Evolving Geopolitical Economic Framework: US vs. China

The Asian Infrastructure Investment Bank is a game changer in what had been since World War II and Bretton Woods American global financial dominance in facilitating US unilateral market penetration via the preponderant voice in IMF and World Bank operations and policy making, and, equally significant, integrating expanding economic power with an interventionist military underpinning. Thus far, America has had it its own way both in the politicization of the world structure (e.g., the Marshall Plan as an early initiative in precipitating the First Cold War, and carried forward into the Second with the fusion of the EU and NATO) and, within the US, the militarization of capitalism as the crucial developmental process (an advanced-capitalist system reaching apogean maturity) sustaining its further growth. No longer. There is a new kid on the block challenging this pattern of hegemonic globalization, yes, relatively speaking, “kid,” having the vitality, growth potential, AND capacity for alternative planning, thinking, and organization, which America, on a descending path toward political-economic senility, no longer possesses.

It was only a matter of time before the AIIB made its appearance, China, once having achieved its consolidated economic base (and population shift to heightened urbanization) accompanied by an ideological adaptability shaking off Maoist orthodoxies, as in the Cultural Revolution, has now come into position to confront the West (chiefly the US and EU) on an equal plane through a parity of economic strength. Washington has been blindsided, its very reliance on militarism as the solution to all its problems, industrial, trade, financial–ideology to the point of rigidity the primary orientation lo these many years–forcing one-sided arrangements on its presumed friends and allies, has ultimately backfired, becoming the engine of its economic descent and political-cultural decline. If I were a moralist, I’d term this the wages of sin, war, intervention, regime change, punctuated by covert actions, special forces, drone assassination, embargoes, all for the retrograde purpose of counterrevolutionary stabilization, retrograde, because this course is no longer historically feasible as we find multiple ascending forces in the world, not only China, but much of Asia, including India, and the whole of Africa and Latin America ripe for full-throttle modernization.

The balance of world power is shifting away from the West under present US leadership, to the extent that the AIIB is gaining support and membership in Europe itself, suggesting not that the EU and NATO will dissolve tomorrow, but that the built-in belligerence therein instilled through US influence and pressure may be breaking down, leaving America high and dry rather than, as planned, isolating and containing Russia and China, the chief long-term US aim and purpose. A disaffection in the ranks is not being looked on kindly by the Obama administration, which may partially account for the stridency and note of urgency in current policy vis-à-vis China (Russia a sideshow to keep NATO still in line, the Turkish downing of the Russian jet precisely the kind of provocation intended for that purpose) as though advancing the timetable of US confrontation with China lest the Grand Alliance break up. One senses a desperation and frenetic diplomatic activity in response to the sudden visibility of the AIIB, in the realization that China is taking on America, not on the battlefield, but largely on the US’s own professed terms: trade, investment, and industrial development. “Better dead than red” no longer seems applicable as a shibboleth for justifying hostility toward China, although the campaign of counterterrorism subtly invokes and/or calls to mind the earlier anticommunism in stimulating the fears of the American public, leaving a residual though latent taint on China transferring that fear to the present. (I leave the Republican party, its Congressional members, and especially its presidential candidates outside of the discussion, their near-unanimous knee-jerk reaction of favoring war at the drop of a pin, in contrast to the sophisticated retrogression and platitudinous liberalism by its opponents to the same end, leaves them unsuited for other than catastrophic solutions which would prove still more disastrous, as America’s friends and allies appear to realize. The choice between the power-politics of stabilized confrontation and Armageddon awaits the nation, but in fairness to the Republicans it should be said that the present Democratic administration and the party at large are hardly risk-adverse, forming a dangerous bipartisan coalition on essentials of war and peace.) The move to discredit, and excite terror of, China in the eyes of the West, if not in that of the world, is nowhere more evident than in America’s conscious and unconscious realization of Chinese ascendancy, a world trend which, agonizingly, is matched by America’s own decline.


Do I exaggerate the trend, and is this ascendancy merely so recent as to coincide with breaking news about the Asian Infrastructure Investment Bank? No, on both counts. China has been in the business of developmental economic planning, investment, and construction, particularly attentive to Third World needs, for some time, as have the AIIB’s own diplomatic and financial activities, both backed by the Chinese government. (Let me be clear: I am not a cheerleader for capitalism, and given China’s transformational energies in that direction, e.g., as manifested in its loan policies and investment acumen, I would have preferred a decisively socialist direction for that country and therefore its impact on world politics. But the issue here is not a love of China, although I think it represents far less of a threat to world peace, because of its ascendant position, than the US, desperate to reverse its long-term if not imminent decline. Pulling at the military ropes to stay afloat lends an air of risk-taking to the overall foreign policy framework.) Consider then a New York Times article, “China’s Global Ambitions, Cash and Strings Attached,” by Clifford Krauss and Keith Bradsher, the latter words tacked on, in typical Times fashion, to ensure conveying the paper’s animus toward China, even though the article is quite neutral. The date: July 24, 2015, before the head-on US assault on the AIIB, but when Obama’s military pivot to the Pacific had already become familiar policy.

