US-China conflict enters new phase under Biden

The following article is based on a discussion at a meeting of the China/Hong Kong/Taiwan section of International Socialist Alternative on February 7.

Tom Crean and Vincent Kolo

The COVID pandemic has massively exposed the rot and decay of global capitalism. The U.S. and the EU, allegedly “advanced” capitalist powers, have completely failed to contain the virus leading to massive and completely unnecessary loss of life.

But the virus was also the trigger of the deepest global economic crisis since the 1930s which has been particularly devastating in the neocolonial world. Underlying this crisis is a crisis of productivity with capitalists generally refusing to invest in expanding production but rather plowing the bulk of their superprofits back into the global financial casino.

Global economic perspectives for 2021 and 2022 are very much linked to progress in vaccinating the world population. Now we are seeing increasing vaccine nationalism with the EU, the UK, the U.S., Russia and China using the vaccines as a tool of foreign policy or taking a protectionist approach, even threatening to refuse export of vaccines produced in their territory as the EU has done. China is delivering its vaccines from Sinopharm and Sinovac to dozens of countries especially in the Middle East, Southeast Asia Latin America, and even to some Eastern European countries excluded from the EU’s vaccine plans. China’s propaganda has lauded its “vaccine diplomacy” and attacked the Western vaccines as “unsafe.”

An article in Business Insider (2/6/21), made the following points:

“The fundamental problem is that there is not enough manufacturing capacity to vaccinate the entire global population this year or even next year. A report published by UBS found that – at current rates – only 10% of the world will be immunized against COVID-19 by the end of this year, rising to just 21% at the end of 2022.

“That limited supply will almost exclusively be used to immunize wealthy countries’ populations, which have bought almost the entire forward supply of vaccines. But a nationalistic approach will carry an enormous public health cost by prolonging the pandemic and increasing the chance of a new, vaccine-resistant strain emerging.”

Business Insider goes on to point out that the International Chamber of Commerce found that unequal distribution of the COVID-19 vaccine could cost the global economy $9 trillion by extending the pandemic. They conclude that,  “in a global vaccine war, all sides would ultimately lose out.”

Here we have a big business publication pointing towards key contradictions in contemporary capitalism. Technical breakthroughs, like the rapid production of new vaccines, continue to be made, but the capitalist elite, imprisoned in the political form of the nation state within an imperialist world order, is increasingly unable to produce any meaningful cooperation to deal with global crises. This is even the case when their own economic interests are threatened — in this case by the continuing pandemic. Instead what we see is growing inter-imperialist rivalry and protectionism which is reminiscent of the 1930s.

The decay of the system is even more pronounced than during the Great Recession of 2008-9 when the key powers, led by the U.S. under Obama, did coordinate their response to the crisis. But in the past twelve years global capitalist institutions have come under increasing strain and the conflict between U.S. imperialism and the rising power of Chinese imperialism has grown much sharper. In reality the neoliberal order has broken down.

We have pointed out that China and the U.S., having been key drivers of globalization in the previous historical period, are now driving the process of deglobalization. This is not primarily due to the role of Trump, Biden or Xi Jinping, but is the logic of imperialism which “abhors any division of power” as Leon Trotsky explained. Trade has gone from being a key contributor to growth in the 1990s and 2000s to being a net drag on growth. Global supply chains are fracturing into several regional supply chains. The U.S. and China are engaged in a process of economic “decoupling” with far-reaching consequences.

In addition to vaccine nationalism threatening economic recovery, there is also a looming financial crisis with massive overvaluation on U.S. stock markets as well as a huge debt crisis. The unprecedented bubble on stock markets is exemplified by the relentless rise of Tesla, which produces less than one percent of the world’s cars, but is now worth more than the world’s nine largest car companies combined. According to the IMF about half of low income economies worldwide are in danger of debt default. There is also a massive corporate debt bubble.

