The US and China: One Side is Losing, the Other is Winning

Asian capitalism, notably China and South Korea are competing with the US for global power. Asian global power is driven by dynamic economic growth, while the US pursues a strategy of military-driven empire building.

One Day’s Read of the Financial Times

Even a cursory read of a single issue of the Financial Times (December 28, 2009) illustrates the divergent strategies toward empire building. On page one, the lead article on the US is on its expanding military conflicts and its ‘war on terror’, entitled “Obama Demands Review of Terror List.” In contrast, there are two page-one articles on China, which describe China’s launching of the world’s fastest long-distance passenger train service and China’s decision to maintain its currency pegged to the US dollar as a mechanism to promote its robust export sector. While Obama turns the US focus on a fourth battle front (Yemen) in the ‘war on terror’ (after Iraq, Afghanistan and Pakistan), the Financial Times reports on the same page that a South Korean consortium has won a $20.4 billion dollar contract to develop civilian nuclear power plants for the United Arab Emirates, beating its US and European competitors.

On page two of the FT there is a longer article elaborating on the new Chinese rail system, highlighting its superiority over the US rail service: The Chinese ultra-modern train takes passengers between two major cities, 1,100 kilometers, in less than 3 hours whereas the US Amtrack ‘Express’ takes 3 ½ hours to cover 300 kilometers between Boston and New York. While the US passenger rail system deteriorates from lack of investment and maintenance, China has spent $17 billion dollars constructing its express line. China plans to construct 18,000 kilometers of new track for its ultra-modern system by 2012, while the US will spend an equivalent amount in financing its ‘military surge’ in Afghanistan and Pakistan, as well as opening a new war front in Yemen.

China builds a transport system linking producers and labor markets from the interior provinces with the manufacturing centers and ports on the coast, while on page 4 the Financial Times describes how the US is welded to its policy of confronting the ‘Islamist threat’ with an endless ‘war on terror.’ The decades-long wars and occupations of Moslem countries have diverted hundreds of billions of dollars of public funds to a militarist policy with no benefit to the US, while China modernizes its civilian economy. While the White House and Congress subsidize and pander to the militarist-colonial state of Israel with its insignificant resource base and market, alienating 1.5 billion Moslems,1 China’s gross domestic product (GDP) grew 10 fold over the past 26 years.2 While the US allocated over $1.4 trillion dollars to Wall Street and the military, increasing the fiscal and current account deficits, doubling unemployment and perpetuating the recession,3 the Chinese government releases a stimulus package directed at its domestic manufacturing and construction sectors, leading to an 8% growth in GDP, a significant reduction of unemployment and ‘re-igniting linked economies’ in Asia, Latin America and Africa.3

While the US was spending time, resources and personnel in running ‘elections’ for its corrupt clients in Afghanistan and Iraq, and participating in pointless mediations between its intransigent Israeli partner and its impotent Palestinian client, the South Korean government backed a consortium headed by the Korea Electric Power Corporation in its successful bid on the $20.4 billion dollar nuclear power deal, opening the way for other billion-dollar contracts in the region.4

While the US was spending over $60 billion dollars on internal policing and multiplying the number and size of its ‘homeland’ security agencies in pursuit of potential ‘terrorists,’ China was investing $25 billion dollars in ‘cementing its energy trading relations’ with Russia.5

The story told by the articles and headlines in a single day’s issue of the Financial Times reflects a deeper reality, one that illustrates the great divide in the world today. The Asian countries, led by China, are reaching world power status on the basis of their massive domestic and foreign investments in manufacturing, transportation, technology and mining and mineral processing. In contrast, the US is a declining world power with a deteriorating society resulting from its military-driven empire building and its financial-speculative centered economy:

1. Washington pursues minor military clients in Asia; while China expands its trading and investment agreements with major economic partners – Russia, Japan, South Korea and elsewhere.

2. Washington drains the domestic economy to finance overseas wars. China extracts minerals and energy resources to create its domestic job market in manufacturing.

3. The US invests in military technology to target local insurgents challenging US client regimes; China invests in civilian technology to create competitive exports.

