Graphic depicting the collision of China and US transport crates. Photo: Adobe Stock.
By Yves Smith – Jul 7, 2023
The contradictions of China-bashing in the United States begin with how often it is flat-out untrue. The Wall Street Journal reports that the “Chinese spy” balloon that President Joe Biden shot down with immense patriotic fanfare in February 2023 did not in fact transmit pictures or anything else to China. White House economists have been trying to excuse persistent U.S. inflation saying it is a global problem and inflation is worse elsewhere in the world. China’s inflation rate is 0.7 percent year-on-year. Financial media outlets stress how China’s GDP growth rate is lower than it used to be. China now estimates that its 2023 GDP growth will be 5 to 5.5 percent. Estimates for the U.S. GDP growth rate in 2023, meanwhile, vacillate around 1 to 2 percent.
China-bashing has intensified into denial and self-delusion—it is akin to pretending that the United States did not lose wars in Vietnam, Afghanistan, Iraq, and more. The BRICS coalition (China and its allies) now has a significantly larger global economic footprint (higher total GDP) than the G7 (the United States and its allies). China is outgrowing the rest of the world in research and development expenditures. The American empire (like its foundation, American capitalism) is not the dominating global force it once was right after World War II. The empire and the economy have shrunk in size, power, and influence considerably since then. And they continue to do so. Putting that genie back into the bottle is a battle against history that the United States is not likely to win.
Denial and self-delusion about the changing world economy have led to major strategic mistakes. United States leaders predicted before and shortly after February 2022—when the Ukraine war began—for example, that Russia’s economy would crash from the effects of the “greatest of all sanctions,” led by the United States. Some U.S. leaders still believe that the crash will take place (publicly, if not privately) despite there being no such indication. Such predictions badly miscalculated the economic strength and potential of Russia’s allies in the BRICS. Led by China and India, the BRICS nations responded to Russia’s need for buyers of its oil and gas. The United States made its European allies cut off purchasing Russian oil and gas as part of the sanctions war against the Kremlin over Ukraine. However, U.S. pressure tactics used on China, India, and many other nations (inside and outside BRICS) to likewise stop buying Russian exports failed. They not only purchased oil and gas from Russia but then also reexported some of it to European nations. World power configurations had followed the changes in the world economy at the expense of the U.S. position.
War games with allies, threats from U.S. officials, and U.S. warships off China’s coast may delude some to imagine that these moves intimidate China. The reality is that the military disparity between China and the United States is smaller now than it has ever been in modern China’s history. China’s military alliances are the strongest they have ever been. Intimidation that did not work from the time of the Korean War and since then, will certainly not be effective now. Former President Donald Trump’s tariff and trade wars were aimed, U.S. officials said, to persuade China to change its “authoritarian” economic system. If so, that aim was not achieved. The United States simply lacks the power to force the matter.
American polls suggest that media outlets have been successful in a) portraying China’s advances economically and technologically as a threat, and b) using that threat to lobby against regulations of U.S. high-tech industries. Of course, business opposition to government regulation predates China’s emergence. However, encouraging hostility toward China provides convenient additional cover for all sorts of business interests. China’s technological challenge flows from and depends upon a massive educational effort based on training far more STEM scientists than the United States does. Yet, U.S. business does not support paying taxes to fund education equivalently. The reporting by the media on this issue rarely covers that obvious contradiction and politicians mostly avoid it as dangerous to their electoral prospects.
Scapegoating China joins with scapegoating immigrants, BIPOCs, and many of the other usual targets. The broader decline of the U.S. empire and capitalist economic system confronts the nation with the stark question: whose standard of living will bear the burden of the impact of this decline? The answer to that question has been crystal clear: the government will pursue austerity policies (cut vital public services) and will allow price inflation and then rising interest rates that reduce living standards and jobs.
Coming on top of 2020’s combined economic crash and pandemic, the middle- and-lower-income majority have so far borne most of the cost of the United States’ decline. That has been the pattern followed by declining empires throughout human history: those who control wealth and power are best positioned to offload the costs of decline onto the general population.
The real sufferings of that population cause vulnerability to the political agendas of demagogues. They offer scapegoats to offset popular upset, bitterness, and anger. Leading capitalists and the politicians they own welcome or tolerate scapegoating as a distraction from those leaders’ responsibilities for mass suffering. Demagogic leaders scapegoat old and new targets: immigrants, BIPOCs, women, socialists, liberals, minorities of various kinds, and foreign threats. The scapegoating usually does little more than hurt its intended victims. Its failure to solve any real problem keeps that problem alive and available for demagogues to exploit at a later stage (at least until scapegoating’s victims resist enough to end it).
The contradictions of scapegoating include the dangerous risk that it overflows its original purposes and causes capitalism more problems than it relieves. If anti-immigrant agitation actually slows or stops immigration (as has happened recently in the United States), domestic labor shortages may appear or worsen, which may drive up wages, and thereby hurt profits. If racism similarly leads to disruptive civil disturbances (as has happened recently in France), profits may be depressed. If China-bashing leads the United States and Beijing to move further against U.S. businesses investing in and trading with China, that could prove very costly to the U.S. economy. That this may happen now is a dangerous consequence of China-bashing.
Because they believed it would be in the U.S. interest, then-President Richard Nixon resumed diplomatic and other relations with Beijing during his 1972 trip to the country. Former Chinese Chairman Mao Zedong, former Premier Zhou Enlai, and Nixon started a period of economic growth, trade, investment, and prosperity for both China and the United States. The success of that period prompted China to seek to continue it. That same success prompted the United States in recent years to change its attitude and policies. More accurately, that success prompted U.S. political leaders like Trump and Biden to now perceive China as the enemy whose economic development represents a threat. They demonize the Beijing leadership accordingly.
The majority of U.S. megacorporations disagrees. They profited mightily from their access to the Chinese labor force and the rapidly growing Chinese market since the 1980s. That was a large part of what they meant when they celebrated “neoliberal globalization.” A significant part of the U.S. business community, however, wants continued access to China.
The fight inside the United States now pits major parts of the U.S. business community against Biden and his equally “neoconservative” foreign policy advisers. The outcome of that fight depends on domestic economic conditions, the presidential election campaign, and the political fallout of the Ukraine war as well the ongoing twists and turns of the China-U.S. relations. The outcome also depends on how the masses of Chinese and U.S. people understand and intervene in relations between these two countries. Will they see through the contradictions of China-bashing to prevent war, seek mutual accommodation, and thereby rebuild a new version of the joint prosperity that existed before Trump and Biden?
