It may not be obvious today, and certainly it’s not how the corporate media reported it, but future historians are likely to look back at March 13, 2009 as the day that American imperialism began it’s inexorable decline. That’s the day that Chinese Premier Wen Jiabao announced that his country was “worried” about its holdings of over $1 trillion in US treasury securities, and warned that he wanted the US to assure China that it would maintain its good credit and “honor its promises” and “maintain the safety of China’s assets.”
There is no way that the US can accommodate Premier Wen and still finance and operate a global military system with over 1000 overseas bases, massive aircraft carrier battle groups, and with hundreds of thousands of men and women armed to the teeth with the latest high-tech military hardware, not to mention fight endless wars on the far side of the globe.
What China is doing is pulling the rug out from under America’s six decades of global military dominance. It is no coincidence that the weekend before Wen’s statement, Chinese naval vessels aggressively harassed a US intelligence ship, the Impeccable, that was operating in the South China Sea.
The implied threat in Wen’s seemingly mild comment was that if the US doesn’t trim its deficit spending dramatically, and get its economic house in order—which means dramatically reducing the American standard of living, and reducing wasteful spending of its military, China will simply cut back on its funding of the US deficit, in the form of buying US Treasury issues, an act which would cause the collapse of the US dollar and what’s left of the US economy.
Now this decline of the US as an economic and military power is not going to be an overnight thing, because China needs to keep selling manufactured goods to the US market—the largest in the world—and in order to do that, it needs to keep recycling dollars spent on Chinese goods back into the US, which to date has meant buying US debt issues.
But there are other ways to recycle dollars back to the US, most notably by investing in actual US assets. To date, China has done this cautiously, in part to avoid arousing political concern in the US. Typically China, when it has purchased shares of US companies, has done so by buying small minority stakes, as it did in the case of the Blackstone Group, a private equity investment firm. But if China were to decide to stop funding America’s massive deficit, this could change. It could decide to just let the dollar slide, and take advantage of the slumping value of US assets to start buying the US up on the cheap.
There is already talk of Chinese auto companies buying up General Motors and Chrysler, and why not? They could have those companies, not to mention most of the national banks, for a song now. But China wouldn’t have to limit itself—nor would it—to buying up dying companies. It could also buy entities like General Electric, Boeing and IBM, or it could buy agricultural assets and mines—or oil companies and oil reserves.
In fact, China has been using its vast trade-surplus-fueled currency reserves of dollars and Euros to lock up at cheap prices on long forward contracts for oil and other critical commodities. This is just the beginning. (It would be ironic and incredibly foolish if the US, which has spent several hundred billion dollars in borrowed money, and as much as $3 trillion if interest costs are factored in, on conquering and controlling Iraq, really did so to gain control of oil, since China has accomplished the same thing peacefully for a small fraction of that cost, by just buying forward supply contracts.)
It is likely that India, whose economy is doing even better than China these days, will do much the same thing.
The end result will be a vast permanent weakening of America, as its economy becomes increasingly subservient to the interests of its new owners.
There is a delicious irony here, since the US, for decades, has done precisely this kind of thing around the world to developing nations, buying up their industries and their resources, and manipulating and controlling their political systems, to its own advantage, always with the backing, or threatened use, of America’s powerful military. Now the once-might US (remember Dick Cheney’s “world’s lone superpower” and George H.W. Bush’s “New World Order”?) is reduced to pleading with China to leave its warships alone, and to shamelessly begging, as Hillary Clinton did in one of her first public statements as secretary of state, for China to “keep buying” US Treasuries.
From the point of view of the majority of the world’s people, who have lived for too long under the American jackboot, this is all a good thing. But forcing the new “Rome” to retreat back within its own borders will also be good for us Americans, who have had to pay for all those military adventures in the name of empire and corporate profits over the years with our blood and taxes.
The problem, for us, however, is that all this military and economic comeuppance will also be accompanied by a dose of reality about our own real living standard. As long as China, India and the oil-producing states were willing to just keep buying American government securities to finance our multi-generational spending binge, it was possible for the US government to keep us citizens all fat and happy by creating a series of bubble economies, pushing up our salaries and the value of our homes to absurd levels, while interest rates remained comfortably low and the US dollar, as the world’s reserve currency, remained strong enough for us to continue to buy goods, the production of which was increasingly being moved overseas.
Suddenly, however, in one brief speech, Chinese Premier Wen has made it clear that the US is no longer calling the shots. Nobody’s saying it out loud here in America, but behind the scenes, it’s clear that increasingly US economic policy is going henceforth to be dictated by governments in places like Bejing, Tokyo, New Delhi and Brazilia. Those same places will also increasingly be telling us where and even if we can use our once mighty military forces.
Given our post-WWII history, that can’t be a bad thing.
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and now available in paperback). He can be reached at firstname.lastname@example.org