(Mr. Ben Mah, author of America and China, America and the World, America in the Age of Neoliberalism, and Financial Tsunami and Economic Crisis – The End of American Hegemony, is a frequent contributor to this website.)

On the eve of the president’s trip to Asia in November 2010, Aaron Friedberg, China scholar, former Vice President Cheney’s Deputy National Security Advisor and founding member of Project for the New American Century, wrote a somewhat revealing article entitled: “How Barack Obama Became a China Hawk”. In this article, Mr. Friedberg described the reasons for the president’s hardening policy towards China, which has gradually developed since he took office in 2009.1.

     While the president’s November trip to Asia included visits to India, Indonesia, South Korea and Japan, the fact that it did not have Beijing on the itinerary was an obvious snub to China. What drew Washington’s displeasure with Beijing, according to Mr. Friedberg, was “a series of strikingly assertive actions by China.”1. These actions include China’s declaration of the South China Sea to be a “core national interest”; China’s confrontation with Japan over the Diaoyu Islands; China’s restriction of the exports of rare earth elements; China’s refusal to sanction North Korea over the sinking of a South Korea naval vessel and China’s protest over the joint U.S.-South Korea naval exercises in the Yellow Sea.1.

      As a result, Washington formulated a new strategy for dealing with China. An example of this new strategy is Obama’s endorsement of India to occupy a permanent seat in the United Nations Security Council, which according to a senior administration official is more than relations between India and America: “It’s part of a strategy in which China risks seeing the United States forming alliances in its neighborhood, which may not be to Beijing’s liking.”2.

      Similarly, “Mr. Obama’s decision to accelerate the deployment of an American aircraft carrier group to the Yellow Sea for joint exercises with South Korea was meant in part to drive home a message to Beijing. Aware that China doesn’t like any kind of display of American military might in its backyard, Obama administration officials are hoping to change Beijing’s cost-benefit analysis until it decides that restraining North Korea is a lesser evil than seeing more American sailors playing war games outside its door.”2.

      Obviously, Obama’s belligerent stand on the Korean conflict is “in line with an increasingly aggressive U.S. policy in Asia. This has included the U.S. attempt to insert itself into territorial conflicts in the South China Sea, backing Japan, Vietnam and other ASEAN countries against China. Washington’s aim in the region has been the pursuit of a series of alliances and assertions of military power directed against China that stretch from India, Pakistan and Afghanistan to Southeast Asia, Japan, South Korea and Taiwan.”5.

      Obama’s decision to heighten tension over the Yellow Sea preceded his debacle at the G-20 Summit. At the G-20 Summit in South Korea, the United States was severely criticized for Federal Reserve QE2 — quantitative easing program — as the world leaders at the Summit believed this was a deliberate attempt on the part of the United States at dollar devaluation. Dollar devaluation is an American act of default to its creditors, and the major creditor happens to be China. It is also a form of currency manipulation, which the United States is constantly accusing China of.  Ironically, China, the victim of American money printing, has been portrayed as a pariah state in international trade in the U.S. and Western media. 

      Indeed, the value of China’s currency — the yuan or Renminbi has long been the contentious issue in Sino-U.S. relations. As a result of China’s Open Door policy and embracing neoliberalism, welcoming foreign direct investments with open arms, China has accumulated plenty of dollar assets and has become the United States’ number one creditor. The adoption of neoliberalism in China was encouraged by Washington and China’s WTO entry was sponsored and promoted by the United States. American strategists did not expect China to become the number one U.S. creditor; as neoliberal experiences had historically created economic stagnation and developed dependency in many countries in Latin America and Africa. “By the early years of the new millennium, Washington realized that the liberal strategy had failed to block China’s ascent to global power and increasingly turned toward a punitive strategy.”4. As a result, “the U.S. developed a detailed, complex and multi-prong[ed] strategy to undermine China’s rise to global pre-eminence. The strategy involves economic, political and military moves designed to weaken China’s dynamic growth and contain its outward expansion.”4.