4. China begins to restructure its economy toward developing the country’s interior and allocates greater social spending to redress its gross imbalances and inequalities while the US rescues and reinforces the parasitical financial sector, which plundered industries (strips assets via mergers and acquisitions) and speculates on financial objectives with no impact on employment, productivity or competitiveness.

5. The US multiplies wars and troop build-ups in the Middle East, South Asia, the Horn of Africa and Caribbean; China provides investments and loans of over $25 billion dollars in building infrastructure, mineral extraction, energy production and assembly plants in Africa.

6. China signs multi-billion dollar trade and investment agreements with Iran, Venezuela, Brazil, Argentina, Chile, Peru and Bolivia, securing access to strategic energy, mineral and agricultural resources; Washington provides $6 billion in military aid to Colombia, secures seven military bases from President Uribe (to threaten Venezuela), backs a military coup in tiny Honduras and denounces Brazil and Bolivia for diversifying its economic ties with Iran.

7. China increases economic relations with dynamic Latin American economies, incorporating over 80% of the continent’s population; the US partners with the failed state of Mexico, which has the worst economic performance in the hemisphere and where powerful drug cartels control wide regions and penetrate deep into the state apparatus.

Conclusion

China is not an exceptional capitalist country. Under Chinese capitalism, labor is exploited; inequalities in wealth and access to services are rampant; peasant-farmers are displaced by mega-dam projects and Chinese companies recklessly extract minerals and other natural resources in the Third World. However, China has created scores of millions of manufacturing jobs, reduced poverty faster and for more people in the shortest time span in history. Its banks mostly finance production. China doesn’t bomb, invade, or ravage other countries. In contrast, US capitalism has been harnessed to a monstrous global military machine that drains the domestic economy and lowers the domestic standard of living in order to fund its never-ending foreign wars. Finance, real estate, and commercial capital undermine the manufacturing sector, drawing profits from speculation and cheap imports.

China invests in petroleum-rich countries; the US attacks them. China sells plates and bowls for Afghan wedding feasts; US drone aircraft bomb the celebrations. China invests in extractive industries, but, unlike European colonialists, it builds railroads, ports, airfields and provides easy credit. China does not finance and arm ethnic wars and ‘color rebellions’ like the US CIA. China self-finances its own growth, trade and transportation system; the US sinks under a multi-trillion dollar debt to finance its endless wars, bail out its Wall Street banks, and prop up other non-productive sectors while many millions remain without jobs.

China will grow and exercise power through the market; the US will engage in endless wars on its road to bankruptcy and internal decay. China’s diversified growth is linked to dynamic economic partners; US militarism has tied itself to narco-states, warlord regimes, the overseers of banana republics and the last and worst bona fide racist colonial regime, Israel.

China entices the world’s consumers. US global wars provoke terrorists here and abroad.

China may encounter crises and even workers rebellions, but it has the economic resources to accommodate them. The US is in crisis and may face domestic rebellion, but it has depleted its credit and its factories are all abroad and its overseas bases and military installations are liabilities, not assets. There are fewer factories in the US to re-employ its desperate workers. A social upheaval could see the American workers occupying the empty shells of its former factories.

To become a ‘normal state’ we have to start all over: Close all investment banks and military bases abroad and return to America. We have to begin the long march toward rebuilding industry to serve our domestic needs, to living within our own natural environment and forsake empire building in favor of constructing a democratic socialist republic.

When will we pick up the Financial Times or any other daily and read about our own high-speed rail line carrying American passengers from New York to Boston in less than one hour? When will our own factories supply our hardware stores? When will we build wind, solar and ocean-based energy generators? When will we abandon our military bases and let the world’s warlords, drug traffickers and terrorists face the justice of their own people?

Will we ever read about these in the Financial Times?

In China, it all started with a revolution

  1. Financial Times, page 7. []
  2. FT – page 9. []
  3. FT, page 12. [] []
  4. FT, page 13. []
  5. FT, page 3. []

James Petras, a former Professor of Sociology at Binghamton University, New York, owns a 50-year membership in the class struggle, is an adviser to the landless and jobless in Brazil and Argentina, and is co-author of Globalization Unmasked (Zed Books). Petras’ most recent book is The Arab Revolt and the Imperialist Counterattack. He can be reached at: jpetras@binghamton.edu. Read other articles by James, or visit James's website.

