reports, widely used in anti-China propaganda, claim that China’s economy will experience sharp slowdown and will fail to reach its targets.

    Self-evidently which of these outcomes is achieved is of fundamental importance for China’s entire national rejuvenation and construction of socialism—as Xi Jinping stated, China’s: “path takes economic development as the central task, and brings along economic, political, cultural, social, ecological and other forms of progress.” But the outcome also affects the entire global economy—for example, a recent article by the chair of Rockefeller International, published in the Financial Times, made the claim that what was occurring was China’s “economy… losing share to its peers”. The Wall Street journal asserted: “China’s economy limps into 2024” whereas in contrast the U.S. was marked by a “resilient domestic economy.” The British Daily Telegraph proclaimed China has a “stagnant economy”. The Washington Postheadlined that: “Falling inflation, rising growth give U.S. the world’s best recovery” with the article claiming: “in the United States… the surprisingly strong economy is outperforming all of its major trading partners.” This is allegedly because: “Through the end of September, it was more than 7 percent larger than before the pandemic. That was more than twice Japan’s gain and far better than Germany’s anaemic 0.3 percent increase.” Numerous similar claims could be quoted from the U.S. media.

    U.S. use of “fake news”

    Reading U.S. media claims on these issues, and comparing them to the facts. it is impossible to avoid the conclusion that what is involved is deliberate “fake news” for propaganda purposes—as will be seen, the only alternative explanation is that it is disgracefully sloppy journalism that should not appear in supposedly “quality” media. For example, it is simply absurdly untrue, genuinely “fake news”, that the U.S. is “outperforming all of its major trading partners”, or that China has a “stagnant economy”. Anyone who bothers to consult the facts, an elementary requirement for a journalist, can easily find out that such claims are entirely false—as will be shown in detail below.

    To first give an example regarding U.S. domestic reports, before dealing with international aspects, a distortion of U.S. economic growth in 2023 was so widely reported in the U.S. media that it is again hard to avoid the conclusion that this was a deliberate misrepresentation to present an exaggerated view of U.S. economic performance. Factually, the U.S. Bureau of Economic Analysis, the U.S. official statistics agency for economic growth, reported that U.S. GDP in 2023 rose by 2.5%—for comparison China’s GDP increased by 5.2%. But a series of U.S. media outlets, starting with the Wall Street Journal, instead proclaimedthat the “U.S. economy grew 3.1% over the last year”.

    This “fake news” on U.S. growth was created by statistical “cherry picking”. In this case comparing only the last quarter of 2023 with the last quarter of 2022, which was an increase of 3.1%, but not by taking GDP growth in the year as a whole “last year”. But U.S. growth in the earlier part of 2023 was far weaker than in the 4th quarter—year on year growth in the 1stquarter was only 1.7% and in the 2nd quarter only 2.4%. Taking into account this weak growth in the first part of the year, and stronger growth in the second, U.S. growth for the year as a whole was only 2.5%—not 3.1%. As it is perfectly easy to look up the actual annual figure, which was precisely published by the U.S. statistical authorities, it is hard to avoid the conclusion that this was a deliberate distortion in the U.S. media to falsely present a higher U.S. growth rate in 2023 than the reality.

    It may be noted that even if U.S. GDP growth had been 3.1% then China’s was much higher at 5.2%. But the real data makes it transparently clear that China’s economy grew more than twice as fast as the U.S. in 2023—showing at a glance that claims that the U.S. is “outperforming all of its major trading partners”, or that China has a “stagnant economy” were entirely “fake news”.

    Many more examples of U.S. media false claims could be given, but the best way to see the overall situation is to systematically present the overall facts of growth in the major economies.