Wave of struggle resumes

The pandemic lockdowns in early 2020 initially cut across the massive wave of struggles we saw in 2019 against neoliberal capitalism and reactionary policies from Ecuador to Iran and India to Hong Kong. But the wave of struggles has now decisively resumed with the BLM uprising in the U.S., the movement against the monarchy in Thailand, the youth led struggle against police brutality in Nigeria, the defeat of a right wing coup in Bolivia, the struggle against dictatorship in Belarus, the struggles for abortion rights in Poland and Argentina, the struggle of farmers against pro-corporate “reforms” in India and now the resistance to the coup in Myanmar.

International Socialist Alternative has participated in many of these struggles. In the continuing protests in Russia against Putin, our comrades heroically intervened calling to bring down the new tsar and for a new 1917.

If we compare the situation today to the Great Recession in 2008-9, we see broadly a more developed consciousness among key sections of youth and the working class in country after country. All the mass movements against corruption, dictatorship and austerity are driven by young people and in most cases, young women are playing a key role. During the pandemic, health care workers and teachers have been to the fore in fighting dangerous working conditions and the desperate lack of necessary resources. It is very significant that the mass protests in Myanmar against the generals’ coup were initiated by hospital workers – in one of the Asian countries worst hit by the pandemic.

But there is also massive political polarization in many countries. Given the weakness, or in some cases, the complete lack of leadership on the left and the labor movement this can create openings for the populist right and the far right.

Facing mass anger and a much deeper crisis than in 2008-9, bourgeois governments in the West are moving away from standard neoliberal responses; they are prepared to spend large sums to shore up demand and are intervening more aggressively in the economy. But such policies, while they will be welcomed by large sections of the population, will not solve the underlying issues which created this crisis. We are truly in a period of depression with many features that are similar to the 1930s when capitalism’s crisis was only “solved” with the massive destruction of World War II. Today, that avenue to rebooting the system is closed.

And in the middle of the pandemic last fall came the devastating wave of wildfires on the West Coast of the U.S. This was a terrible reminder that even when the pandemic comes to an end, a much greater existential threat faces humanity, and capitalism which created climate change has no answer for this either.

Crisis of US imperialism

The situation in the U.S. is a very sharp expression of the multifaceted crisis facing capitalism globally. Nearly 500,000 have died from COVID due to massive cuts to public healthcare over decades and the complete incompetence of the Trump regime.

The pandemic has brought to the fore all of the accumulated problems caused by capitalism and neoliberalism in the U.S. including the massive growth of inequality and the undermining of public education and the public healthcare system. In what is still the most powerful capitalist power on earth, tens of million people are having difficulty getting enough to eat. Millions face the threat of eviction. One recent study by the Economic Policy Institute estimates that 26 million people are currently unemployed, underemployed or have given up looking for work. Meanwhile, the 651 American billionaires, including Jeff Bezos of Amazon and Mark Zuckerberg of Facebook, increased their wealth by over $1 trillion last year, while 12 million people accumulated an average of $5,800 in debt each for rent and utilities.

We pointed out in 2016 that Bernie Sanders and Donald Trump were both expressions in very different ways of the revolt against neoliberalism. At the beginning of 2020, Sanders’ second campaign for president – which had a bold pro-working class program including calling for Medicare for All, a Green New Deal, cancelling student debt and a $15 an hour minimum wage – was attracting millions. But the establishment of the Democratic Party managed to cut across Sanders and unite around Biden. Sanders then capitulated to the Democratic establishment, a real setback for the left.

This was rapidly followed, however, by the mass Black Lives Matter revolt, triggered by the police murder of George Floyd in Minneapolis, the biggest protest movement in U.S. history. It was multiracial and overwhelmingly youthful. It was a revolt against structural racism but more broadly against the dismal future for young people in capitalist America. The movement temporarily put the reactionaries including Trump on the defensive but it also ran up against real limits due to the lack of a clear strategy, program and democratic structure. However, despite all its weaknesses, it pointed in a revolutionary direction, towards a mass, multiracial working class-centered struggle to end racism and capitalism.

