Growing contention between China and US imperialism
In the first four months of
2010, relations between the United States and China have never been out of the
headlines for long, reflecting the complex and multi-faceted relationship
between the world’s leading imperialist power on the one hand, and the world’s
leading developing (and socialist) nation on the other; the relationship
between that bilateral relationship and international relations as a whole; and
the potential for confrontation between the two nations that exists across a
broad swathe of issues.
The headlines in January through March were full of
confrontation and talk of a deteriorating relationship, across a range of
topics, including the fall-out from last December’s Copenhagen conference on
climate change; internet search engine Google’s accusations of hacking against
China followed by its unilateral decision to withdraw from the Chinese market;
President Obama’s meeting with the Dalai Lama, leader of the Tibetan
counter-revolutionaries; the US decision to sell a huge amount of advanced
weaponry to the renegade Chinese province of Taiwan; the marked Chinese
reluctance to back tightened sanctions on Iran and its refusal for several
months to even discuss the issue; the US pressure for China to revalue its
currency, the Renminbi, and its threats to designate China as a country that
manipulates its currency, which, in turn, would leave China open to punitive US
tariffs and other protectionist measures; and a range of other issues.
However, there was an apparent mood swing in April,
with both countries reducing the level of public accusation and polemics,
instead laying apparent emphasis on the prospects for constructive cooperation
between them. This was highlighted by Chinese President Hu Jintao’s visit to Washington DC, to attend the Nuclear Security Summit convened by Barrack Obama, which had
become something of a pet project for the US President. Most significantly, the
US postponed any decision on labelling China as a currency manipulating country,
which had been due to be made on 15 April. And, whilst China also gave some indications that it may be about to make some minor changes in its currency
policy, in what was seen in the west as almost a direct quid pro quo, China dropped its refusal to discuss the possibility of a new sanctions resolution against Iran being introduced at the United Nations Security Council.
However, it should be noted that, having already
successfully delayed the whole process for several months, China has so far only agreed to discuss the possibility of new sanctions against Tehran. This is far
from agreement on actual additional sanctions and this whole phase of the
crisis over the Iranian nuclear issue may yet be dragged out for several more
months. Indeed, no sooner had China agreed to such discussions, than newspapers
started to report that Chinese and Russian diplomats were using these talks to
argue against sanctions and for dialogue, which remains Beijing’s repeatedly
stated public position. Moreover, besides the veto-wielding Chinese and
Russians, the current, non-permanent members of the Security Council include
such countries as Brazil, Lebanon, Nigeria, Turkey, Gabon and Uganda, none of whom have any inclination to back stronger sanctions against Iran, but rather have close diplomatic and economic ties with the country. Currently, the United States is, therefore, far from getting its own way on this issue in the Security
Council, much to the chagrin of President Obama and his Secretary of State
Hilary Clinton, let alone the forces to their right in US politics. The former
Chinese Ambassador to Iran was quoted in the China Daily, in remarks
which would almost certainly have had to be cleared for publication at a higher
level, as saying that, even if China finally agreed to any new sanctions
against Tehran, they would not be of a nature as to have a serious adverse
impact on the friendship and cooperation between China and Iran and that the
Iranian leaders knew and understood China’s position very well. A Beijing visit by Iran’s chief nuclear negotiator served to underline the point.
Moreover, if China is prepared to make some
adjustments to its currency policy, these are in fact derived from and respond
to domestic concerns and are considered to be in China’s own best interests.
Furthermore, they are unlikely actually to benefit the United States greatly or even at all. Both these facts were acknowledged in an 8 April
article in the New York Times, which stated: “The Chinese government
is preparing to announce in the coming days that it will allow its currency to
strengthen slightly and vary more from day to day, people with knowledge of the
emerging consensus in Beijing said on Thursday. The move would help ease
tension with the Obama administration about the United States’ huge trade
deficit with China.”
However, the paper continued: “But if China allows only a small move in the renminbi, the effects on the American trade deficit
may also be small. Chinese companies are formidably competitive and, while
labour costs are rising in China, transportation and communication costs are
plunging because of heavy investment in new expressways and rail lines.