    What China has to do to achieve its 2035 goals

    Turning first to assessing China’s economic performance, compared to its own strategic goals of doubling GDP and per capita GDP between 2020 and 2035, it should be noted that in 2022 China’s population declined by 0.1% and this fall is expected to continue—the UN projects China’s population will decline by an average 0.1% a year between 2020 and 2035. Therefore, in economic growth terms, the goal of doubling GDP growth to 2035 is slightly more challenging than the per capita target and will be concentrated on here—if China’stotal GDP goal is achieved then the per capita GDP one will necessarily be exceeded.

    To make an international comparison of China’s growth projections compared with the U.S., the U.S. Congressional Budget Office (CBO), responsible for the official growth projections for the U.S. economy on which its government’s policies rely, estimates there will be 1.8% annual average U.S. GDP growth between 2023 and 2023—with this falling to 1.6% from 2034 onwards. This figure is slightly below the current U.S. 12-year long term annual average GDP growth of 2.3%—12 being the number of years from 2023 to 2035. To avoid any suggestion of bias against the U.S., and in favour of China, in international comparisons here the higher U.S. number of 2.3% will be used.

    The results of such figures are that if China hits its growth target for 2035, and the U.S. continues to grow at 2.3%, then between 2020 and 2035 China’s economy will grow by 100% and the U.S. by 41%—see Figure 1. Therefore, from 2020 to 2035, China’s economy would grow slightly more than two and a half times as fast as the U.S.

    The strategic consequences of China’s economic growth rate

    The international implications of any such growth outcomes were succinctly summarised by Martin Wolf, chief economics commentator of the Financial Times. If China’s economy continues to grow substantially faster than Western ones, and it achieves the status of a “medium-developed country by 2035”, then, in addition to achieving high domestic living standards, China’s will become by far the world’s largest economy. As Wolf put it: “The implications can be seen in quite a simple way. According to the IMF, China’s gross domestic product per head (measured at purchasing power) was 28 per cent of U.S. levels in 2022. This is almost exactly half of Poland’s relative GDP per head… Now, suppose its [China’s] relative GDP per head doubled, to match Poland’s. Then its GDP would be more than double that of the U.S. and bigger than that of the U.S. and EU together.” By 2035 such a process would not be completed on the growth rates already given, and measuring by Wolf’s chosen measure of purchasing power parities (PPPs) China’s economy by 2035 would be 60% bigger than that of the U.S. But even that would make China by far the world’s largest economy.

    Wolf equally accurately notes that the only way that such an outcome would be prevented from occurring is if China’s economy slows down to the growth rate of a Western economy such as the U.S. Clearly, if China’s economic growth slows to that of a Western economy, then, naturally, China will never catch up with the West—it will necessarily simply stay the same distance behind. Therefore. as Wolf accurately puts it the outcomes are:

    What is the economic future of China? Will it become a high-income economy and so, inevitably, the largest in the world for an extended period, or will it be stuck in the ‘middle income’ trap, with growth comparable to that of the U.S.?

    The progress in achieving China’s strategic economic goals

    Turning to the precise figure required to achieve China’s 2035 target, China’s goal of doubling GDP required average annual growth of at least 4.7% a year between 2020 and 2035. So far China, as Figure 1 shows, is ahead of this goal—annual average growth in 2020-2022 was 5.7%, meaning that from 2023-2035 annual average 4.6% growth is now required.

    China’ 5.2% GDP increase in 2023 therefore once again exceeded the required 4.6% growth rate to achieve its 2035 goal—as shown in Figure 1. From 2020 to 2023 the required total increase in China’s GDP to hit its 2035 target was 14.9%, whereas in fact its growth was 17.5%. This is in line with the 45-year record since 1978’s Reform and Opening Up, during which entire period the medium/long term targets set by China have always been exceeded.

    Therefore. to summarise, there is no sign whatever in 2023, or indeed in the period since 2020, that China will fail to meet its target of doubling GDP between 2020 and 2035—China is ahead of this target. Such a 4.6% growth rate would easily ensure China becomes a high-income economy by World Bank criteria well before 2035—the present criteria for this being per capita income of $13,846.