This concerns only one country, in America’s backyard, Ecuador, which already sets off political-economic-military alarm bells, the more so because of location and because there are countless other examples of Chinese investment in Latin America and Africa, originally private hunting preserves for American capital, especially in riding the wave of European de-colonialism of the Third World. Yes, expansion, but hardly Western-brand imperialism at the point of a gun, and—the title—with strings attached. The reporters begin, infrastructure to the foreground: “Where the Andean foothills dip into the Amazon jungle, nearly 1,000 Chinese engineers and workers have been pouring concrete for a dam and a 15-mile underground tunnel. The $2.2 billion project will feed river water to eight giant Chinese turbines designed to produce enough electricity to light more than a third of Ecuador.” When one reads Paul Baran’s Marxian classic work, The Political Economy of Growth, the contrast with typical imperialist projects is glaring; instead of building rail and port facilities for the sole purpose of extracting the client country’s wealth, the improvement stays at home. Not that China didn’t do the other as well, as in the construction of a refinery outside the port of Manta, yet a study of the various projects would show a balance struck on the side of internal improvements, infrastructure per se, which does not rob the country of its resources and prevent its modernization. Chinese capital also built factories, and, Krauss and Bradsher note, even with respect to Manta, “Chinese banks are in talks to lend $7 billion for the construction of an oil refinery [just mentioned], which could make Ecuador a global player in gasoline, diesel and other petroleum products.”

The contrast with Western style investment only gets better (i.e., less vulturish): “Across the country in villages and towns, Chinese money is going to build roads, bridges, hospitals, even a network of surveillance cameras stretching to the Galapagos Islands. State-owned Chinese banks have already put nearly $11 billion into the country, and the Ecuadorean government is asking for more.” Selfless? Surely not, but neither is it narrowly exploitive, for Ecuador is hardly a jewel in the imperialist crown by virtue of population, military prowess, or economic clout, and rather, as the reporters correctly observe, part of a broader societal-historical process of shifting global power: “Ecuador, with just 16 million people, has little presence on the global stage. But China’s rapidly expanding footprint here speaks volumes about the changing world order, as Beijing surges forward and Washington gradually loses ground.” That The Times sees the latter, America’s decline, is somewhat earth-shaking as America’s MSM goes. The article also reports that the renminbi is “expected to be anointed soon as a global reserve currency, putting it in an elite category with the dollar, the euro, the pound and the yen”—which actually came about this past week, Washington gnashing its teeth while Bretton Woods negotiators turning in their graves. From gnashing no doubt to rage though not publicly discussed: “China’s state-owned development bank has surpassed the World Bank in international lending. [The organizations we created after World War II to ensure America’s global economic hegemony are being challenged and/or superseded, grounds enough for consternation and a good deal more, to which must be added, as now, wholesale defections from US iron-clad, no deviations leadership on the financial and banking fronts.] And its effort to create an internationally funded institution to finance transportation and other infrastructure has drawn the support of 57 countries, including several of the United States’ closest allies, despite opposition from the Obama administration.”


Let’s leave Ecuador, the situation, as I say, being duplicated from Serbia (power plants) to Ethiopia (glass and cement factories) to Venezuela (low-income housing) to Uzbekistan (natural gas pipelines), and bring the analysis up to date, no longer last summer, but AIIB firmly in place, its membership a silent or not so silent refutation of America’s paradigm of unilateral military-economic global dominance. China was excluded from TPP on fallacious grounds, as though the US cared a fig about human rights violations, not only where other nations were concerned but our own record of waterboarding and full menu of torture in black sites worldwide, while China, in contrast, has consistently offered membership to America in AIIB. No takers, of course, the move, even though EU arrangements would be left intact, being seen by the administration as an admission of weakness and capitulation to China’s power—in sum, the falling-domino theory in its economic guise. Even profits cannot supplant the temptations of war, which suggests that the US has become so rigidly ideological that the standard premises and goals of capitalism are being cast aside in what is fast becoming, on the US side, a Manichaean world view of ceaseless struggle, the framework of adversaries widened from Russia to include, still more imperatively, China.

Jane Perlez’s informative New York Times article, “China Creates a World Bank of Its Own, and the U.S. Balks,” (Dec. 5), this time an accurate title, provides a clear view of the bank’s genesis, its operations, and China’s conception of its role in international politics and economics. The sub-heading, “In setting up the Asian Infrastructure Investment Bank, China enlisted American allies, including Britain, even as Washington expressed skepticism,” previews the telling point that a direct blow is being struck at US global supremacy, with ramifications affecting EU and NATO stability via a possible tug-of-war emerging from a bipolar economic world. To America, any sign of disloyalty is a mortal sin, economic, military, anything for that matter. This is the cost of a half-century and more of arrogance backed by military force—a brittle mind-set that demands obedience to its dictates, leaving an ethnocentric we-they dichotomy in its wake.

