The Guardian 13 September, 2006

Made in China?
The Crisis of US Imperialism

Gerald Horne

Recently, Francesco Sisci, Asia editor of the popular Italian daily La Stampa, wrote an article entitled "Why the West Must Reorient" for his mass audience: it no doubt sent shock waves through Europe. In it, he argues that the EU and US must change "because China’s growth has brought a systemic change to the world at large." China is fuelling growth in Asia that, Sisci claims, "foreshadows a different world, where for the first time in at least two centuries the West will become an economic minority."

Reverting to history, Sisci recalls how William Shakespeare, in writing Othello, The Merchant of Venice and Romeo and Juliet, viewed Venice — as did many others — as the "most advanced country in the world", though "in reality" England "was the country leading the changes in Europe and Venice was in decline." The lesson he says is that "we rule out things we don’t like; often when it’s too painful to accept our reality we misread it."

Something similar is happening today as the EU and US, whose combined population is less than China’s, confront the rise of this largest of all nations, which happens to be ruled by a communist party. Ironically, the US spent trillions to bring down the former Soviet Union by allying with Maoist China, not to mention "Islamic fundamentalism". Now it is precisely that fateful decision, which involved the opening of China to massive foreign investment, that has placed China seemingly in the passing lane with consequences so immense for imperialism, white supremacy and global development generally that they have yet to be fully assessed.

Still, it would be silly to assume that world imperialism is supinely accepting its fate, though there is a palpable split in the US ruling elite about how to proceed vis-à-vis China, with those with massive investments there counselling moderation and those without seeking destabilisation.

Meanwhile, Washington hawks continue trying to stir up anti-Beijing antagonisms in Taiwan, the rebel province off the coast of China, whose present regime has been making noises about independence. But more cautious voices are warning that the gigantic arms transfers to Taiwan may wind up in China’s arsenal, since economic ties between Taipei and Beijing have become so substantial that present momentum is moving toward the ouster of Taiwan’s anti-Communist regime and the ascension of a pro-China government.

This dilemma is indicative of the knotty problem faced by Washington as it confronts Beijing. Thus, the well-informed analyst, Henry CK Liu, writing in the influential Asia Times, observes that "the US Navy is now dependent on Asia, and eventually China, to build its new ships, and eventually the economics of trade will force the US Air Force to procure planes made in Asia and assembled in China".

Yuan challenge to US $

Such grim and stark realities have not stopped some in Washington from seeking to halt China’s peaceful rise. For example, the bipartisan duo of liberal Democrat Senator Charles Schumer (NY) and conservative Republican Senator Lindsey Graham (SC) have introduced the China currency bill calling for a 27.5 percent tariff on Chinese exports unless it revalues its currency upward by 27.5 percent within 180 days of passage of the bill.

This bill has attracted a stunning array of bipartisan supporters and a companion bill has been introduced in the House by a similar duo, conservative Republican Duncan Hunter (CA) and liberal Democrat Tim Ryan (OH).

Yet, Liu argues forcefully that soon "the day will come when this technical issue" of the value of China’s currency "will become moot, when the Chinese yuan will naturally become a reserve currency for trade, reflecting the reality of changing global trade patterns," challenging the current hegemony of the dollar. When that day arrives, the entire monetary and financial edifice of US imperialism will be subject to a major shock. The US will be unable to resort so easily to the printing press to deal with its pressing economic problems but, like most nations, will have to earn foreign currency the old-fashioned way — by working and producing. Moreover, taxing Chinese exports will simply drive up inflation in the US, particularly for consumer goods, and will hamstring corporations like Wal-Mart, KMart, Sears Roebuck and many more.

In fact, the Schumer-Graham bill will hasten the day when the Chinese yuan will be "pegged to a basket of currencies of which the dollar is only one among several", writes Liu. Thus, "China will have less of a need to hold dollars", hindering Beijing’s present huge purchases of US Treasury bills which keeps the US Government afloat in light of the tax-cutting mania that grips the dominant Republican Party. If China is compelled to retreat from this market for US Treasury bills, either taxes would have to rise, or programs in defence, health, education, etc. would have to be slashed.