7 comments on this article so far ...

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  1. VPK9 said on January 3rd, 2010 at 4:16pm #

    Okay, you’re kind of nuts. While you are correct in stating that the US is pursuing a militant imperialist policy, you’re overglamourizing China because of China’s past as a “foe of capitalism”. China is probably the most capitalist country in the world, with all of the problems that plague capitalist nations. As I read your article, I couldn’t help but notice all kinds of factual innacuracies. I’ll point some of them out here.
    1. That high-speed Chinese rail system you were talking about as an example of true “mass transit”? Tickets are over $100 a person. The dining car serves Roast Duck. This is by no means a people-centered improvement. It’s an project that will only benefit the Chinese elite.
    2. China has horrible working conditions. You acknowledged this, and then justified it (and worker’s rebellions) by saying that China has the capacity to repress dissent. Is that really something that a newsletter called “Dissident Voice” should be condoning?
    3. China is incredibly destructive to its own environment. You tried to put a positive spin on this by saying that those resources were being destroyed to support Chinese industry, which will give people jobs. However, those jobs are (as mentioned above) poorly paid, dangerous, and sometimes deadly. Is raping the environment worth supporting jobs that poison the workers?
    4. Regarding China’s foreign policy. You had a paragraph comparing Chinese & US foreign policy. It was couched so that it made China sound so much better than the US. Oh, China engages in imperialism too, except it’s okay because they build railroads and ports to move the captured resources out of the contry with. Oh, China brutalizes the economies using its own blunt economic force, which is SO much better than what the US does. Really, the only moral difference between China and the US is that at the moment, China is very reluctant to send its troops to other countries (which is a very good thing for all of us, because they’d be worse than the US). You also had a sentence I found very funny. So funny it deserves its own point.
    5. “China sells plates and bowls for Afghan wedding feasts; US drone aircraft bomb the celebrations.”
    Okay, seriously? You do know that those plates and bowls used to be made by local artisans who now have no jobs because of, oh yeah, China. I read a very interesting article recently about some candle lanterns used in a traditional religious ceremony. For most of history, those lanterns were made by local glassblowers and metalworkers, and all sorts of craftsmen. Now, most of the lanterns currently in use are a) cheap, b) plastic, and c) Made in China (under sweatshop conditions too!). How fantastic!
    You seem to have fallen victim to a classic misconception. How can I make this plain to you? JUST BECAUSE SOMEONE IS AN ENEMY OF THE US DOES NOT MAKE THEM A F****** SAINT!!!! Way too many of my fellow youth have fallen victim to this misconception. We seem to be so focused on our own desire to rebel that we forget what we’re supporting. It’s like the youth in the 60’s who seemed to think it was better for people in the third world to live under a vicious police/puppet state controlled by Moscow, than under a brutal military/puppet state controlled by Washington. So yes, China and the US have conflicting interests and don’t get along well. Should that mean that everything China does should be wrapped up with a positive spin? In a newsletter that tries, above all, to tell people the truth?

  2. Don Hawkins said on January 3rd, 2010 at 5:30pm #

    VPK9 strange name I think I saw that on a Japanese car the other day yes the new VPK9. Anyway what you just wrote is true. China is in deep do do first and they know it. Nature of the beast where they sit on the Earth. Is China trying to do what is needed to slow the little problem, no. It appears they are ahead of us in some way’s but still just a band-aid. Water and food in only a few years big trouble in big China. A few years is ten then twenty. The coal that we here in the US burn and the coal in China I don’t know the exact figure as I have never seen it but a guess 5,000 times the natural rate of CO 2 measured back in millions of years. Could I be wrong yes so how about 3,000 times the natural rate a figure that is not a guess is total fossil fuel burned Worldwide is now putting about 10,000 times the natural rate of CO 2 measured back in millions of years back into the atmosphere. I remember a new’s article that showed people in China a restaurant that had a piece of coal in a glass case and was worshiped for the prosperity it brought to the people, oh dear. A new way of thinking and soon. Keep witting VPK9. jen siang Chinese for truth. Fish

  3. lichen said on January 3rd, 2010 at 5:42pm #

    VPK9, you wrote an excellent response to the rather ridiculous attitude in this article. Ideologues often decide to put their blinders on and attack any non-nationalist who wishes to see and say things as they are anywhere in the world (just like marxists wish to defend China, and zionist conspiracy theorists love Iran, the center-right liberals are still having an affair with Mandela and the poverty-creating ANC.)