       One of the most obvious economic strategies is the clamoring for Renminbi revaluation. The revaluation of the Chinese currency as demanded by the U.S. was allegedly for the purpose of leveling the playing field for U.S. exporters, but it has a more sinister, hidden objective: to erode China’s “competitive edge and weaken its dynamic export industries”4.

       Another economic strategy is to press China for financial liberalization.  Under the slogan of free trade and national treatment for foreign direct investment, Washington has pressed Beijing to open its financial markets, allowing free capital flow. The opening of China’s financial markets will facilitate the takeover of China’s banking sector. “The White House sees the powerful financial sector as the only real lever to capture the commanding heights of China’s economy, through mergers and acquisition.”4. In this regard, Wall Street financial capital has secured the cooperation of the Chinese financial and banking elite for the first stage of privatization under the name of banking reform. China’s banking reform turned out to equate to financial windfalls for many U.S. banks, which have made a killing thanks to China’s banking industry makeover. However, the downfall of Bear Stearns, the bankruptcy of Lehman Brothers, the government rescue of AIG and the entire U.S. banking system have delayed China banking privatizations. Globally, neoliberalism is in retreat. The perception that the predatory, corrupt and bankrupt U.S. banking system was the most advanced and that China should emulate and adopt it as a model for its financial sector has lost credibility in China. 

       Similarly, the fact that China’s banks and other Chinese business enterprises can be bought out by U.S. multinationals while the acquisition of American businesses by Chinese firms have been blocked — even when Chinese bids were higher than competing offers — has exposed America’s double standard  both for free trade and for the concept of national treatment for foreign investments.

       Another example of American hypocrisy is the recent rejection by Sprint Nextel Corp of the bids from Huawei Technologies and ZTE Corp for a billion dollars in telecommunication equipment contracts, despite the fact that their submitted bids were lower than competitors. According to the Wall Street Journal, the bids were rejected “largely because of national security concerns in Washington.”6.But in reality, it was part of a U.S. “China Containment Strategy.”

       However, Washington did allow state-owned China Investment Corp. to invest in hedge funds such as Blackstone and investment bank Morgan Stanley as a minority shareholder when the later was on the verge of bankruptcy.  Allowing this kind of transaction facilitated dollar recycling and helped to create a “speculator culture” in China, and “to weaken the power of productive capital in the state planning apparatus.”4.

      Another weapon of the U.S. “China Containment Strategy” is the launching of an extensive international campaign to demonize China. The campaign has mobilized Western media, Congressional leaders, Federal Reserve and administration officials, American academia and economists to blame China for economic crisis and the decline of U.S. competitiveness. China’s crimes include “unfair competition, low wages, state subsidies, to shoddy quality and unsafe products.”4. The agenda for this “is to facilitate greater U.S. penetration and to limit China’s dynamic overseas expansion.”4. Another purpose is to press China’s policymakers, especially those of neoliberal persuasion, to change policies for the benefit of the United States. “Equally important these ‘critiques’ are designed to unify the business, banking, political and military elite and justify aggressive moves against China.”4.

      Obama’s aggressive actions against China may raise a few eyebrows in both Washington and Beijing. However, Obama’s strategy is not such a big surprise. As presidential candidate, Obama joined the chorus in his election campaign that the United States should adopt a get-tough policy with China on “protection of intellectual property rights, the manipulation of its currency, human rights, or the right stance on Sudan and Iran.”3.

       To be sure, human rights has always been used as a weapon by Washington to achieve geopolitical objectives in her relationship with China, as American academic James Petras stated: “One of the longest standing political ploys is Washington’s human rights propaganda campaign, highlighting China’s human rights violations, while ignoring its own massive offenses and downplaying those of its allies like the Jewish state of Israel. By discrediting China’s internal politics, the State Department hopes to inflate U.S. moral authority, deflect attention from its worldwide long term and large scale violation of human rights accompanying its global empire building and build an anti-China coalition.”4.

