Strained US – China Relations: China’s Crucial Role as America's Creditor

by James Petras from Global Research.  This astute observer of international political and economic affairs trains his sights on the increasing role of China in international affairs and the reactions of the US governing class to the challenges it presents to the US global hegemony.  Among his particularly interesting observations are the following:

The Obama regime’s political and diplomatic provocations against China in pursuit of its military-driven empire, come at a very high real and potential price.  We cannot assume that China will remain a stoic punching bag for the US, absorbing territorial threats, economic pressures and gratuitous diplomatic insults without taking counter-measures especially in the economic sphere.

In large part, the majority of exports from China to the US are the result of US multi-national corporate decisions to produce and sub-contract in China.  In other words, the trade deficit with China is directly related to US corporate global investment strategy, which, in turn, flourished after the US government liberalized it rules and deregulated US corporate conduct.  Liberal investment policies under the US government, and not Chinese “unfair trade rules”, are a major cause of the trade deficit.

In other words, the US re-directed its investment strategies from producing useful, quality commodities for domestic consumption and export to importing manufactured goods from abroad at a greater profit for the corporations.  The weakening of US productive capacity - its productive forces - was reflected in its declining competitive position and its deepening trade imbalances.  Given the tight relations between the White House and Wall Street, policy makers sought to blame Chinese monetary officials for an undervalued currency, rather than confront the bubble economy stimulated by the policies of the Federal Reserve and generated by the Wall Street investment houses, whose executives go on to occupy key economic posts in the US government and who provide substantial funding for electoral campaigns.

The key to understanding this paradox of economic gain and political hostility lies in the fundamentally different political and economic structures and global strategies of the two countries.

In contrast to the Chinese market-driven quest for global power, US imperialism is built around military conquest and appropriation of economic wealth.

The US has severely weakened its productive forces in the process of funding a global military machine. China, on the other hand, has sought to become a world power on the bases of the long-term, large-scale development of its productive forces, even in the face of US opposition.

However I take issue with his conclusion: "Ultimately what we have is a conflict between two diametrically opposing political economic systems." Such a statement suggests that they are different systems! They are both capitalist systems--but the Chinese form is at an earlier, nationalistic stage for obvious historical reasons. Whereas the US version is at an imperialistic stage of development, and insists on its global hegemony. China is too big and too proud to submit to demands such as the penetration of their economy by Wall Street financial institutions and submission to other US ruling class dictates. In the longer run, the capitalist system is doomed in both countries by diminishing energy and material resources, environmental pollution, and climate change.