“A marginally stronger renminbi would make
Chinese goods only marginally more expensive in the United States and make
American goods slightly cheaper in China, which is now exporting more than four
times as much to the United States as it imports.”
The New York Times failed to add that making
Chinese goods “marginally more expensive” in the United States would, in
any event, be far from a net gain for the US economy, as many of these “Made
in China” items, that are ‘piled high and sold cheap’ in the Walmarts and
other stores the length and breadth of the United States, are in fact made by
US companies operating in China, either as joint ventures or as so-called WFOEs
– Wholly Foreign-Owned Enterprises. And an increase in the price of Chinese
goods in US stores would hit the pockets of millions of working and middle
class Americans, who rely on cheap yet reasonably good quality Chinese-made
products. At a time when the US is struggling to lift itself out of recession,
such a move may hit the purchasing power of millions of American consumers
whilst doing little or nothing to alleviate the USA’s double digit unemployment
rate. “Be careful of what you wish for” would seem to be the apposite
expression here!
Turning to the real reasons behind China’s currency calculations, the New York Times report continued: “The move is being
made for domestic policy reasons in China, primarily as an inflation-fighting
tool, people with knowledge of the emerging consensus in Beijing said… Allowing
wider variation in the currency would also make it easier for China’s central
bank to fight inflation, which Wen Jiabao, the premier, identified last
month as a top concern for the leadership. Consumer prices were 2.7 percent
higher in February than a year earlier, after prices were falling as recently
as last October. Inflation is accelerating in China faster than most Western
economists expected. A stronger currency helps hold down prices by making
imports cheaper.”
Against this clear benefit for China, the paper cautioned: “A stronger renminbi [as repeatedly demanded by the United States – Ed.] could prove to be a mixed blessing for the United States. If China cuts back sharply on purchases of Treasuries, then the Obama administration could
find it harder to finance American budget deficits.”
The potential downside for China, identified by the New York Times, is that: “A slightly stronger renminbi that
fluctuates each day against the dollar would mainly hurt low-margin,
labour-intensive industries in China like shoes and textiles. Many Beijing officials have been worried about job losses in these industries if the currency
appreciates.”
But irrespective of any impact on China, this cannot bring any particular benefit to the United States, as the days are long since
gone when the United States could compete with developing countries in such
sectors as shoes and textiles. The key reason for China’s massive trade surplus
with the United States lies in the fact that the United States itself refuses
to sell to China the very things that China most wants and needs to buy, which
are big-end, high-value goods, such as super computers and various advanced
technologies, which would add billions to the US trade figures, were they not
banned for cold war, anti-communist reasons and the USA’s continued strategic,
if doomed, goal of frustrating China’s development.
Furthermore, another contributory factor to China’s
trade surplus with the US is that many Chinese exports to the US are actually
of goods where only the final assembly has been done on the Chinese mainland,
with the actual manufacture of components, and hence the real added value,
occurring in other Asian markets, such as Taiwan, south Korea and Singapore. China’s trade surplus with the US is therefore complemented by a trade deficit with many of its
neighbours, whereas what are in effect, at least in large measure, Taiwanese,
Singaporean or south Korean exports to the USA, via China, appear only in China’s trade figures with Washington.
Additionally, such low-end manufacturing industries
as textiles and shoes are already in relative decline in China as the New York Times also notes: “Much of this production is already starting to
move out of China, notably to Vietnam and Bangladesh, where labour costs have
stayed low. And Chinese factories producing these goods have been struggling to
find enough workers over the last two months as the economy grew powerfully
this winter, stimulated by heavy bank lending, strong demand for workers in the
retail sector and rising government spending on high-speed rail lines and other
infrastructure investments.” (All above quotations from ‘China Seems Set to
Loosen Hold on Its Currency’ by Keith Bradsher.)
Whilst the United States constantly tried to
pressure China on its currency and to support toughened sanctions against Iran, China was more vexed over the blatant US interference in two of the most sensitive core issues
related to its sovereignty and territorial integrity, namely Tibet and Taiwan.
