A new cold war is upon us, but only China is in a position to push it beyond the point of no return. That moment will come when China’s policymakers cross the Rubicon and decide to wean Chinese economic growth off the US trade deficit.
Interesting article about the symbiotic relationship and the changing conditions that threaten it. One of these factors is the development of the Chinese economy beyond the point that the Americans that entered into the deal foresaw.
Yanis Varoufakis points out, correctly in my view, that neither side wants to end this "dark deal" since it is highly beneficial to powerful interests in both countries. But US attempts to undermine China's development and challenge it militarily through creation of a "Pacific NATO" may force its closure.
YV doesn't explore the ramifications of this but they would be considerable for both sides as well as the world, since it affects global trade and therefore impacts the global economy. This is coming sooner of later since it is the natural course of development, but it looks to me like it is coming sooner than later. China is already taking steps to prepare for it and has for some time, just as Russia acted to increase self-sufficiency as a result of sanctions.
Will China Dump Its Dark Deal with America?
Yanis Varoufakis
15 comments:
Now that Biden has been smart enough to steal MAGA the Chinese are also smart enough belatedly to see the thin end of the wedge. What to do though!
I expect Walmart to continue importing goods from China. Consumers don't care about geopolitics.
Chimerica made the US and China interdependent based on supply chains. The issue at the moment is the US interrupting key supply chains for Chinese tech manufacturing to constrain China's development (and competition). I guess they haven't figured out yet that China can interrupt supply chains that the US is dependent on. Works both ways.
The big event will be when China floats the Yuan.
I think Biden is aware that China can play the game of interrupting lots of different supply chains not just "tech" manufacturing. Knowing the danger to "tech" leads on to knowing the danger for other supply surely. Obviously capitalism has to change. Libertarianism has to go out the window. It can't play the "imperialism game or tactic" with China to maintain Libertarian Capitalism (Go where you want to maximize profit) because it has nuclear weapons. As to China floating the yuan there's the old inflation bogey that led to the Tiananmen Square Massacre. Deng Xiaoping decided that all prices should be subject to market determination at one go. There were massive protests at the ensuing high inflation consequences hence the massacre. Xi Jinping may decide floating the yuan could topple him!
Chimerica made the US and China interdependent based on supply chains. The issue at the moment is the US interrupting key supply chains for Chinese tech manufacturing to constrain China's development (and competition). I guess they haven't figured out yet that China can interrupt supply chains that the US is dependent on. Works both ways.
Yes, geopolitics works both ways.
The populist message is that we should reduce interdependence on supply chains. For resiliency reasons. Not because warmongers have a beef with China.
The last 3 years have proven those supply chains unreliable…
So there is some indication that the 20 year soft power initiative with China is ending (because it didn’t work, ie test failure) AND the firms won’t fight it because from their perspective it’s has been shown to be unreliable under certain conditions (pandemic) …
So the decoupling is probably going to happen as both the diplomatic institutions AND the corporate institutions see problems with it…
The last 3 years have proven those supply chains unreliable…
Yes, and that along with sanctions and other factors both economic and political are leading to building national self-sufficiency, which is not a bad thing other than for world trade and the global economy. This is also the opposite direction from neoliberalism, which is based on free markets, free trade and free capital flows. This implies that continuing neoliberal globalism will require a shift to more openly pursue neo-imperialism and neocolonialism.
Moreover, it will result in falling profit rates for those firms affected since capital will no longer flow to "where it is most productive." That means rising costs of production and potentially a hit to the living standard in developed nations.
Unless WWII intervenes and it appears that WWIII has already gone hot with Nato not only expanding its influence worldwide but also escalating against Russia.
The populist message is that we should reduce interdependence on supply chains. For resiliency reasons. Not because warmongers have a beef with China.
Right, sort of. The systemic effect of emphasizing efficiency at the expense resilience is now biting, so naturally there is a reaction to plug the leaking dikes.
But the warmongers are not just calling attention to the need for resilience, they are building animosity toward China in preparation for the coming conflict before China becomes unstoppable not only economically as a competitor but also militarily as a declared adversary and chief threat. And it's the "populists" that are leading this charge, while the liberals focus on doing Russia first.
The big event will be when China floats the Yuan.
Yes. And China has known for some time that it has to reduce dependence on the USD.
The problem is that a lot of Chinese firms have done very well with Chimerica, as have US firms. So there is pressure on both governments not to upset the apple cart — pun intended. Apple stands to take a big hit losing its Chinese market, for instance.
Populists don't want foreign entanglements. Steve Bannon is on the fringe in that regard.
Steve Bannon is a complex case. A major factor that often goes unnoticed is that he is an ultra-conservative Catholic, probably to the right of Opus Dei. He is rabidly anti-communist and identifies "China" with the "Communist Party of China". He is also an ultra-right American conservative who is a "populist" in the sense of being a rabid nationalist in the pejorative sense. These are all which factors in his virulent opposition to China. Where I agree with him is in his recognition of the danger of the "administrative state" and the need to put an end to its control of government from administration to administration. Actually, I don't think Bannon is as opposed to an administrative state as to this one. He would probably be happy with an administrative state based on his policy views in order to ensure their transmission across elections.
He’d be right with the admintrative state if that state would be rabidly anti CCP…
he is against the Ukraine war as it diverts from the CCP…
He seems to be sponsored by an expat Hong Kong guy …
I take in his media a lot …
He is pro trump but trump is not anti CCP… so there will eventually be trouble there between them..
Excellent observations about Bannon. He's viewed as part of this movement, having been part of the Trump administration. But he calls his show the warroom for chrissakes. This is a betrayal of what populism is supposed to be about. 'Right wing' or libertarian economic views are par for course though. This form of populism is not social democratic, or driven by the left - although it has support from the so-called alternative (or dirtbag) left. The "genuine" left is busy playing partisan games and supporting warmongers. The genuine left has no political representation in the US.
Tucker Carlson and Matt Stoller are better able to articulate American nationalism than Bannon. Carlson in particular has used his platform to point out the rot from within.
I would call Scott Ritter and Colonel MacGregor populists for speaking out against the war in Ukraine, and for their realist perspective in foreign policy. They also convey the message that America's problems are internal. This is the challenge that must be faced, if the US is to avoid going down the tubes. Add Tulsi Gabbard to the mix, and you have the basis for a third party alternative.
I should have written: The genuine left has no political representation in Washington DC.
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