Liu warns that similar pressure on Japan two decades ago led to the "1985 Plaza Accord", which "destroyed the Japanese export economy and brought stagflation to the US that led to the 1987 crash." The Schumer-Graham bill "may well be the spark that will ignite a raging forest fire in the US debt-infested economy in the coming years."

Impact on US manufacturing

Still, attempts to sideline China continue. Recently, the Chicago Tribune issued a shrill warning about the Chinese-owned auto parts maker Wanxiang Corporation, which has opened up shop in Elgin, Illinois. It now has a "sleek 168,000 square-foot US headquarters off Interstate Highway 90" and is emulating the Chinese oil giant CNOOC(Chinese National Offshore Oil Corporation), which tried to buy out US oil giant Unocal, and the Chinese appliance maker Haier, which has tried to purchase its competitor, Maytag. Wanxiang is challenging Delphi for a bigger stake of the auto parts business with General Motors.

Delphi has been spending considerable time stiffing its workers and attaining obscenely high earnings through the manipulating of bankruptcy laws, rather than competing with this formidable Chinese company. In any event, the Chicago Federal Reserve Bank has warned that the Midwest faces major job loss in the auto market, not least since "Asian car-makers" like Toyota and Nissan "have set up manufacturing plants in the south in recent years". This "poses the most likely structural threat to the region’s economy", says this instrument of finance capital, ignoring its own complicity in this process. Kia, Hyundai and Samsung — all based in South Korea and all formidable transnational corporations — have also been competing strongly with their US counterparts of late, and this has raised eyebrows in Washington.

China impact on US-Korea relations

An earth-shattering shift in relations between the US and South Korea has accompanied these new economic developments. Though US hawks would like to target North Korea for regime change, South Korea’s President has warned that relations between his nation and the US would suffer if Washington were to try to execute such an overthrow.

In part, China is a factor here also since dramatically improved relations between Seoul and Beijing have influenced South Korea to put distance between itself and US imperialism. Recently, US ambassador to South Korea, Alexander Vershbow, caused uproar among South Koreans when he called North Korea a "criminal regime". He had to cancel a meeting in a central Seoul office after the Korean Confederation of Trade Unions, which also has offices in the building, formed a blockade and refused to guarantee the ambassador’s safety.

So moved, the Pentagon has withdrawn nearly a quarter of the roughly 37,000 US troops stationed in South Korea. Indeed, a January 2004 poll conducted by a Seoul-based firm indicated that South Koreans now consider the US a greater threat than North Korea. Such sentiments have caused the Bush White House to tone down the rhetorical excess that caused Pyongyang to be deemed a central pole in the "Axis of Evil".

China desire for peaceful development

No doubt China is pleased with the lessening of tension on its northern border, as Beijing insists on peaceful development. Certainly, eased tensions allow Beijing more latitude in deepening relations with Cuba, which has witnessed an influx of Chinese-made buses and trains and consumer goods, not to mention a series of high-level military visits from the People’s Liberation Army.

US imperialism also seeks to enlist India in an anti-China bloc and, for this reason, Bush visited New Delhi in March. India, however, has been in the forefront of nations resisting US hegemony. New Delhi was one of the closest allies of the former Soviet Union during the Cold War and suffered grievously as a result, as Pakistan and Washington sponsored "Islamic fundamentalists" to provoke violence in India’s northern province of Kashmir.

Thus, the major oil companies of India and China have just joined forces to buy Petro-Canada’s 37 percent stake in Syrian oil fields for a whopping US$573 million, which is slated as the first of a number of future collaborations between the world’s most populous nations.

A nation weaned on the poison of white supremacy as the US has been will have difficulty, in any event, in forging closer ties with a nation like India comprised overwhelmingly of the darker-skinned. Just ask Neelima Tirumalasetti, a US national of Indian origin, who has just filed suit in a federal court in Texas against a US firm. She was subjected allegedly to repeated racial harassment and discrimination after the company for which she worked, Caremark, decided to outsource work to India.


