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Vol. VI, No. 51      Jan. 28 - Feb 3, 2007      Quezon City, Philippines











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U.S. and China: Harmony Today, Confrontation Tomorrow?
Second of four parts

On several issues and concerns, both China and U.S. imperialism today share some common interests and to some degree are interdependent. Whatever fractious issues separate the two countries, these appear to be manageable or are simple irritants and at the moment do not jeopardize the major common and strategic interests they both share.

By Bobby Tuazon

On several issues and concerns, both China and U.S. imperialism today share some common interests and to some degree are interdependent. Whatever fractious issues separate the two countries, these appear to be manageable or are simple irritants and at the moment do not jeopardize the major common and strategic interests they both share. This is not to rule out the fact however that there are definitely clashing perceptions and policy differences which emanate from circles of authorities and interests in both the U.S. and China that will likely lead to a direct confrontation. A bigger problem – with repercussions to current ties between the two countries - will stem from a possible implosion from within China as a result of worsening social and economic problems spawned by the country’s unrestrained market reform and its stranglehold by the global capitalist system.

But at present, the issues that harmonize the interests of both countries, or where China defers to U.S. hegemony and the status quo, are: a) trade and investment; b) how to deal with North Korea; c) “global terrorism” including Afghanistan and Iraq; and d) Southeast Asia.

However, they appear to be poles apart on the following: a) defense; b) Taiwan; c) Iran; and d) human rights and U.S. intellectual property rights.

Total trade between China and the U.S. has leaped from $33 billion in 1992 to over $230 billion in 2004. In 2004, China’s trade growth, combining imports and exports, reached 35 percent. Between 1999 and 2004, U.S. imports from China grew from $82 billion to just under $200 billion, accounting for a quarter of all America’s import growth. On the other hand, U.S. exports to China nearly tripled in the five years after 1999, far exceeding forecasts prior to China’s World Trade Organization (WTO) entry. America’s exports to China have risen about 10 times as fast as exports to the world during that time, but are still far below China’s exports to the United States.[1]

The U.S. officially praises China’s market-oriented reforms and its joining the WTO international trading system, as “nothing short of breathtaking,” to quote U.S. Trade Representative Susan Schwab, making it the third largest trading nation in the world.[2] In 2005, China was expected to become the U.S.’ second largest trade partner. The U.S., on the other hand, is China’s second biggest trade partner after Japan.

America's exports to China create 500,000 high-salary jobs for the United States each year while China's cheap and good commodities have helped U.S. consumers save expenditures to the tune of US$20 billion each year. The development of China-U.S. economic and trade contacts is a "win, win" result, bringing solid benefits to the two countries.[3]

Between the two countries, however, China is highly dependent on the U.S., the world’s largest economy, on high flows of international trade and investment to rapidly grow its economy and create the 30-40 million new jobs it needs each year to maintain internal social stability.[4] U.S. direct investment in China covers a wide range of manufacturing sectors, petrochemicals, big hotel projects and restaurant chains. In addition, more than 100 U.S.-based TNCs have projects in China, some with multiple investments. Cumulative U.S. investment in China is valued at $48 billion.

Since 2002, China has surpassed the United States to become the largest recipient of foreign direct investment, and at the same time it has also exported capital. China is the world’s largest producer of more than 170 products, including steel, aluminum, cement, etc. The amount of energy it consumes is second only to the United States.[5]

The downside for the U.S. of this seemingly robust bilateral trade ties is that Chinese imports have wiped out some industries in the United States, notably electronics, toys and textiles.[6] There are major areas of friction: U.S. demands to China to remove its restrictive practices to foreign goods and services, including high tariffs; lack of transparency; requiring firms to obtain special permission to import goods, inconsistent application of laws and regulations, and leveraging technology from foreign firms in return for market access. China’s access to WTO is meant to help address these barriers.[7]

But at the moment, China’s current trade boom and investment projects correspond to the Chinese leadership’s trajectory since 1978 when they dumped socialist construction and adopted capitalist reform integrating the country’s economy into the global capitalist system. Unabashedly calling this as “socialism with Chinese characters,” Deng Xiao-ping and his ilk began lowering import tariffs and eliminating import quotas to promote trade and by granting favorable treatment to entice foreign investment capital.[8]

