There is the old African aphorism: “When elephants fight, it is the grass that suffers”. We should have learnt this lesson in relation 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” as far back as in 1823, when Britain was the dominant world power. So, when the USSR obtained a toehold with a communist ally, Castro, in Cuba by 1960, they faced the US’ kickback. So, during the Cold War, it was not surprising when, because Dr Jagan equivocated as to his ideological leanings, he was ousted. He forgot Sparta’s advice to the pipsqueak Melians: “The strong do what they can; the weak suffer what they must.”
While not as stark, we are in the midst of another struggle between two global behemoths – the US and China – this time, based on economics rather than ideology. But the stakes remain the same: who will 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 Chinese 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, 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 centralised 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”, since that meant they could now take advantage of the seemingly infinite cheap labour of China.
The profits were stratospheric, and the US policymakers – lobbied by the business class – went along with the degutting of the US industrial manufacturing base that had previously supplied the world with manufactured goods and brought them unheralded prosperity. By 2000, vast swathes 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 U.S., Japan, and Germany, now gave way to Chinese dominance. By 2021, China’s manufacturing capacity was greater than the US and EU’s combined.
However, by the middle of the last decade, the Trump Administration, which was panned for favouring the rich, realised that China was not only about to overtake the U.S. 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 caught 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, it had retained the centralised command of the Government to insist that decisions ultimately redounded to their country’s interests.
The Trump Administration slapped tariffs on a wide range of Chinese goods, and while this pushed up the cost of those goods in the U.S., the effects were felt much more gravely in China. China, in the meantime, had worked its way up the value chain, and the U.S has not weakened it fundamentally. The Biden Administration has continued to discourage U.S. businesses from investing in China; and, for instance, has prevented chipmakers from supplying Chinese companies with this key input into almost every modern manufactured good.
This strategy is “war by other means”, and we are already been asked to choose sides.