Perlez begins by discounting the view of China’s ulterior motives of selfish aggrandizement and surreptitious moves toward global military conquest, both currently in vogue in the US: “As top leaders met at a lush Bali resort in October 2013 [note the date, early enough to indicate both the plans for model reconstruction and the test, in the intervening time, on whether profession has been translated into practice], President Xi Jinping of China described his vision for a new multinational, multibillion-dollar bank to finance roads, rails and power grids across Asia. Under Chinese stewardship, the bank would tackle the slow development in poor countries that was holding the region back from becoming the wealth center of the world.” Kerry at the time congratulated Xi, “’That’s a great idea,’” but, she reports, “the enthusiasm didn’t last long, as the Obama administration began a rear-guard battle to minimize the bank’s influence.” What follows is sheer gibberish, not the fear of military-economic competition, but that China would not respect human rights—or rather, both, the latter considerations becoming well-worn State Department talking points (mine, not Perlez), and worse still, the implied corruption associated with the loans: “The United States worries that China will use the bank to set the global economic agenda on its own terms [as had the US for decades when it was in the driver’s seat], forgoing the environmental protections, human rights, anticorruption measures and other governance standards long promoted by its Western counterparts. American officials point to China’s existing record of loans to unstable governments, construction deals for unnecessary infrastructure, and villagers abruptly uprooted with little compensation.” If the record is so bad, why the alarm; China would be hoisted on its own petard.

Ascribing base motives to others may in fact reflect back on one’s own acts (e.g., drones, covert actions) and thoughts (claims ranging from Exceptionalism to liberal humanitarianism), thereby requiring the denial of the reality of one’s own GUILT and projecting both guilt and the larger reality of stiffing through corruption and misdeeds the victims of one’s own claims to power. I submit that China’s record of developmental assistance, although hardly lily-white, is directed to the real needs of disadvantaged nations and peoples, not the enrichment of assorted cliques in exchange for military bases, safe havens for administering torture, or rules stacked in favor of US market penetration. Those closest to America either appear to be catching on to the one-sided business arrangements, as in TPP and the EU-IMF-World Bank ground-rules for trade, or, equally if not more disheartening from the US’s standpoint, are only going along with the tide, sensing the way the wind is blowing. Perlez writes: “But the administration suffered a humiliating diplomatic defeat last spring when most of its closest allies signed up for the bank, including Britain, Germany, Australia and South Korea. Altogether 57 countries have joined, leaving the United States and Japan on the outside.” And she adds, matter-of-factly: “The calculation for joining is simple. China, with its vast wealth and resources, now rivals the United States at the global economic table.” The IMF’s inclusion of the renminbi this past week is one more match to light the fire of America’s demiurgic itch for Great Powers-showdown.

We are coming full-circle, the inversion of the starting place, in which America was all-powerful and now has to relinquish control of the global economy. “China is taking direct aim at the current development regime,” Perlez, recognizing the import of pending change, observes, “the Bretton Woods system established under the leadership of the United States after World War II to help stabilize currencies and promote growth.” This is an epochal change, the kind that the previously supreme nation does not take lying down, perhaps only microseconds away from the stab-in-the-back legends (aka, terrorism) used so effectively in 1930s Germany in Hitler’s rise to power and coming with greater frequency into prominence in America through a bipartisan consensus on domestic surveillance, the dismantling of the social safety net, and a resurgence of gut-xenophobic hatred toward immigrants. Jin Liquin, who will lead the bank, has written a book, “Bretton Woods: The Next Seventy Years,” in which he shows awareness of where the US is coming from, its fear of suffering decline: “’The U.S. risks forfeiting its international relevance while stuck in its domestic political quagmire.’” And he adds what might serve as an epitaph on American aspirations for maintaining global hegemony: “’History has never set any precedent that an empire is capable of governing the world forever.’”

My New York Times Comment on the Perlez article, same date, follows:

Perlez’s reporting is superlative, giving us a rounded statement of the AIIB. Its formation is explainable in light of the TPP, which pointedly excluded China. I am encouraged by the geopolitical framework evolving: a check on US economic hegemony through a clear balancing of global financial power. But something else is also important: unlike US hostility to the project and Obama’s militarization of the TPP through his military “pivot,” backed by significant force in the Pacific, we see instead a non-militarized paradigm of growth underscored by European member states and the eschewal of exclusionary policies.

The administration has reason to be concerned: China is running circles around the US, particularly in its investment strategy of focusing on fundamental infrastructure. Yes, we finally have an alternative to the US-dominated IMF and World Bank, one that both Asia and Africa will find more attractive. The Chinese comment that empires do not last forever is very much to the point, though Washington, unlike Cameron and London, is in the deep throes of denial.

The US is first, last, and always ideological, whereas others, China, etc., can pragmatically advance in their growth process. Obama is carrying America over a cliff by his politicization of economic policy, and more, by his zealous determination to confront, encircle, and if possible isolate both Russia and China. He isn’t half the mensch that Xi and Jin are.

Norman Pollack Ph.D. Harvard, Guggenheim Fellow, early writings on American Populism as a radical movement, prof., activist.. His interests are social theory and the structural analysis of capitalism and fascism. He can be reached at pollackn@msu.edu.