The United States gave China precisely what it lacked, namely an open market for goods, access to financial markets, and a store of value for savings, among other things. Providing a global reserve currency has been America's decisive contribution to Chinese success.[9]

U.S. imperialism is served by China as a net exporter of capital most of which goes to the U.S. and which helps the U.S. to soften its financial crisis. China serves the global capitalist system by being mainly a processing country. In effect, China has become so dependent on the United States for its economic growth that this gives Washington leverage in either securing Beijing’s cooperation to its aggressive foreign policy or at least reducing China’s influence and intransigence in areas where U.S. interests are paramount or of high value. The U.S. has been trying to boost Chinese pride by cheering it as a major international player that should play an active role in the world particularly in hot spots. The subtle expectation of course is for China to support U.S. imperialism’s aggressive foreign policy including its wars of aggression and interventionism.

So beneficial have economic ties with China been that the U.S. state department believes it needs China’s cooperation in pursuing America’s foreign policy objectives throughout the world. The United States, Christopher Hill, Assistant Secretary of State for East Asian and Pacific Affairs said in May 2006, is “engaged with China on many, many different levels – on almost every issue that affects our broad strategic and economic interest. We have found many areas in which our interests and policies converge and, as importantly, we are able to engage candidly in those areas where we have found differences…More China does not mean less U.S.”[10]

Hill also said that for seven consecutive U.S. administrations the United States has "supported and encouraged China's integration into the global system."  China is now a member of important security and economic organizations such as the United Nations, the Association of Southeast Asian Nations (ASEAN), the ASEAN Regional Forum (ARF), the WTO and the Asia-Pacific Economic Cooperation (APEC) forum.

The next step for China, Hill said, is to take on a greater role in the international system, "a system from which China has benefited greatly."  This includes, he explained, constructive engagement with China on issues ranging from Iran's nuclear ambitions and North Korea's nuclear weapons to the humanitarian crisis in Darfur.

Chinese cooperation in the U.S.-led “war on terrorism”

Although there had been swings, ups and downs in China-U.S. relations (from Cold War containment to constructive engagement, thereafter to “containment-engagement”)[11] since the rapprochement in the early 1970s, 9/11 set a new tone for Washington in dealing with China in the context of the new global situation. In Washington, 9/11 led to the downgrading of China – at least for then and now - as a “primary security threat” and gave focus on the Middle East and the “war on terrorism.” (In fact, China was not even mentioned in the “axis of evil.”) Beijing expressed strong public support for the “war on terrorism,” voted in favor of the UN Security Council Resolution 1373[12], supported the “coalition campaign” in Afghanistan and contributed $150 million for Afghan reconstruction. China and the U.S. also began a counter-terrorism dialogue with several rounds already completed.

Compromise on the Korean nuke issue

The Democratic People’s Republic of Korea (DPRK or North Korea) continues to be a traditional ally of China but on the matter of its controversial nuclear weapons program, Beijing has shown a compromising attitude that favors the United States. The Beijing government opposed Pyongyang’s decision to withdraw from the Nuclear Non-Proliferation Treaty in January 2003, has expressed concerns over its nuclear capabilities and its desire for a non-nuclear Korean Peninsula. It also backed the U.S. in referring its own ally’s non-compliance with its International Atomic Energy Agency (IAEA) obligations to the UN Security Council. China was angered by North Korea’s nuclear test on Oct. 10, 2006, saying it would harm Pyongyang’s relations with Beijing and called on the United Nations to take “appropriate measures” to get North Korea to relinquish its nuclear weapons.[13]

It now appears, says Prof. Chalmers Johnson, who has written several books on East Asia, that Beijing “actually seems more interested in a perpetuation of the status quo on the Korean Peninsula.” Its policy is one of “no unification, no war,” according to him. Reunification, which, he says, may also happen with the collapse of North Korea due to economic isolation and its inevitable integration by South Korea, may lead to a new powerful actor in northeast Asia possibly armed with nuclear weapons – “not a development the Chinese would necessarily welcome.”[14]

Some U.S. authorities have however accused Beijing of dragging its feet on the nuclear issue and even secretly propping up North Korea as a cudgel against the U.S. and particularly Japan.