    It should be noted, as discussed in in detail below, that a clear international conclusion flows from this necessary 4.6% annual average growth rate for China to achieve its strategic goals. It means that China must continue to grow much faster than the Western economies throughout this period to 2035—that is in line with China’s current trend. However, if China were to slow down to the growth rate of a Western economy, then it will fail to achieve its strategic goals to 2035, may not succeed in becoming a high income economy, and will necessarily remain the same distance behind the West as now. The implications of this will be considered below.

    Systematic comparisons not “cherry picking”

    Having considered China’s performance in 2023 terms of achieving its own domestic strategic goals we will now turn to actual results and a comparison of China with other international economies. This immediately shows the factual absurdity, the pure “fake news” of claims such as that the U.S. has “the world’s best recovery“ and “the United States… is outperforming all of its major trading partners.” On the contrary China has continued to far outgrow the U.S. economy not only in 2023 but in the entire last period. China’s outperformance of the other major Western economies, the G7, is even greater that of the U.S.

    Entirely misleading claims regarding such international comparisons, used for propaganda as opposed to serious analysis, are sometimes made because data is taken from extremely short periods of time which are taken out of context—unrepresentative statistical “cherry picking” or, as Lenin put it, a statistical “dirty business”. Such a method is always erroneous, but it is particularly so during periods which were affected by the impact of the Covid pandemic as these caused extremely violent short-term economic fluctuations related to lock downs and similar measures. China’s assertion of superior growth is based on its overall performance, not an absurd claim that it outperforms every other economy, on every single measure, in every single period! Therefore, in making international comparisons, the most suitable period to take is that for since the beginning of the pandemic up to the latest available GDP data. As comparison of China with the U.S. is the most commonly made one, and particularly concentrated on by the U.S. media campaign, this will be considered first.

    China’s and the U.S.’s growth in 2023

    It was already noted that in 2023 China’s GDP grew by 5.2% and the U.S. by 2.5%—China’s economy growing more than twice as fast as the U.S. But it should also be observed that 2023 was an above trend growth year for the U.S.—U.S. annual average growth over a 12-year period is only 2.3% and over a 20-year period it is only 2.1%. Therefore, although in 2023 China’s economy grew more than twice as fast as the U.S., that figure is actually somewhat flattering for the U.S. Figure 2shows that in the overall period since the beginning of the pandemic China’s economy has grown by 20.1% and the U.S. by 8.1%—that is China’s total GDP growth since the beginning of the pandemic was two and half times greater than the U.S. China’s annual average growth rate was 4.7% compared to the US’s 2.0%.

    Economic performance of China and the three major global economic centres

    Turning to wider international comparisons than the U.S. such data immediately shows the extremely negative situation in most “Global North” economies and China’s great outperformance of them. To start by analysing this in the broadest terms, Figure 3 shows the developments in the world’s three largest economic centres—China, the U.S., and the Eurozone. These three together account for 57% of world GDP at current exchange rates and 46% in purchasing power parities (PPPs). No other economic centre comes close to matching their weight in the world economy.

    Regarding the relative performance of these three major economic centres, at the time of writing data has not been published for the Euro Area for the whole year of 2023 —which would be the ideal comparison. However, it has been published for the the Euro area for the four quarters of 2023 individually and trends can be calculated on that basis. These show that In the four years to the 4th quarter of 2023, covering the period since the beginning of the pandemic, China’s economy has grown by 20.1%, the U.S. by 8.2%, and the Eurozone by 3.0%. China’s economy therefore grew by two and a half times as fast as the U.S. while the situation of the Eurozone could accurately be described as extremely negative with annual average GDP growth in the last four years of only 0.7%.

    Such data again makes it immediately obvious that claims in the Western media that China faces economic crisis, and the Western economies are doing well is entirely absurd—pure fantasy propaganda disconnected from reality.