Already a pressing problem in India is the abusive and racist outpourings by US customers who phone Indian call centres for technical assistance with computers and other items. Thus, Tirumalasetti was called a "brown-skinned bitch" and "dirty Indian" by her co-workers in Texas. Before that, the Indian-born President of Pepsico, Indra Nooyi, one of the most powerful businesswomen in the US, was subjected to even more racially tinged harassment after she gave a speech in Manhattan criticising US global policies. Web sites can be found that teach US nationals the choicest words in the Indian language of Hindi that can be used against Indian workers during calls to service centres.

If enlisting India in an anti-China bloc is unpromising, there is always Japan, whose relations with Beijing are quite complicated, not least due to Tokyo’s historic plans stretching back to the late 19th century to exploit Asia’s largest nation in the way that Britain particularly exploited Africa and the Americas in order to gain global supremacy. Analyst Tim Shorrock argues, however, that "the rapid expansion of Sino-Japanese trade and the surprising evolution of cultural ties between Japan and the Asian mainland are softening anti-Japanese feelings within China and convincing many Japanese that closer ties with China may work to their benefit"

Citing one example, Shorrock notes that "an important milestone reached last year, Japanese trade with China reached US$168 billion, allowing China to replace the United States as Japan’s largest trading partner for the first time since World War II." A testament to the grim prospects of US imperialism is that its continued hegemony is heavily dependent on exacerbating tensions between China and Japan, which seems unlikely right now.

US military remains bogged down in a quagmire

Moreover, like the use of a skin cream that worsens the blemishes it is designed to obliterate, the devious stratagems deployed by US imperialism are precisely undermining its position globally. The criminal and illegal invasion of Iraq should certainly be seen in this light. Recently, Nobel Prize-winning economist Joseph Stiglitz (see has estimated that the real cost of this war is likely to be between US$1 trillion and US$2 trillion, up to 10 times more than previously thought. This spending has occurred, as taxes continue to be cut, borrowing, particularly from Japan, China and South Korea, proceeds apace and the military remains bogged down in a quagmire, unable to respond in the aggressive manner to other global trouble spots.

Withdrawal or redeployment plans have fallen on deaf ears. Thus, the military is consistently unable to meet its recruitment goals though it continues to target rural areas with depressed economies and working-class neighbourhoods. The word is out, however, and the sight of soldiers returning maimed or in body bags is not the ideal recruiting broadside. A Zogby Poll in March revealed that 72 percent of US troops serving in Iraq favour US withdrawal within one year. They have been joined by two retired high-ranking military officials, one of whom describes the war in Iraq as "the most strategic foreign policy disaster in US history." Even right-wing ideologues such as Brent Scowcroft, former aide to President George H W Bush, William F Buckley Jr and Pat Buchanan have criticised the war.

Moreover, the various scandals that have afflicted the US military have harmed the US profile in the international community. A recent United Nations report proclaimed that the detention centre run at Guantánamo Bay, Cuba should be closed because treatment of detainees amounted to "torture". The report concludes that combinations of interrogation techniques, brutal force-feeding and excessive violence in transporting prisoners violated their right to physical and mental health.

Nearly 500 individuals have been held as "enemy combatants" at Guantánamo since 2002. Likewise, Amnesty International charged the US and its allies with similar atrocities in Iraq. There, 14,000 prisoners are subjected to various forms of abuse. Human Rights Watch chimed in, asserting that Washington is pursuing a deliberate strategy of abusing prisoners that is not a "failure of training, discipline or oversight but a deliberate policy choice".

China signs energy agreements

Increasingly desperate, US imperialism has begun to seek to ratchet up tension with Iran, as a way to deflect attention away from the Iraqi debacle. Besides, Iran too sits atop a lake of oil and natural gas, which Texas oilmen have been lusting after for some time now.