Blunt policy on Taiwan

Republic of China or Taiwan is a Cold War relic. A province of China that was occupied by Gen. Chiang Kai-shek’s Kuomintang remnants following their defeat by the CCP-PLA led by Chairman Mao Ze-dong in 1949, Taiwan had been propped up by the U.S. and was used by the latter to intimidate and contain the Beijing government. The thaw in China-U.S. relations during the 1970s, led the U.S. to adopt a “One-China Policy” but maintained Taiwan as an ally, making it the second largest recipient of military sales, and warned China against annexing the province.[15]

In line with the 1979 Taiwan Relations Act, which committed U.S. defense of Taiwan in case of a foreign aggression, the Bush administration approved the biggest arms sales to Taiwan – a 10-year package amounting to $18.6 billion including submarines, helicopters and missiles.[16]

Taiwan had been a major irritant even as China and the U.S. were engaged in active bilateral trade and investment but it has been overshadowed in recent years by America’s “war on terrorism” even as it continues to serve as U.S.’ balancing act against China. Historically, the U.S. could not afford to engage China in a war over Taiwan, a move that has been pressed by Washington’s neo-conservative and pro-Taiwan groups. However, one cannot rule out Washington’s success in keeping Taiwan secure not only as its bilateral commitment but also as a client state in support of U.S. military supremacy in the East Asia.

Taiwan has also enjoyed the support of Japan’s rightist groups. And all that China could do is to commit to the “peaceful reunification” with its belligerent province while warning that declaring its “independence” would be courting danger. In March 2005, China passed an anti-secession law that essentially hints Beijing would reunify with Taiwan through whatever means possible.[17] Meantime, China’s upgrading of its military capability is seen by U.S. neo-conservatives including influential Republican Party members, the U.S.-China Economic and Security Review Commission, and the conservative daily, Washington Times, as showing that the threat of an invasion of Taiwan remains real.

Taiwan is just part of China’s foreign policy on settling old, irredentist claims.[18] After recovering Hong Kong from the UK in 1997, China set its eyes likewise on various island groups in the South China Sea, particularly the Spratly group of islands (Nansha in Chinese) and the Paracels (Xisha).[19] In fact since March 1988, China had occupied more than seven islands in the Spratlys and prospects of occupying others pit Beijing against six other claimants, namely, Vietnam, with which the Chinese navy clashed twice, in 1974, and in 1988; as well as the Philippines, Taiwan, Malaysia, Brunei, and Indonesia.

Through South China Sea passes virtually all of the oil from the Gulf Region intended for China, Japan, South Korea and Taiwan. There is possibly oil under the Spratlys although experts doubt that any significant reserves here will ever become commercially viable as the waters are about 2,000 meters deep. The deepest oceanic drilling for oil is only to a depth of 872 meters in the Gulf of Mexico.[20]

Is China-U.S. armed confrontation looming?

The current Chinese leadership is pragmatic enough not to engage the U.S. in a military competition – whether now or in the immediate future - that could be seen as a challenge to U.S. military supremacy in East Asia. Since 1979, following Deng Xiao-ping’s modernization campaign and after cutting off solidarity support to national liberation movements, the Beijing government has officially pursued a policy of “promoting international peace” as the basis for China’s modernization in the context of its integration into the global capitalist system. The only exception is when it comes to its suzerain claims over Taiwan and the South China Sea, particularly over the Spratly Islands, where China has flexed its military muscle.

Persistent accusations that China is building up its military in order to establish its own hegemony in the region and challenge U.S. military supremacy that would alter the regional “balance of power”, remain strong but are mainly voiced by neo-conservatives in the U.S. government particularly Bush, the Pentagon, Secretary of State Condoleezza Rice, the CIA, the pro-Taiwan lobby groups and other rightist elements and think tanks.

A “top-to-bottom modernization,” the neo-conservatives say, “is transforming the Chinese military, raising the stakes for U.S. forces long dominant in the Pacific.”