After the November election where Biden won and the Democrats took control of Congress, we saw the other side of the dynamic of polarization, the growth of a reactionary, counterrevolutionary threat which culminated in the far right led assault on Congress on January 6. This is also a very serious warning about the price that will be paid in this period for not building a mass movement of the working class with a fighting anti-capitalist leadership.

The goal of Trump and a wing of the Republican Party, using the far right as shock troops, was to overturn the result of the election, in other words to carry out a coup, even if it was poorly organized and executed. There was also incompetence and massive underestimation by the state forces to the clearly signalled intent to storm the Capitol, compounded by elements of collusion.

In the wake of scrambling to stop the coup, the political establishment, reflecting the interests of the ruling class, drew conclusions. They saw January 6 as an assault on the institutions of capitalist democracy which have served them well and which they are not prepared to dispense with at this point. They especially saw January 6 as further undermining the interests of U.S. imperialism globally versus its rivals, first and foremost China. It compounded the perception of chaos and social breakdown in the U.S and “America’s irreversible decline”, a key tenet of Xi Jinping’s foreign policy.

The establishment and the state have gone on an “anti-extremism” offensive, rounding up and charging many on the far right with various crimes. Trump and others have been removed from social media platforms. Corporate backers have deserted the Trumpist wing of the Republican Party, at least for now.

But this anti-extremism campaign will also be directed against the left, including socialists. In Seattle, Socialist Alternative faces a right wing, corporate financed attempt to remove Kshama Sawant from office, the only elected Marxist in the US. It also will not in the medium term undermine the populist right or far right which are a by-product of capitalism’s decay. The only way to defeat these forces is to build a mass movement that fights for the change working class people need such as the demands Bernie Sanders raised, many of which are enormously popular including with millions who voted for Trump.

At the moment, we also see the new Biden administration taking a more aggressive approach to stimulus spending. Biden has proposed $1.9 trillion in further stimulus, including $1,400 payments to individuals and a continuing $400 top-up to unemployment benefits, and significant resources to scale up vaccination. This is supported by the Federal Reserve and the U.S. Chamber of Commerce. At the same time, the Democrats look likely not to deliver on promises to implement a $15 minimum federal minimum wage (a doubling of the current figure). Hence, while being prepared to “spend big” to address the crisis they will not take steps to really improve the lives of working people in an ongoing way unless they come under mass pressure.

The Democratic establishment and the Federal Reserve see the depth of the economic crisis and the danger of it getting much worse. They are trying to learn the lesson of 2008-9 when inadequate stimulus during the Great Recession contributed to a very slow recovery. They also see the need to retake control of the situation before the next wave of mass upheaval sweeps the US. Again this is a fundamentally different situation to 2008-9 and the standard neoliberal playbook of using monetary policy and letting “the market” solve the problem simply won’t work.

Chinese imperialism’s strengthened position

Meanwhile the situation in China appears very different. It is the only major power to experience economic growth in 2020 even if the growth statistics are inflated by the regime. Key to this is the relatively successful containment of COVID, using authoritarian and sometimes quite brutal measures, compared to most other key powers, despite the disastrous failure by the regime at the start when they covered up the initial outbreak in Wuhan and dealt heavily with whistleblowers, directly contributing to turning this into a global pandemic.

The Chinese economy, with its enormous manufacturing capacity, benefited from massive global demand for laptops and PPE. China exported 224 billion face masks – 40 for every person on the planet. Its exports of medical equipment rose 31 percent from the year before. There has also been extensive state intervention in the economy with big infrastructure spending and big investment in the production of vaccines. And while there is a growing trend towards state intervention in the economy internationally, Chinese state capitalism is far more developed in this approach.

The creation of the Regional Comprehensive Economic Partnership (RCEP) trade bloc of 15 countries dominated by China last November and China’s investment deal with the EU announced in December have been propaganda coups for the Chinese Communist Party (CCP) regime. However, the economic substance of these deals should not be exaggerated. For example, the Japanese government which is a signatory to the RCEP is at the same time giving financial incentives to Japanese companies to relocate production out of China and back to Japan.