    Relative performance of China and the G7

    Turning to analysing individual countries, then comparing China to all G7 states, i.e. the major advanced economies, shows the situation equally clearly—see Figure 4. Data for China and all G7 economies has now been published for the whole of 2023. The huge outperformance by China of all the major advanced economies is again evident.

    Over the four years since the beginning of the pandemic China’s economy grew by 20.1%, the U.S. by 8.1%, Canada by 5.4%, Italy by 3.1%, the UK by 1.8%, France by 1.7%, Japan by 1.1% and Germany by 0.7%.

    In the same period China’s economy therefore grew two and a half times as fast as the U.S., almost four times as fast as Canada, almost seven times as fast as Italy, 11 times as fast as the UK, 12 times as fast as France, 18 times as fast as Japan and almost 29 times as fast as Germany.

    In terms of annual average GDP growth during this period China’s was 4.7%, the U.S. 2.0%, Canada 1.3%, Italy 0.8%, the UK 0.4%, France 0.4%, Japan 0.3% and Germany 0.2%.

    It may therefore be seen that China’s economy far outperformed the U.S., while the performance of all other major G7 economies may be quite reasonably described as extremely negative—all having annual average economic growth rates of around or even under 1%.

    Comparison of China to developing economies

    A comparison using the IMF’s January 2024 projections can also be made to the major developing economies—the BRICS. Figure 5 shows this, using the factual result for China and the IMF projections for the other countries. Over the period since the start of the pandemic, from 2019-2023, China’s GDP grew by 20.1%, India by 17.5%, Brazil by 7.7%, Russia by 3.7% and South Africa by 0.9%.

    This data confirms that the major Global South economies are growing faster than most of the major Global North economies, which is part of the rise of the Global South and draws attention to the good performance of India. But China grew more than two and half times more than all the BRICS economies except India—China’s growth was 15% greater than India’s. It should be noted that India is at a far lower stage of development than the other BRICS economies—all the others fall in the World Bank classification of upper middle-income economies whereas India falls into the lower middle income group.

    Comparison of China’s growth to Western economies

    Finally, this outperformance by China casts light on what is necessary to achieve its own 2035 strategic targets. China’s 4.6% growth rate necessary to meet these goals means that it must continue to maintain a growth rate far higher than Western economies—Figure 6 shows this in overall terms in addition to individual comparisons given to major economies above. Whereas China must achieve an annual average 4.6% growth rate the median growth rate of high income “Western” economies is only 1.9%, the U.S. is 2.3%, and the median for developing economies is 3.0%.That is, to achieve its 2035 goals China must grow twice as fast as the long term trend of the U.S., almost two and a half times as fast as the median for high income economies, and more than 50% faster than the median for developing economies. As already seen, China is more than achieving this.

    But such facts immediately show why it is an extremely misleading when proposals are made that China should move towards the macro-economic structure of a Western economy. If China adopts the structure of a Western economy then, of course, China will slow down to the same growth rate as Western economies—and therefore fail to achieve its 2035 economic goals. China will be precisely stuck in the negative outcome of the situation accurately diagnosed by Martin Wolf.

    What is the economic future of China? Will it become a high-income economy and so, inevitably, the largest in the world for an extended period, or will it be stuck in the ‘middle income’ trap, with growth comparable to that of the U.S.?

    Conclusion

    In conclusion, it addition to objectively analysing 2023’s economic results, it is also necessary in the light of this factual situation to make a remark regarding Western, in particular U.S. “journalism”.

    None of the data given above is secret, all is available from public readily accessible sources. In many cases it does not even require any calculations and simply published data can be used. But the U.S. media and journalists report information that is systematically misleading and in many cases simply untrue. While it lagged China in creating economic growth the U.S. was certainly the world leader in creating “fake economic news”! What was the reason, what attitude should be taken to it?