Foreign specialists and U.S. officials, for example, point to several programs that could soon produce for China a stronger and strategic nuclear deterrent against the United States, soldiers better trained to use high-technology weapons, and more effective cruise and anti-ship missiles for use in the waters around Taiwan.[21] In addition, China maintains the world’s largest military, at 2.5 million troops, although the Beijing government has traditionally justified this as a necessity given China’s large mass of land that shares borders with countries with which it has had armed hostilities particularly Russia, India in South Asia, as well as Vietnam in Southeast Asia.[22]

Likewise, U.S. and Taiwanese military officials point to China's rapid development of cruise and other anti-ship missiles designed to pierce the electronic defenses of U.S. vessels that might be dispatched to the Taiwan Strait in case of conflict. China’s 2nd Artillery Corps has deployed more than 600 short-range ballistic missiles aimed at Taiwan from southeastern China's Fujian and Jiangxi provinces, according to Taiwan's deputy defense minister, Michael M. Tsai. Medium-range missiles have also been developed, he said, and much of China's modernization campaign is directed at acquiring weapons and support systems that would give it air and sea superiority in any conflict over the 100-mile-wide Taiwan Strait.[23]

Increasingly, China's navy and air force have set out to project power in the South China Sea, where several islands are under dispute and vital oil supplies pass through, and in the East China Sea, where China and Japan are at loggerheads over mineral rights and several contested islands.

Furthermore, China, according to a report prepared for former U.S. Defense Secretary Donald Rumsfeld's office by Booz Allen Hamilton, a consulting firm, has developed a "string of pearls" strategy, seeking military-related agreements with Bangladesh, Cambodia and Thailand in addition to those with Myanmar (Burma) and Pakistan. The 13,500-square-mile territory (South China Sea) has also become a platform that China needs to protect southern sea lanes, through which pass 80 percent of its imported oil and tons of other imported raw materials. It could serve as a base for Chinese submarines to have unfettered access to the deep Pacific, according to Tsai, Taiwan's deputy defense minister.

China, with a $1.3 trillion economy growing at more than 9 percent a year, has a defense budget rising by double digits in recent years, jumping to 12.6 percent in 2005 when it hit $30 billion.[24] China’s defense spending is of course just 7 percent of what the Bush government spent for defense in 2005 - $440 billion.

Other sources show, however, that perceptions about China’s military build-up are overblown, saying that the ongoing modernization of the Chinese military poses less of a threat to the United States than recent studies by the Pentagon and U.S. Congress. Both studies exaggerate the strength of China's military by focusing on the modest improvements of specific sectors rather than the still-antiquated overall state of Chinese forces.

The state of the Chinese military and its modernization must also be put in the context of U.S. interests in East Asia and compared with the state and modernization of the U.S. military and other militaries in East Asia, especially the Taiwanese armed forces. Viewed in that context, China's military modernization does not look especially threatening.[25]  

China, admitted Admiral Dennis C. Blair, commander-in-chief of the Pacific Command in March 1999, “is not a military threat to U.S. interests. It will be many years before the People’s Liberation Army presents a major challenge to U.S. forces.” And yet, in that same month, the U.S. Senate voted 97-3 to build a “national missile defense” essentially against China and North Korea, with President Clinton supporting a $10.6 billion budget on it for five years.[26]

Although not officially calling its policy in East Asia as "containment," the United States has ringed China with formal and informal alliances and a forward military presence. Central to the U.S.’ military strategy in East Asia is its system of alliances with Japan, South Korea, Thailand, the Philippines and Australia. It also wants to transform ASEAN into a “multilateral defense cooperation.”[27] With such an extended defense perimeter, the United States considers as a threat to its interests any natural attempt by China to gain more control of its external environment by increasing defense spending. Even without U.S. assistance, Taiwan's modern military could probably dissuade China from attacking. “Taiwan does not have to be able to win a conflict; it needs only to make the costs of any attack unacceptable to China. The informal U.S. security guarantee is unneeded,” says Cato’s Ivan Eland.