    His conclusion should have said that both sides need to withdraw from the destructive, stupid, good-for-no one global crusade for dominance and take care of their own; the contradiction that so many countries have been unable to overcome is that once, before “modernization” or “development,” they were self-sustaining countries, where people could just grow vegetables and fruit trees on their own land and get by quite well; but not any more. China’s leaders recently signed deals with the US to “reject protectionism at all levels,” an attack, most of all, on their own people and those of neighbouring states (where the IMF and the stock market induced collapse has caused a continuing suicide epidemic in Korea; fanned by continuing imports of cheap Chinese sweatshop junk and slave-rice.)

    The things he calls for the US to do are quite good, but we really don’t need to start from a model of 21st century China.

  4. cromag said on January 3rd, 2010 at 10:58pm #

    I enjoyed reading this article. It does come across slanted towards highlighting a certain amount of superior economic positioning decisions that the Chinese are implementing, and the reader comments challenge this obvious issue but the main point is in the title and I think the article highlights a communist/socialist China’s ability to focus it’s resources to gain economic ground on the U.S.
    Globally and domestically

    That is my take-away from the reading.

  5. Mulga Mumblebrain said on January 4th, 2010 at 2:41am #

    I think that China’s rise is, on balance, a very good thing, and that the fall of the American Reich is unambiguously a good thing. The US, led by its predatory ruling elite, and enthusiastically supported by an ignorant, jingoistic and infinitely vicious populace (with numerous, but clearly powerless, exceptions)has spent over 200 years spreading death, terror and destruction around the world.
    I believe that the difference between the US and China is basically the difference between a malign authoritarian regime and a benign one. The US is a malignant authoritarian regime, ruled by an hereditary and infinitely vicious ruling elite, with a sham facade of democracy and a totally brainwashed and supremely ignorant public. All real political, economic and media power in the USA is in the hands of the moneyed elite, social mobility has declined to almost zero and inequalities of income, and more markedly, wealth, are the greatest in history. The USA based its great economic wealth on extermination of millions of indigenous, ruthless exploitation of natural riches unmatched in any country, tens of millions of slaves, tens of millions of ruthlessly exploited immigrants and the pillage of the Western Hemisphere, then the world.
    China’s authoritarian regime is in my opinion, both more benign and more rational than that of the USA. China’s ruling elite rises through the ranks of its one ruling party. This one-party system is more honest than the US one party, with two wings, system, where contest is totally about power and ideological differences are miniscule, and real ideological alternatives are ignored or suppressed. In fact, of course, ‘democracy’ in any meaningful sense, is impossible in giant states. In the US elections are contests between two near identical parties, where the amount of money spent determines the victor in more than 90% of contests. Incumbents are almost invariably returned. Voting is not compulsory, but obedience to the laws passed as a result of ‘elections’ you did not participate in, is. Election campaigns and the periods between elections are characterised by lying (anthropogenic climate change denialism the supreme example)abuse, distortion and the mobilisation of fear and hatred (being unashamedly mobilised by the new ‘Liberal’ Party leader in Australia, Abbott)in the worst individuals. Indeed that is clearly another fatal flaw of so-called ‘democracy’. It gives an equal say to morally and intellectually unequal individuals. The same vote for the racist and the humanist, the jingoists, the misanthropes, the greedy, the stupid and the ignorant as for the benevolent and generous. And the malignant character traits of the worst amongst us, rather than being lessened and ameliorated are, instead,deliberately exacerbated and inflamed, in a spiritual and intellectual debacle.
    In China,on the other hand,anyone can join the ruling party and rise through merit. As a result China’s leaders are technocrats, scientists and engineers, in contrast to the US where they are invariably rich men from business or the law or opportunists like Obama and Reagan who sell themselves to powerful elite patrons, in Obama’s case the Zionists, in Reagan’s the extreme Right in business. China’s populace has as much ‘freedom’ in everyday life as anyone. Obey the law and you’ll be left alone to live your life, just like the US. Exceptions where powerful economic interests oppress the little man occur in both countries, but I see more chance of this situation being addressed in China than in the US. So called ‘dissidents’ are compradores at best, or traitors serving Western interests to destabilise their country. China’s economic system is far more rational than the USA’s. China’s leaders set the parameters of national policy, and the laws of supply and demand have been mobilised to do the work. The economic success has, however, been based on the decades of reconstruction under Mao, Zhou En-lai et al after 1949, a period about which the rabid Right loves to lie. In contrast the US political system is entirely devoted to increasing thewealth of theruling elites, at the expense of the rest, come what may. The proof of the pudding is in the eating. China is rapidly catching up with the USA, and is also coming to dominate the environmental industries that may save our ecological bacon, while the US, led by its parasitic and psychopathic elite, remains mired in denialism.
    Unfortunately the USA and its Western allies will not countenance an end to the 500 year nightmare of Western dominance over and pillage of the non-Western road. We see the evidence of Western planning for confrontation with China everywhere and it’s rapidly growing. Australia, which relies on China for its economic ‘success’ has seen a recent, sudden, and clearly co-ordinated upsurge in Sinophobia. The Right, now led by a real extremist, Abbott, is nakedly appealing to this racist element, at a time when racist attacks (Indians are a favourite target-the thugs call it ‘curry-bashing’)are rising in number. As elsewhere in the West, this Sinophobia is being led by local Zionists, who infest the local Rightwing mainstream media, as the Zionists, having scored an amazing victory in taking over the West, do not see any prospect of controlling China to a similar degree. A China dominated world is not one where Jews call the shots and Israel can piss on international law and basic human decency.
    Military power, murder, violence and intimidation being the USA’s one remaining strong suit, we can be sure that a confrontation will come, some time soon. I imagined that it might come under the next Bush, the next insane, psychopathic, authoritarian mass murder that the jingoistic, murderous morons of the Yankee ‘heartland’ spews up to represent their malignancy, but, after a year’s unequivocal evidence, I can see it happening under Obama. If his Zionist masters order it, he will obey.