    First, to avoid accusations of distortion, it should be stated that there were a small handful of Western journalists who refused to go along with this type of distortion and fake news. For example Chris Giles, the Financial Times economics commentator, in December, sharply attacked “an absurd way to compare economies… among people who should know better.” Giles did not do this because of support for China but because, quite rightly, he warned that spreading false or distorted information led to serious errors by countries doing so: “Coming from the UK, which lost its top economic dog status in the late 19th century but still has some delusions of grandeur, I can understand American denialism… But ultimately, bad comparisons foster bad decisions.” But the overwhelming majority of U.S. and Western journalists continued to spread fake news. Why?

    First, the fact that identical distortions and false information appeared absolutely simultaneously across a very wide range of media makes it clear that undoubtedly U.S. intelligence services were involved in creating it—i.e. part of the misrepresentation and distortions were entirely deliberate and conscious, aimed at disguising the real situation.

    Second, another part was merely sloppy journalism—that is journalists who could not be bothered to check facts.

    Third, supporting both of these factors was “white Western arrogance”—an arrogant assumption, rooted in centuries of European and European descended countries dominating the world, that the West must be right. Therefore, such arrogance made it impossible to acknowledge or report the clear facts that China’s economy is far outperforming the West.

    But whether it was conscious distortion, sloppy journalism, or conscious or unconscious arrogance, in all these cases no respect should be given to the Western “quality” media. It is not trying to find out the truth, which is the job of journalism, it is simply spreading false propaganda.

    It remains a truth that if a theory and the real world don’t coincide there are only two courses that can be taken. The first, that of a sane person, is to abandon the theory. The second, that of a dangerous one, is to abandon the real world—precisely the danger that Chris Giles pointed to. What has been appearing in the Western media about international economic comparisons regarding China is precisely abandonment of the real world in favour of systematic fake news.

     

    This article was published earlier in mronline.org and is republished under Creative Commons Attribution-Non Commercial-No Derivatives 4.0 International License

    Feature Image Credit: China will continue to lead global growth in 2024 – globaltimes.cn

  • Houthi’s attacks in the Red Sea: What does this mean for the world?

    Houthi’s attacks in the Red Sea: What does this mean for the world?

    The Houthis started in the 1990s as an armed group in Yemen, fighting against corruption. They belong to a community called Zaidis, who are a part of the Shia-Muslim minority. Along with Hamas and Hezbollah, the Houthis have declared themselves to be a part of the Iranian-led “axis of resistance” against Israel, the US, and the larger West.1 The Houthis have been attacking commercial ships passing through the lower Red Sea, and this has dramatically increased since mid-November in retaliation to Israel’s bombardment of Gaza. Due to these events, the Red Sea trade route is significantly affected, impacting the flow of global trade and having the potential to cause further damage. With ships attacked and stranded in one of the leading shipping routes of the world, countries seem to find themselves in yet another geopolitical fix. As the war continues between Israel and Gaza, the Red Sea has become a renewed hotspot for geopolitical and military tensions.

    Situated between Africa and West Asia, the Red Sea is a seawater entrance to the Indian Ocean in the south and goes through the Gulf of Aden and the Bab El Mandeb Strait, meeting the Gulf of Suez in the north. Countries like the US, France, Japan, and China have military bases in the region, including in Djibouti and many along the Horn of Africa, with considerable deployment of ships, weapons, and personnel. Establishing such bases conveys how critical it is to have control of the area as a measure of regional power and as a way of asserting their dominance internationally. Big players, including the Cold War rivals, have long struggled to gain presence and influence in West Asia. Having a military and economic presence in Africa with proximity to the Red Sea was necessary, for it provides access to almost 12% of the world’s trade, including nearly 40% of the trade between Europe and Asia.2 

    Until recently, the Houthis had been targeting ships heading towards Israel or ones that Israelis owned. However, recent developments showing attacks on ships bound for Israel with flags of various countries have raised grave concerns for global trade and security in the immediate future. The US, along with countries like the UK, France, and Bahrain, have tried to stop Houthi attacks on ships passing through the Red Sea under what Washington calls the “Operation Prosperity Guardian”. On the first day of the new year, The US military released a statement conveying that they killed at least 10 Houthi rebels and sabotaged three Houthi ships. Although the US was successful in deterring the Houthis from their attempt to attack, it did not do much to stop the group from being involved in disrupting peaceful navigation through the Red Sea.