It is the U.S. that has increasingly made war preparations directed specifically against China – a strategy that dates back to the Cold War when the U.S. pursued an aggressive “containment” policy since China gained its independence in 1949. Under the Bush administration, the U.S. engages China in a robust trade and investment ties but maintains an aggressive policy of encirclement and cooptation in the field of counter-terrorism in East Asia.[28]

In particular, China feels threatened by the U.S.’ theater missile defense (TMD) system with a possible TMD installation in Taiwan. In 1999, Wang Daohan, a senior adviser to then President Jiang Zemin, reacted to the report about the TMD installation: “It is like playing with fire. That will completely disrupt the current world situation, and instead a new Cold War will appear.”[29]

In a section of the Pentagon’s 2006 Quadrennial Defense Review entitled “Shaping the choices of countries at strategic crossroads,” the document makes clear that the buildup of the U.S. military is aimed at deterring any country from challenging U.S. domination in any region of the world. It warns that Washington “will attempt to dissuade any military competitor from developing disruptive or other capabilities that could enable regional hegemony,” adding the explicit threat that “should deterrence fail, the United States would deny a hostile power its strategic and operational objectives.”

In particular, the document singles out China, describing it as “having the greatest potential to compete militarily with the United States and field disruptive military technologies that could over time offset traditional U.S. military advantages.”

In retort, a Chinese foreign policy spokesperson writing in the China Daily called the references to China in the document “anxiety on the part of the U.S. that borders on the illusionary.”[30] Bulatlat


[1] The China Business Forum, November 2005, “U.S.-China Trade in   Perspective: Asia’s Emerging Union and Implications for the United States.”

[2] “China has major stake in global trade talks, US official says,” Susan Krause, Washington File, Aug. 29, 2006.

[3] John J. Mearsheimer, professor of political science, Chicago University, cited in “Will China’s rise trigger Sino-I.S. confrontation?”, Global Times, November 2005. China’s GDP continues to grow at around 9% or higher in real terms, and its exports growth rates have stayed around 30% for the past three years. China’s trade surplus continues to hit new records – it reached $102 billion in 2005 tripling the $32 billion in 2004. For the first 7 months in 2006 its trade surplus reached $75.95 billion, another 51.9% increase from the same period last year. Prof. Pao Yu-ching, An Analysis of China’s Capitalist Reform, 2006.

 [4] “Chinese President Comes to Washington: What Next for U.S.-China Relations?” Infoline, April 27, 2006.

 [5] Prof. Pao-yu Ching, “An Analysis of China’s Capitalist Reform,”2006.

[6] “Santa Clausewitz, a minor Chinese god,” Spengler, Asia Times, December 21, 2004.

[7]The China Business Forum, November 2005, “U.S.-China Trade in   Perspective: Asia’s Emerging Union and Implications for the United States.” 

[8] Pao Yu-ching, “An Analysis of China’s Capitalist Reform.”

[9] “Santa Clausewitz, a minor Chinese god,” Spengler, Asia Times, December 21, 2004. The result of this mutually-beneficial relationship, Spengler avers, is a Sino-U.S. “duopoly” rather than a “unipolar” world.

10 “U.S., China not competitors in Southeast Asia, State’s Hill says,” Jane Morse, Washington File…date???

 [11] In 1994, the Clinton administration through Defense Secretary William J. Perry defined “a comprehensive engagement policy” with China coupled with military contacts. “Our security posture dramatically improves if China cooperates with us,” said Perry in a de-classified memorandum issued in August that year. Memorandum I-94/18035, “U.S.-China Military Relationship”.

[12] The Sept. 28, 2001 SC Resolution 1373, voted upon seven days after 9/11, adopted wide-ranging anti-terrorism measures including suppressing financing for suspected terrorist networks.

[13] “China issues warning to North Korea,” William Foreman, AP.

[14] Chalmers Johnson, Blowback: The Costs and Consequences of American Empire, 2000, New York: Henry Holt and Company.