  6. commoner3 said on January 4th, 2010 at 5:34am #

    This a completely misinformed article and I mostly agree with VPK9’s commentary on it.
    China is no more a communist courntry but it is a capitalist one through and throuhg with most of the capitalists there are related and cronies of the the communist party bosses and functionaries.
    I disagree with VPK9 when he wrote:”JUST BECAUSE SOMEONE IS AN ENEMY OF THE US……”. There are NO animosity, or rivalry between China and the US. They are partners who complete each other.
    Many of the manufacturing plants in China are owned and controlled by US corporations or partially owned and controlledby US corporations and all are producing American products with just the label “Made in China” and all are dependent on exproting to the US and EU to survive and continue to be in business.
    So, the US encourage China to get all the raw materials and to produce all the electricity for these manufacturing operations. So, when the Chinese get some minerals or oil from Africa or South America , they are not competing with the US but are getting the resources for US manufacturing operations.
    To seal this partnership with a kiss, the Chinese are investing many of their savings in buying US Treasury notes which is helping to finance the current budget deficits in the US, China owns about 1 Trillion dollars (that is a T) of US Treasury Notes.
    So, all that talk about asking China to revalue its currency or follow good environmental practices is pure bullshitting.

  7. Deadbeat said on January 4th, 2010 at 4:18pm #

    Excellent diversity of commentary. Apparently analyzing the Chinese political economy is rather complex and not either-or. I agree that China is not a Socialist economy. It is a State-Capitalist economy as exploitation is rampant in China.

    However I think the point of Petras’ article is to contrast how China is dealing with the Capitalist crisis juxtapose against the United States. Therefore I don’t read Petras as praising China. Clearly China economic stimulus is helping to maintain its economy — more in the Keynesian sense than anything the U.S. is doing right now. In fact U.S. policy, and where I agree with Mulga appears totally irrational unless you factor in neoliberalism’s and Zionism’s influence and goals.

    I agree with Petras call…


    We have to begin the long march toward rebuilding industry to serve our domestic needs, to living within our own natural environment and forsake empire building in favor of constructing a democratic socialist republic.