Australia, another signatory, has been engaged in a very bruising trade war with China which cost it $3 billion in lost exports last year. The situation of Australian imperialism is particularly revealing because while they are closely aligned with the U.S. in a geo-strategic sense, they are also very dependent economically on China.

But while the Chinese economy has grown enormously in the past twenty years, to the point that, if measured by purchasing power parity rather than international exchange rates, it is now one-sixth bigger than the U.S. economy according to the IMF (though still a third smaller in dollar terms and far smaller in per capita terms) the real picture is far more complicated. Growth in 2020, while far better than in the EU or the U.S., was still at its slowest pace since 1976.

Furthermore, the regime’s aim to break the economy’s unsustainable dependence on exports and debt-driven infrastructure investments by increasing consumption suffered a huge reverse last year. Consumer spending shrank 3.9 percent in 2020 and ‘total social financing’ (the broadest measure of new credit throughout the economy) jumped by 13.3 percent. China’s consumer spending occupies a stubbornly low share of total GDP at just 39 percent, which is far lower than other large developing economies for example Brazil (61 percent), India (58 percent) and South Africa (59 percent).

There has been a massive increase in inequality with China’s superrich elite experiencing their best ever year for wealth accumulation, a combined gain of $1.5 trillion for the country’s 800-odd billionaires – outstripping even the gains of their U.S. counterparts. Meanwhile large sections of the working class and rural population struggled to make ends meet. Median disposable income fell in the first half of 2020 and then staged a modest recovery in the second half. None of China’s 31 provinces increased the minimum wage last year for the first time since 2009. Official statistics showed unemployment reaching a 20 year high of 6.2% in February and 4.7% for the year as a whole. But this is a significant underestimate as only those with “urban” registration papers are included. The vast migrant workforce of 270 million – who comprise the majority of China’s blue collar workforce – are not included in unemployment figures because they are legally classified as “rural” .

The Chinese regime has also suffered setbacks in the global competition with the U.S., particularly with a number of key countries moving to partially or completely ban telecom infrastructure giant Huawei. This means shutting China out of the 5G market in these countries, a key battleground in new technology. Trump’s administration blacklisted more than 100 Chinese tech companies and in most cases these bans are unlikely to be reversed by Biden.

Internally, the regime’s massive propaganda offensive combined with relative success in dealing with the pandemic compared to Western powers has undoubtedly had an effect in pushing back against mass anger within China over the economic crisis which has befallen large sections of the working class and rural poor who are left out of the regime’s alleged “V-shaped recovery”.

But none of the underlying issues in Chinese society have been addressed and it is only a matter of time before the increasingly brutal dictatorship faces more serious challenges, including from the working class. Even under the conditions of a massive surveillance state, the global radicalization of young people is also affecting China. The number of young people identifying with left-wing ideas has become a mass phenomenon, with the biggest layer calling themselves “Maoists” but others identifying with Trotskyism, Anarchism and other anti-capitalist trends. Even the young “Maoists” in many cases use that label more as a cover for opposing state capitalism and CCP rule rather than expressing actual support for a return to Stalinism. Unlike some Maoists in western countries, the new brand of Chinese Maoists see the CCP regime as a counter-revolutionary capitalist regime. Many of them embrace internationalism and identify strongly with feminism and LGBTQ rights.

On social media which is the only limited outlet for protest there have also been major outbreaks of the MeToo movement and feminism in China. The year 2020 saw several brutal murders of women by their partners in a society where one in four married women have suffered domestic violence according to official data. In December, a song by Mandopop artist Tan Weiwei about violence against women triggered intense debate on social media with the hashtag “brave lyrics of Tan Weiwei” being shared 300 million times.