Here again, China is a potential stumbling block to US designs as its state-owned energy firm has just completed a US$100 billion deal to take a leading role in developing a vast oilfield in Iran. China also is complicating US relations with its traditional ally as it has just agreed to a deal with BP of Great Britain that would make this energy firm Beijing’s biggest overseas partner. Then during a landmark visit King Abdullah, the aging 82-year-old monarch of Saudi Arabia, travelled to Beijing to ink a comprehensive energy cooperation agreement. This was a Saudi shot over Washington’s bow, warning the hawks that Riyadh has options beyond kowtowing to US imperialism.

South-South co-operation

At the same time Chinese Foreign Minister Li Zhoxing visited Cape Verde, Senegal, Mali, Liberia and Nigeria, deepening ties with the planet’s poorest continent — ties that have led to a quadrupling of China’s trade with Africa over the past five years. Perhaps the most significant aspect of these important visits was the trip to Nigeria, Africa’s largest oil producer and most populous nation, leading to China’s acquisition of a 45 percent stake in an oil block off the coast of Nigeria at a cost of US$2.5 billion. Li also invited African leaders to the China-Africa summit to take place later this year in Beijing. Forty-five African nations participated in the first such forum in 2000, hiking China’s trade with the continent. This tie between China and Africa is an emblem of "South-South" cooperation with Beijing leading the way.

In sum, US imperialism faces an all-sided challenge, which provides context for the controversy concerning the attempt by Dubai Ports World of the United Arab Emirates to take over operation of a number of US port facilities. Little was said during this flap about the basic principle of public goods being privatised; instead, an orgy of Arab-bashing was unleashed.

Yet, as one writer opined in the Financial Times, "the next phase of globalisation, in the words of the US National Intelligence Council, will most likely have an Asian face. Americans and Europeans will not find it comfortable." This is probably too broad a formulation, though it contains a fundamental truth. Nations forged on the principle of white supremacy, eg the US, will have difficulty in adjusting to a 21st century reality where nations like China and India assume a role as global leaders.

Moreover, the "Islam-phobia" that has erupted in the wake of the tragic attack on Manhattan in September 2001, ill equips the US to grapple with the fact that with oil prices stuck in the US$70-$80 barrel range, perhaps a half trillion dollars will land in the coffers of oil producers like Saudi Arabia, Kuwait, Iran, etc. These nations often recycle these dollars in the US — e.g. the Dubai ports deal — and if such efforts are blocked, this only complicates the trajectory of US imperialism.

One example of this may be Iran which under such assault by Washington partially is because it has decided to shift to the euro and away from the dollar. Iran’s plan is to begin competing with New York’s Nymex and London’s IPE with respect to international oil trades, using a euro-denominated international oil-trading mechanism. This will be an obvious blow to US dollar supremacy in the global oil market that could spell the beginning of the end for the world’s only reserve currency. This has only heightened the bloodlust that now drives Washington’s tense relations with Tehran.

China is also moving to strengthen ties with Russia, whose own relations with Washington are also in a nosedive. Former vice-presidential nominees Jack Kemp and John Edwards co-chaired a blue-ribbon panel that issued a report denouncing the Putin regime, raising questions about Moscow’s energy policies in particular. Others in Washington have called for freezing Russia out of the so-called Group of Eight, which is slated to meet this summer in St Petersburg. For its part, Moscow is concerned with the US-backed military alliance, NATO, creeping ever closer to its borders and sponsoring regime change in its neighbours, e.g. Ukraine and Georgia. This has led directly to an entente between Beijing and Moscow.

Thus, be it Europe or Africa or Latin America or Asia, it is China that is standing in the way of unrivalled US hegemony and domination. Is it too early to suggest that instead of being marked as a stroke of genius, Nixon’s trailblazing visit to Beijing some 35 years ago may be marked as the beginning of the end for US imperialism?

Gerald Horne is a contributing editor of Political Affairs,
journal of the Communist Party USA

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