      In this global empire building, Washington strategists have long concluded that the future challenger to U.S. lone superpower will be China, and that the competition between the United States and China for the world’s oil supply will be intensified in the coming decades.  Sanctions against Iran are part of the strategy of containment to deny oil to China by disrupting commercial and friendly relations between Iran and China. Accordingly, China was asked to join the U.S. sponsored sanctions against Iran and sacrifice its own interests.

       Similarly, on global warming, China was asked to sacrifice its own interests by abandoning the favorable terms of the Kyoto Protocol in favor of a more costly emission cap, while the U.S. refused to ratify Kyoto and has shown no interest in reaching international accord. Subsequently, China was severely criticized and vilified in the Western media as the main obstacle to climate control.

       However, realizing the challenges of asking China to act against its own interest, Washington strategists came up with the concept of “G-2”, under which China ostensibly will assume a “new role as a global economic superpower and hence as a legitimate architect and steward of the international economic order.”7. China, as a “responsible stakeholder’ in the international system,” should support the Washington Consensus and World Bank and its ideology, all for the benefit of the finance capital in the United States.8.

      Accordingly, the “U.S.-China Strategic Economic Dialogue” initiated by former U.S. Treasury Secretary Henry Paulson was held between the United States and China. Unfortunately, it was too obvious that these meetings were only intended “to extract concessions from Beijing and preempt actions from the Congress.”9.

      After having extracted so many concessions on trade and investment matters from Beijing, Washington is increasingly encountering difficulties gaining China’s cooperation on the issues that are clearly against China’s vital national interests. Consequently, conservative critics of the Obama administration are now calling for a tougher policy on China by applying pressure for the reunification of the Korean peninsula and strangling the North Korean economy. The U.S. military elite have clamored for an increased U.S. naval presence in the South China Sea and the deployment of the U.S. aircraft carrier George Washington in the Yellow Sea.  It is claimed that “A robust and visible reconnaissance and surveillance program off the coast of China” is essential in America’s confrontation with China.2.10.

       Consequently, under heavy pressure for a more militant stand with China, the Obama administration is increasingly taking provocative actions against her and such actions “threatens to turn Northeast Asia and the entire planet into a tinderbox.”5. Coincidentally, the American academic elite such as Martin Feldstein and Paul Krugman all agree that a major war may be needed to lift the American economy out of the doldrums.11. Fundamentally, economic crisis and the growing militarization of the U.S. economy have provided a tremendous impetus for using war as a solution for the present American economic predicament. This surely does not augur well for global peace and stability, especially when the contested parties are nuclear powers. Military confrontation will be disastrous for America, China and people all over the world.

Notes:
1. Friedberg, Aaron: “How Barack Obama Became a China Hawk”,  November 10, 2010  The New Republic
2. Cooper, Helene: “Asking China to Act Like the U.S.”,  November 27, 2010 New York Times
3. Council on Foreign Relations: “The Candidates on U.S. Policy toward China”,  April 14, 2008
4. Petras, James: “War with China. The Dangers of a global conflagration Rising and Declining Powers: The Sin-U.S. Conflict Deepens”,  April 29, 2010  Global Research
5. Auken, Bill Van: “The Korea crisis and the threat of a wider war”,  November 27, 2010  wsws.org
6. Lablin, Joan & al. : :Security Fears Kill Chinese Bid in the U.S.”,  November 6, 2010 Wall Street Journal
7. Bergsten, C. Fred: “A Partner of Equal”,  July/Aug  2008  Foreign Affairs
8. Webster, Graham: “Zoellick on China: The Washington Consensus?”,  May 30, 2007 transpacific.net
9. Chan, John: “U.S.—China Strategic Economic Dialogue underscore sharpening trade tension”, December 20, 2006  wsws.org
10. Pedrozo Raul: “Beijing’s Coastal Real Estate”, November 15, 2010 Foreign Affairs.
11. Hirsh, Michael: “Economists From Both Sides of Political Spectrum Envision Grim Employment Scenario For Years to Come”, October 6, 2010 National Journal