China and the US vie for East Asia and Europe

6 September, 2020 · News> Global situation> Weekly Report

The Beijing government is talking about selling a 20% of the US debt it holds. According to academic estimates and those of the US central bank, this would produce a rise in interest rates in the US capable of endangering the economic recovery in the US, while at the same time lowering the relative value of the Chinese currency, making its products cheaper for the rest of the world. The measure is consistent with the promise Xi made this week: to open up the Chinese market further to compensate for the loss of US capital. The underlying message is that if the U.S. insists on decoupling its economy from Chinese industry, it will move definitively and openly from trade war to currency war.

But decoupling is advancing at a fast pace, and it is being matched by the bloc formation processes. This week it was reported that Japan, Australia and India are boosting integrated supply chains to reduce their dependence on China. The US immediately proposed to turn this economic alliance into the basis of an Asian NATO.

Not that everyone is very clear about this or wants to go down this road as a first option. The Philippines, for instance, is trying to overcome the contradictions of a national capital that is very dependent on both powers by raising the level of the stakes: on the one hand, trying to develop its commercial relations with China, and on the other, covering itself against Beijing by deepening military cooperation with the United States. Japan encourages the relocation of companies that today produce in China to India and Bangladesh, but Abe’s resignation forces them to make explicit strategies for the future, and the most assertive ones, that is, the most aggressive ones against China, continue producing too much uncertainty for Japanese capital to embrace them with enthusiasm. A symmetrical case is Indonesia, the giant visited by Xi this week. Xi and Widodo tried to bring trade positions closer together in a framework that pushes them towards a closer alliance… but that generates so many difficulties for the sovereignty ambitions of national capital that it divides the political apparatus and even the Indonesian petty bourgeoisie of Chinese origin.

Palau. Next US military base in the Pacific

And if the tensions between the two great imperialisms with global aspirations generate contradictions in the bourgeoisies of the large Asian countries, it is obviously also true of the small ones. This week we saw the Solomon Islands begin the road to disintegration as a state. There would remain two independent states, one aligned with China, the other with the US and Taiwan. The danger of becoming someone else’s battleground being so obvious, other micro-states, like the Palau, renounce all aspirations to sovereignty and offer themselves as a military base to the United States as the lesser evil.

In India, however, the continental escalation serves to exacerbate the hopes of economic independence for a national bourgeoisie bent on an escalation of measures to force import substitution. This week, it banned a hundred more Chinese apps and announced new tariffs on imported cars. In the midst of a rampant crisis long preceding the covid, all these measures become inseparable from the impoverishment of the population, so that the nationalist bombardment is redoubled and fuelled, serving as a passage to the framing and justification of militarism. So, as could not be otherwise, the new protectionist barrage was accompanied by new military frictions in the Himalayas.

The difficulties of the United States and China in Europe

Di Maio and Wang Yi

In general, although the confrontations are increasing and more frequently have military consequences, neither of the two powers finds it easy to compress the regional and local contradictions into multilateral alliances serving as a basis for creating imperialist blocs.

Even Russia, whose ambition is to establish energy alliances with Vietnam and begin to extract from the South China Sea, for whose exclusive dominion Beijing is, is out of China’s control an hardly on its side.

Not to mention the EU. The dark bureaucratic language of Brussels has been getting tougher on Beijing so far this year. Just this week, Borrell said that economic imbalances in the trade relationship with China em>must be corrected before it is too late. In other words: either Europe seeks alliances to economically counterbalance China or the European powers will lose their centrality on the global imperialist chessboard. China, fearing a rapprochement with the United States, sent its foreign minister to tour the main EU chancelleries in order to say that Europe could not be imprisoned in a new cold war. The charm offensive -in fact an offer of investments in a moment of crisis- seemed to have a certain success. The resistance to follow the USA and to raise the tone against Beijing is strong in Germany and in the whole continent. But it coincided with a visit to Taiwan by the president of the Czech Senate. Beijing flew into a rage over support for what it considers a secessionist movement. The general condemnation of the Europeans was not long in coming. Immediately China moved to damage control and announced that this week its top diplomat would visit Greece and Spain to secure its position on the Mediterranean ports of entry and exit (Algeciras, Valencia and Piraeus) and regain some ground within the EU game by supporting the EU members most damaged by the crisis.

In this whole game the European powers are far from passive. France has an increasingly angry relationship with China’s allies and feeds Vietnam’s resistance as much as the US. And Germany is preparing a strategy and diplomatic cover to make itself militarily present in the Indian and Pacific region.

On the other hand, the United States is not being very able to frame the Europeans and especially Germany. The main goal during the last two years has been to avoid the opening of Nord Stream 2. The key to the conflict: the whole German strategy of the green deal pivots on the availability of cheap gas. And today, cheap gas can only reach German industry from Russia. That is why the capacity of the already existing gas pipeline has to be doubled. Problem: it gives Russia strategic weight in the EU and excludes the US from the big European energy business.

We closed August with the USA approving sanctions against German companies and managers who had participated in its construction. According to the German foreign minister, this was a new low in the German-American relationship which placed Germany on the same level as Iran and North Korea. The truth is that with the gas pipeline about to open and the U.S. pressing, Russia was becoming a weak political flank for Berlin. That is why Germany reacted so quickly to the attempted assassination of Navalny and why Putin allowed them to take the detainee out of the country. Being the ones to determine what had happened to Navalny and therefore the first to demand new reprisals against Russia allowed the German government to take the focus off its more strategic infrastructure… or at least keep the debate on the gas pipeline and Russia as something strictly German.

The energy alliance with Russia is not only uncomfortable in the face of the U.S. – not a month goes by without US incidents and armed frictions with Russia– or most of the countries that were part of the Russian bloc. Germany’s European partners are increasingly concerned. Sweden reported just two weeks ago a Russian military presence on its border unprecedented since the Cold War, and the Russian nuclear submarines in the Baltic and Arctic are increasingly active. Everything suggests that the next zone of friction between the USA and China will be the Arctic, which for Russia means marking space against both… and against Europe.

Too many loose parts

German Navy

The process of block formation is necessarily contradictory. Under the conditions of imperialism no national capital can survive alone, by decoupling itself from all the others. It needs to access markets, find placements for its surplus capital… and prevent the commercial spaces it dominates from being taken away by others pursuing the same objectives. This is why it is so difficult to summarize and compress all the contradictions between one and the other into just two blocks. The needs of each national capital and the state that represents it do not know about loyalties, only about profits. So every process of bloc formation is at the same time a process of discipline by the one who aspires to lead it, but also of integration of capital and markets. With an increasingly brutal and global crisis underway, the supply of both the US and China for the follower capitals is necessarily restricted. They play more with the threat of an economic blockade and military pressure than with the candy of opening up exports and investment destinations for them. The inevitable result is that there are too many loose pieces on the board for conflicts not to multiply. It is this chain of more or less controlled frictions and explosions that will determine the final form that alliances and exchanges around China and the United States will take.

What is clear is that the global confrontation between the two powers emerging as bloc leaders has already begun. Workers from all over the world are already the victims, who are paying in deaths on not a few sides, in precarization and unemployment on all sides, the needs of a capital to which the world has become too small. Another sign that, just as it is not in its interests to have a homeland, neither is it in its interests to link up with any bloc.


Follow the updates on this and other topics on our Telegram channels @Communia and @huelga.


We are Emancipation | We publish Communia in English, Spanish and French.

Workers of all countries, unite, abolish armies, police, war production, borders, wage labor!