    Private shipping companies such as Maersk, CMA CGM, Hapag-Lloyd, and MSC have begun to avoid using the Red Sea route due to the imminent threat from Houthis.3  The ongoing supply chain disruption caused by the COVID-19 pandemic and Russia’s invasion of Ukraine could further escalate due to the Red Sea crisis and cause severe concerns for world trade and consumer goods supply. With the suspension of trade via the Suez Canal, traffic through the Red Sea has dropped by 35%.4  The Houthis have raised the shipping cost internationally, imposing additional costs on commerce when trouble at the Panama Canal due to low water levels has already made shipping more complicated and central banks worry about a new inflationary spike. While trade hasn’t wholly stopped, most ships can choose the longer but safer route around Africa through the Cape of Good Hope to reach Europe and Asia from either side. This option imposes significant costs on shipping and, therefore, to consumers and affects local states in the region if the Houthi “blockade” persists. In the worst-case scenario, crude oil prices would rise in 2024 if oil shipments through the canal were stopped entirely, and this could cause a significant disturbance.

    Image Credit: washingtoninstitute.org

    Surprisingly, though, Russian ships have enjoyed free navigation through the Red Sea. Russian ships travel to Asia through the Black Sea, connecting to the Mediterranean Sea, passing through the Suez Canal and the Red Sea, and joining the Indian Ocean. With sanctions from Europe and the US amid the war in Ukraine, Russia cannot afford to lose its markets in Asia, particularly India and China, since these two countries buy almost 90% of Russia’s oil exports.5  The free navigation of Russian ships could possibly be due to its close relationship with Iran or due to the adoption of a similar stance with the Houthis on the war between Israel and Gaza. In the unlikely scenario that Russia does not have access to the Red Sea, it leaves them with the only other option of travelling through the Cape of Good Hope, adding 8,900 kilometres with an additional two weeks of travel. Such delays in oil shipments and a highly possible hike in price may prompt countries like India and China to start looking for other alternatives to their oil requirement, given the pre-existing energy crisis. Most probable alternatives include Saudi Arabia and other Gulf countries that do not need to pass the Red Sea to reach the Indian Ocean and thus Asian markets since they have ports in the Persian Gulf with access to the Arabian Sea.

    The disruption in trade has caused an impact on Indian imports and exports as well. Indian exports traverse the Indian Ocean and reach the Suez Canal through the Arabian Sea to reach European markets. Trade between India and Europe has been rising, at an all-time high in 2022, with goods traded worth $130 Billion.6   As of 2021, India engaged in trade worth $200 Billion through the Suez Canal, making the EU one of India’s main export destinations, with a Free trade agreement in the talks.7  India also procures its oil from Russia using the Suez Canal and the Red Sea. A slowdown or possible pause of oil imports may cause severe concerns amid the ongoing energy crisis. At such a juncture for the Indian economy, if the situation persists, trade will likely take a hit along with India’s domestic economy. If the condition fails to change decisively, the higher fees and the expense of prolonged travel duration will also put inflationary pressure on the global economy and India.

    The Houthis will most likely continue to put pressure on Israel to stop its onslaught in Gaza, and they are likely to keep attacking until they reach their goal. By taking control of the Red Sea and indirectly and directly hurting countries irrespective of their size and power, Houthis pressurize the international community to, in turn, put pressure on Israel. This also means that the group is unlikely to agree on any other way of settlement. Not only does this fall on Israel to stop their attacks but also on the US since the latter has always portrayed itself as a peace negotiator in the Middle East and, therefore, has the responsibility to restore order in the region. The Houthis possess a plethora of Iranian-supplied weaponry, ranging from precision drones to anti-ship cruise and ballistic missiles that can strike a moving vessel hundreds of kilometres away. What makes the Houthis more dangerous is the enormous stockpile that can help them continue their campaign indefinitely.

