There is the old African aphorism: “When elephants fight, it is the grass that suffers”. We should have learnt this lesson, as it applies to international affairs, when the USA and the USSR were locked in mortal combat after WWII. The US had carved out the Western Hemisphere as their “sphere of influence” with their Monroe Doctrine in 1823, when Britain was the dominant world power; so, when the USSR obtained a toehold with communist ally Castro in Cuba by 1960, they faced the US’ kickback. During the Cold War, it was not surprising that when Dr Jagan equivocated in regard to his ideological leanings he was ousted. He had forgotten Sparta’s advice to the pipsqueak Melians: “The strong do what they can; the weak suffer what they must.”
While not yet as stark, we are in the midst of another struggle between two global behemoths – the US and China. This time it is based on economics rather than ideology, but the stakes remain the same: to be the hegemonic power going forward. There are several great ironies in this eventuality, not the least being that the rise of China from being a poster boy for poverty at the end of WWII was facilitated by the US. After several disastrous missteps under its leader Mao while attempting to repeat the USSR’s move to wrench their nation from a peasant base into an industrialised state, relations between the two communist nations became strained.
The anti-communist US President Richard Nixon saw an opening to drive a further wedge between them, in order to gain an advantage over the USSR by recognising Communist China and facilitating its entry into the UN and Breton Woods family of institutions in 1972. By 1978, when the leadership of China fell into the hands of the pragmatic Deng Xiaoping, who abandoned the dogmatic Maoist state economy, US businesses were ready to invest. They appreciated Deng’s philosophy of “it does not matter whether the cat is black or white, once it catches the mice”. This meant they could now take advantage of the seemingly infinite cheap labour of China. The profits were stratospheric, and US policy makers, lobbied by the business class, accepted the degutting of their industrial manufacturing base, which had previously serviced the world and brought them unheralded prosperity. By 2000, vast swaths of mid-America became known as the ”Rust Belt” because of the abandoned factories, as China became the “factory of the world” through injections of American finance and technology.
The global economy underwent a seismic shift as global manufacturing, trading networks and supply chains that had once been dominated by the US, Japan, and Germany now gave way to Chinese dominance. By 2021, China’s manufacturing capacity was greater than that of the US and EU combined.
However, by the middle of the last decade, the Trump Administration, which was panned for favouring the rich, realized that China was not only about to overtake the US as the largest economy in the world, but had built its economy to be less dependent on western technology while building its military capabilities. Unlike other Third World economies, which had been exploited for cheap labour but had remained trapped in a middle-income trap, China was strategically preparing to regain its historic place as the “middle kingdom” around which all other countries revolved. While using capitalism in its economic institutions, China had retained the centralized command of government to insist that decisions ultimately redound to its interest.
The Trump Administration slapped tariffs on a wide range of Chinese goods, and while this pushed up the cost of those goods in the US, the effects were felt much more gravely in China. China, in the meantime, had worked its way up the value chain, and the US has not weakened it fundamentally. The Biden Administration continued to discourage US businesses from investing in China, and, for instance, has prevented chipmakers from supplying Chinese companies with this key input in almost every modern manufactured good.
This strategy is “war by other means”, and we are being asked to choose sides.