[15]After its diplomatic recognition of China under a “One-China Policy” in 1979, the U.S. passed the Taiwan Relations Act that committed U.S. defense of Taiwan and the continuation of military aid and arms sales. The U.S. policy on "one China" has evolved to cover three issues: sovereignty, peaceful resolution, and cross-strait dialogue. First, the United States did not explicitly state its own position on the status of Taiwan in the three communiques, but "acknowledged" the "one China" position of both sides of the Taiwan Strait. Nonetheless, some have contended that the U.S. position, since originally formulated in 1972, in the first of three Communiques, has adopted the "one China" principle and shifted closer to that of the PRC's. Some in Congress and elsewhere contended that President Clinton's statement on "Three Noes" was a change in U.S. policy. Second, successive Administrations have expressed the consistent U.S. stance - in increasingly stronger ways - that any resolution of the Taiwan question be peaceful. Third, the Reagan Administration agreed to "Six Assurances" with Taiwan in 1982, including promises that Washington will not mediate and will not pressure Taipei to negotiate with Beijing. With intermittent cross-strait talks and military tensions in the 1990s, however, President Clinton has urged dialogue and a peaceful resolution "as soon as possible." In July 1999, U.S. encouragement of dialogue culminated in President Clinton's articulation of a new phrase: that U.S. policy has "three pillars" (one China, cross-strait dialogue, and peaceful resolution). “China/Taiwan: Evolution of the "One China" Policy - Key Statements from Washington, Beijing, and Taipei, Shirley A. Kan Specialist in National Security Policy, Foreign Affairs, Defense, and Trade Division, Updated March 12, 2001.

[16] Friends Committee on National Legislation, March 31, 2005.

[17] This drew a strong denunciation from Taiwan President Chen Shuibian, who called the act “a law of aggression.”

[18]Chalmers Johnson, Blowback. The term “irredentism” is taken from the name of an Italian political party of 1878 that sought to reclaim adjacent regions occupied largely by Italians but under foreign control.

[19]In February 1992, China passed the “Law of the People’s Republic of China on the Territorial Sea and the Contiguous Zone,” laying down an exclusive claim to the entire Spratly archipelago, about 324,000 sq. miles of ocean, and authorized the Chinese navy to evict “trespassers” by force.

[20]Chalmers Johnson, Blowback.

21 “China Builds a Smaller, Stronger Military Modernization Could Alter Regional Balance of Power, Raising Stakes for U.S.,” Edward Cody, Washington Post, April 12, 2005.

22 Cody, ibid.  

[23]Cody, ibid. In March 2006 China announced a 14 percent rise in defense spending, to $35 billion. South China Morning Post, Nov. 1, 2006.  

[24]“Is Chinese Military Modernization a Threat to the United States?”, Ivan Eland, Cato Policy Analysis No. 465, January 23, 2003.

[25] Cato analysis, ibid.

[26] Chalmers Johnson, Blowback. In 1999, China, a nuclear power since 1964, had roughly 20 old, liquid-fueled, single-warhead intercontinental-range missiles, whereas the U.S. had about 7,150 strategic warheads deliverable against China via missiles, submarines, and bombers. In 2001, the Bush administration shifted much of its nuclear targeting from Russia to China.

[27] According to Steve Hadley, President George Bush’s national security adviser, the U.S. also considers Mongolia, Indonesia, Malaysia, and Singapore as other “key friends” in its overall security strategy in East Asia. “New Insights into U.S. East Asia Strategy,” Pacific Forum CSIS, Comparative Connections, July 2006.

[28]“Pentagon spells out strategy for global military aggression,” Bill Van Auken, wsws, 9 February 2006.  

[29] Chalmers Johnson, citing New York Times, March 24, 1999.

[30] “The speedup of China’s military modernization has its own logic, which is completely reasonable,” wrote Yuan Peng, vice director of the Institute of American Studies of China’s Institutes of Contemporary International Relations. “It is a necessary step for a major power in a new phase of development, just like the U.S. did at the end of the 19th century and the beginning of the 20th century, when it invested heavily in its naval power.” wsws, ibid.

*This is part of a paper discussed by the author at the conference of the International League of Peoples’ Struggles in East Asia and Oceania on Dec. 11, 2006. It will also be part of a forthcoming book on East Asia today.

Hegemony or Cooperation: Major Contradictions in East Asia Today*
First of four parts

The Korean Peninsula: U.S. Military Aggression and Pyongyang’s Response
Third of four parts

China vs Japan: FTAs, Oil and Taiwan
Last of four parts




© 2007 Bulatlat  Alipato Publications

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