    The attacks have also prompted an unanticipated return of Somali piracy in international seas. As a result, increased expenses are now a worry for merchant shipping lines and seafarer safety for governments worldwide. The ship Lila Norfolk, under the Liberian flag and carrying six Filipinos and fifteen Indians, was taken over by Somali pirates on January 4th, 2024. The Indian navy had already deployed four warships patrolling the Indian Ocean, including INS Chennai, which was involved in the rescue operation during the recent highjack of ship Lila Norfolk. Even though the Indian Navy’s intervention allowed for the sailors’ rescue, it caused further concerns for India’s security and economy. The spill over of these attacks onto the Indian Ocean may threaten India’s security.

    Countries must monitor developments in the Red Sea and, for India, the Indian Ocean. Although India has not joined any Western-led operations on this matter, the country must push the international community to ensure freedom of navigation and the territorial integrity of countries over their sea is upheld under the UN Convention on the Law of the Seas.

     

    References

    [1] Who are the Houthi rebels and why are they attacking Red Sea ships? (2023, December 23). BBC News. https://www.bbc.com/news/world-middle-east-67614911

    [2] Yerushalmy, J. (2023, December 19). Red Sea crisis explained: what is happening and what does it mean for global trade? The Guardian.

    [3] A new Suez crisis threatens the world economy. (2023, December 16). The Economist. https://www.economist.com/international/2023/12/16/a-new-suez-crisis-threatens-the-world-economy

    [4] Graham, R., Murray, B., & Longley, A. (2023, December 19). Houthi Red Sea Attacks Start Shutting Down Merchant Shipping. Bloomberg.com. https://www.bloomberg.com/news/articles/2023-12-18/houthi-attacks-start-shutting-down-red-sea-merchant-shipping

    [5] Russia: crude oil shipments by destination 2023 | Statista. (2023, September 14). Statista. https://www.statista.com/statistics/1350506/russia-crude-oil-shipments-by-destination/

    [6] I. (n.d.). First India-EU Trade and Technology Council: Significant Milestone in India-EU Relations – Indian Council of World Affairs (Government of India). https://www.icwa.in/show_content.php?lang=1&level=3&ls_id=9416&lid=6112#:~:text=The%20EU%20is%20India’s%202nd,EU%20total%20trade%20in%20goods.

    [7] Ibid.

     

    Feature Image Credit: dailynewsegypt.com

  • G20’s New Delhi Declaration: Serving the Interest of the Global Landlords

    G20’s New Delhi Declaration: Serving the Interest of the Global Landlords

    The Delhi declaration’s achievement is preservation of the interest of the global elite (including the Indian elite). The global landlords enabled it while paying lip service to global good.

    The G20 summit in India ended on a high note with a New Delhi Declaration. This is a matter of immense satisfaction for the prime minister personally and for his entire team which had to struggle to arrive at a consensus among the warring elements of the grouping. It highlights India’s present pole position in the global order. Other nations are trying to draw it into their sphere of influence, or at least trying to prevent it from getting closer to the other side.

    India’s advantage is a result of the continuing Ukraine war and the aggravating Cold War between the G7 and China-Russia combine. It has required deft manoeuvring, more so because of India’s political problems with China which resulted in its president giving the meeting a miss. This caused considerable consternation, given China’s economic and political clout.

    [powerkit_button size=”lg” style=”info” block=”true” url=”https://thewire.in/world/g20s-new-delhi-declaration-serving-the-interest-of-the-global-landlords” target=”_blank” nofollow=”false”]
    Read More
    [/powerkit_button]