China responded to the US announcement that it
intended to sell $6.4bn worth of sophisticated armaments to the anti-communist
holdout regime in its island province of Taiwan, not only with verbal protests,
but with an announcement that sanctions would be enforced against leading US companies involved with the arms sales, which include Boeing, Lockheed Martin and Raytheon. The
projected sales include 60 Black Hawk helicopters and 114 Patriot missiles.
Such sanctions could have real bite. In the last
three years, Boeing has derived some four percent of its total revenues from China. For its part, Boeing estimates China’s total commercial aviation market at $400bn
over the next 20 years.
China also dropped a heavy economic hint as Obama
planned to meet the Dalai Lama, the counter-revolutionary feudal leader of the
Tibetan separatists. Leading Chinese official Zhu Weiqun opined: “If the US leader chooses this period to meet the Dalai Lama that would damage trust and cooperation between
our two countries, and how would that help the United States surmount the
current economic crisis?” (Quoted in ‘China warns US over Dalai Lama’, Financial
Times, 2 February 2010.)
After Obama finally met the Dalai Lama on 18
February, the Chinese news agency Xinhua released an important commentary,
setting out the background to the meeting and explaining why China feels so strongly about it.
Stating that Obama had met the Dalai Lama despite “stern
warnings from China”, it said that the Dalai Lama “must have forgotten
that the fate of Tibet never relies on him and a few foreigners but has always
been decided by all the Chinese people, including all ethnic minorities in the
region.”
The commentary went on to set out the historical
context as follows: “The so-called ‘Tibet issue’ was fabricated by
imperialists to serve their intention of invading, partitioning and containing China.
“Back in 1888 and 1904, troops of the United Kingdom intruded into Tibet twice, but failed to take it away from China due to strong revolt
from the Tibetan people backed by the whole Chinese nation. Since then, foreign
forces turned to cultivating their agents for ‘Tibet independence’ in the upper
strata of Tibet’s local ruling echelon. After the Second World War, the
United States directly interfered with Tibetan affairs, sabotaging China’s cause of national unification and liberation of the people.
“In order to maintain the theocratic
feudal serfdom, local rulers in Tibet colluded with foreigners to first
violently resist the peaceful liberation of Tibet and then start an armed
rebellion against democratic reforms.
“In 1954, the US Central Intelligence Agency (CIA) recruited spies among Tibetans, sent them for training and then
secretly took them back to China. The US had been supplying weapons and
ammunition to these spies through secret border transport and air-dropping.
“In March 1959, when the Dalai Lama and
his followers failed in an insurgency and fled Tibet, he was closely accompanied
by a CIA radio operator, who helped keep contact with outside forces and guided
them to air-drop materials to the fleeing group.
“Since 1959, the Dalai Lama has been
relying on foreign forces. A declassified document showed the US spent up to 1.66 million dollars in 1964 on the ‘Tibet project’ alone. The money was spent
supporting 2,100 ‘Tibet guerrillas’, buying equipment and educating senior ‘Tibet officials’. Other expenditures included transport and intelligence training.
“Meanwhile, the Dalai Lama received an
allowance of 180,000 dollars, a huge amount of money compared with a salary of
100,000 dollars for the then US president.
“We can say that the ‘Tibet issue’ would have vanished long ago if the foreign forces had not spared any effort
to support the Dalai Lama. In recent years, foreign financial support to the
Dalai Lama and his followers became a little more hidden, but remained equally
strong.
“Despite the serious financial crisis,
the US government’s 2009 fiscal budget planned 16.8 million dollars for the
Dalai clique, an increase of 25 percent over the previous year. It also ‘paid’
the clique in the name of non-governmental organisations and foundations or by
inviting the Dalai Lama for sermons…
“Even in the poor
and weak old China, imperialists and local separatist forces in Tibet could not succeed in splitting the region from China. Any ‘Tibet independence’ conspiracy
nowadays is no different from a farce as socialist China grows increasingly
stronger.” (‘Foreign backing gives Dalai Lama no room but doom’, Xinhua,
20 February 2010.)
Although China continues to seek good and constructive relations with Washington, the inherent and basic
contradiction between a rising socialist China and a declining US imperialism means that periods of amelioration in their bilateral relationship are temporary and
cannot obscure the fundamental contention that can only intensify in the months
and years ahead.