Xi Jinping gave a speech in January to the annual gathering of the superrich at the World Economic Forum in Davos, Switzerland (this time online). The speech was an attempt to claim the mantle of global leadership. Xi declared China was ready to “work with other countries to build an open, inclusive, clean, and beautiful world that enjoys lasting peace, universal security, and common prosperity.” We can say confidently that these worthy goals will never be reached through the so-called leadership of the CCP dictatorship.

Also noteworthy is that Xi’s speeches at home strike a radically different tone from the “good cop” who spoke at Davos. Addressing PLA troops in November at a Guangdong military base on the 40th anniversary of the founding of Shenzhen, China’s richest city, he urged them to “put all (their) minds and energy on preparing for war”. This and many similarly militaristic speeches have been widely broadcast in Chinese media. In a speech in October, on the 70th anniversary of China’s entry into the Korean War, the only time it has directly fought the U.S., Xi said China is not afraid of war, adding that “we should speak to the invaders in a language they understand”. Rather than real preparations for war at this stage, Xi’s regime is whipping up nationalism as a means to check the growth of social and political discontent. This is also an important element in the internal CCP power struggle, which is sharper today than at any time since 1989. Xi is magnifying external threats and using nationalism to blunt challenges from factional rivals who want to block him from extending his rule after the next CCP Congress in 2022.

In reality, Xi’s soothing rhetoric tailored for overseas financial markets and governments is combined with an increasingly aggressive, strongarm approach on many fronts internally and internationally including in relation to the debts of neocolonial countries to Chinese imperialism. However, even here the regime has benefited from the disastrous approach of the EU and the U.S. to the pandemic, by promoting Chinese vaccines to developing countries as the West hoards their supplies.

Biden: a change of form not substance

The Biden administration will not return to the policy of “constructive engagement” with the goal of making China a “responsible stakeholder” in the global capitalist order. This was an approach Biden had previously supported when he was part of the Obama administration but the situation has now radically changed.

As the ISA has said, the shift of U.S. policy was not just about Trump; there is a broad consensus in the American ruling class that they need to challenge the rise of Chinese power. The new Secretary of State, Anthony Blinken, said at his Senate confirmation hearing that the Trump administration was right to stand up to China. He has also said he agreed with Pompeo calling CCP policy in Xinjiang “genocide” against the Uyghur people, a term that has been used by imperialist powers as a pretext for war and regime change.

ISA supports the legitimate struggle of the Uighurs and other oppressed people against vicious state repression and widespread use of forced labour. But we warn that the struggle against repressive regimes, which raises the need to overthrow capitalism and imperialism, is not strengthened but rather fatally weakened if it allows itself to be hijacked by any capitalist government or ruling class. U.S. imperialism has a long history of propping up dictatorial regimes when this serves its geopolitical interests. Of 49 countries identified as dictatorships in 2015 by pro-U.S. think-tank Freedom House, the U.S. government provided military support to 36 of them – that’s 73%. International working class solidarity, with active engagement by labour movement organizations globally, is the most powerful weapon to defeat repressive regimes.

There will be a shift in rhetoric more than a shift in content under Biden. He is talking about convening a “democracy summit” of key countries, effectively an anti-China summit.This approach poses challenges. As the New York Times(2/3/21) pointed out,” The sense of a dysfunctional, if not entirely broken, democratic system in the United States has foreign rivals crowing — and suggesting that it has no business lecturing other nations.”

But there is a way for the Biden regime to take a slightly more humble approach (by the standards of U.S. imperialism). On February 4, Biden gave a speech at the State Department where he said: “the American people are going to emerge from this moment stronger, more determined and better equipped to unite the world in fighting to defend democracy because we have fought for it ourselves.” This is a clear reference to putting down Trump’s threatened coup on January 6.

Biden is taking a sharper approach to Putin and using alleged sympathy with the masses in the streets of St. Petersburg, Moscow and other cities as cover for reasserting the interests of US imperialism. The U.S. will also claim rather half-heartedly to be on the side of the people against the coup in Myanmar, although key regional allies of the U.S. such as Japan and Australia are urging a light-handed approach to the military regime lest it should “join the league of China”.

