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US-China Relations: From trade war to hot war?

CommentGuest Author
US-China Relations: From trade war to hot war?

Britain’s political system is having a nervous breakdown over the ongoing Brexit saga. Meanwhile, the world’s two superpowers have gone from currency wars to trade wars. This raises the question: will these economic and geo-strategic struggles lead to a hot war plunging the world into a nuclear catastrophe?

If a trade deal is struck then the mainstream media and Trump can gleefully tell us that all is well with the world: stock markets are booming so don’t worry yourself about a thing. Hyperbole aside, will a trade deal lead to a thaw in US-China relations? Can it help resolve the economic and geostrategic tensions that exist between both nations?

The election of the populist Trump, a billionaire businessman, on a ticket of ‘Make America Great Again’ tapped into a public mood that was angry at the de-industrialisation of America and the way Wall Street has been fleecing ‘Main street’. Trump’s election reflected a recognition by the American ruling class of the need for action against a backdrop of an escalating rivalry in advanced technology between the US and China, competition for raw materials/markets and increasing geo-political tensions.

Challenges facing China’s leadership
President Trump’s imposition of trade tariffs on Chinese imports reflects another front in this economic struggle between the two superpowers. U.S. trade tariffs have undoubtedly hurt the slowing Chinese economy that is facing a number of major challenges not least of which is maintaining annual GDP growth above 6% to ensure social stability.

The Chinese ruling class is still haunted by the memory of the Tiananmen Square uprising that threatened its very existence. Hence, its economic programme is motivated by the key priority of avoiding social unrest in a country with a well educated population that has high expectations raised by its economic revolution over the last 40 years. The recent protests in Hong Kong reinforce these fears amongst the Chinese elites.

U.S.-China co-dependency
On the one hand both nations are mutually dependent upon one another yet they are both in competition with each other on the economic, technological, diplomatic and military fronts. The question is whether their state of mutual dependency is strong enough to stave off any further deterioration in their relationship that raises the prospect of a military conflict.

The United States is dependent upon China in a number of key areas that range from the cheap consumer goods that Chinese and American manufacturing based in China can sell to American consumers. Besides this, is the vitally important role of America’s key foreign creditors such as China, that holds over a $1 trillion in U.S. treasury bonds. Foreign creditors help enable the U.S. government to run its public debt to over $22 trillion that helps pay for its huge war machine.

China’s economic problems
Conversely, Chinese manufacturing industry is dependent upon the continuing ability of heavily indebted U.S. consumers to continue purchasing its products.
More importantly, China’s leaders are acutely aware that they have to tread carefully in managing its huge debt problems. Hence, why the Chinese government is so keen to try and stimulate its slowing economy to help resolve this escalating debt crisis. The One Belt One Road project and the Made In China 2025 projects, that are seen as major threats by the American Empire, are integral parts of trying to boost economic growth.

U.S. economic problems
Since the 9/11 attacks the U.S. has thrown off the so called Vietnam syndrome. It has used its military power to engage in naked gun boat diplomacy fighting one regime change war after another in an attempt to reassert its political, economic and strategic dominance over the Middle East.
Instead of investing in its education system, creaking inf

astructure, and unbalanced economy that is falling behind its main competitor the U.S. ruling class, dominated as it is by the demands of finance capital, has degenerated into myopic short termism allowing the pursuit of massive profits by its bloated financial industry at the expense of the rest of society. Yet the American media and corporate politicians have the temerity to complain about China’ s rapid economic development and have fallen fall back upon sabre rattling threats and imposing tariffs upon Chinese imports.

China catching up with the U.S.
No amount of American trade tariffs or gunboat diplomacy in the South China Sea will prevent China from investing massively in research and development to stimulate innovation in its economy that will threaten American hegemony over the global economy. It is estimated that this year China will surpass the U.S. in the amount of money devoted to research and development. China’s R&D spending has increased by an average of 18% a year since 2004 compared to 4% a year for the U.S. which devotes ever greater resources to its bloated military whose 2019 budget came in at an astronomical $989 billion which is 4 times larger than the defence budgets of the next 9 countries combined!

Geo-political rivalry will intensify
The much touted trade deal, if it ever comes off, may help to relieve tensions between China and the U.S. on a temporary short term basis. However, no matter how comprehensive the deal it will not resolve the fundamental economic problems between the two nations that are leading to rising geo-political and military tensions.

Despite its own serious problems with a gigantic debt pile China has committed itself to a massive long term investment in its economic development. All the trends suggest that by mid century or even sooner China will have eclipsed the U.S. to become a global leader in advanced technologies that will greatly enhance its economy.

This undermining of American hegemony over the global economy obviously has serious geo-political consequences as the U.S. will not allow this to happen without a struggle. A struggle Britain would be wise to keep out of.
It remains to be seen whether this intensified rivalry remains contained to the economic sphere or whether it may escalate to military warfare. The next global recession, that comes closer every day, will undoubtedly exacerbate U.S.-China relations and may well push military and geo-political tensions to breaking point. After all, warfare and foreign policy are merely a continuation of domestic politics and economics by other means.