Can Biden use this approach with success to regain the initiative in the conflict with China? We can’t exclude that for a period this will have an effect and we must be clear that while US imperialism is down, it is not out.

And while the reactionary, anti-working class nature of the “communist” dictatorship is very clear when it is attacking trade unions, suppressing any element of democratic rights in Hong Kong and putting hundred of thousands into “reeducation camps” in Xinjiang, socialists must also expose what lies behind the democratic pretensions of U.S. imperialism.

From dropping atomic bombs on Hiroshima and Nagasaki at the end of World War II to the carpet bombing of Southeast Asia in the 70s to the endless military interventions in Latin America and the Middle East, U.S. imperialism has always been ruthless in pursuit of its interests. This will continue to be the case.

The American ruling class are only committed to bourgeois democracy insofar as it serves to maintain capitalist rule inside the U.S. and as a cover for the assertion of their economic and strategic interests globally. They will not hesitate to support dictatorships and slaughter (as in Indonesia in 1965, Thailand 1976 and South Korea 1980) where this is seen as necessary to stop revolution.

It is important for the ISA to address illusions in U.S. imperialism which have emerged among some activists in Hong Kong, China and Taiwan, and to a lesser extent in Thailand and Myanmar, who are looking for an ally in the fight against dictatorship. At the same time, we also have to take up illusions in sections of the left and the labor movement in some countries in the Chinese regime, seeing it as an ally in opposing U.S. imperialism. These are both deeply mistaken positions.

How the conflict will develop

Meanwhile Xi has adopted an aggressive posture to test Biden. For example, the Chinese air force recently simulated an attack on the U.S. aircraft carrier USS Theodore Roosevelt in a military exercise in Taiwanese waters. The logic of Xi’s factional struggle within the CCP leadership drives these moves more than a rational calculation of China’s interests.

Of course we cannot exclude a truce being reached at some point between the U.S. and Chinese regimes but the underlying dynamic of this conflict points to it playing out over decades, not years. It can, under certain circumstances, also heat up and lead to actual military conflict although a full scale war remains very unlikely due to the massive nuclear arsenals of both countries.

But at the same time the internal crisis in both China and the U.S. will go on, driven by the crisis of global capitalism. The attempt of U.S. imperialism to reassert itself globally and push back against the rising power of China, while it may produce some results, definitely has limitations. The U.S. is still the strongest power globally in economic and military terms. But it has been in decline since the 1970s. There is no road back to the hegemonic position it held at the end of World War II where other capitalist powers lay in ruins.

Nor will they be able to defeat China the way they stopped the rise of Japan 30 years ago. China presents a much bigger challenge. Japan’s GDP in 2020 was lower than in 1995 and measured against the size of the U.S. economy it has slipped from 71 to 25 percent. China is much poorer and has a much weaker welfare safety net than Japan had when its long stagnation began in the 1990s. Should a similar process befall the Chinese economy this would trigger massive social unrest and revolutionary upheavals, which would confront U.S. imperialism with a different type of “China problem”.

While one side could “win” in the end, it will only be at enormous cost to itself. The likely perspective is that the longer this conflict goes, the more it will weaken and undermine both superpowers. This will in turn exacerbate the crisis of capitalism in both countries and strengthen both revolutionary and counterrevolutionary dynamics.

What is critical is to forge internationalist unity between the working class of China, Hong Kong and Taiwan and the working class of the United States and to build strong revolutionary parties in these areas. We must oppose the poison of great power nationalism and chauvinism. This is used by the ruling class to distract and divide workers. Trump talked about the “China virus” to distract from his criminal negligence during the pandemic. This contributed directly to a wave of racist attacks on Asians in the U.S. in the spring. There are now reports of a new wave of attacks. Likewise we oppose both free trade and protectionist policies which harm and divide working people in different ways.

The main enemy, as German revolutionary Karl Liebknecht, said during World War I, is the capitalist class at home.