If anyone thought that talking of a ‘new cold war’ with China was overstating the case, the recently announced AUKUS military pact must make them think again. Surely timed to deflect notions of US weakness after its defeat in Afghanistan, this major new multifaceted defence agreement between the US, UK and Australia sees the latter firmly jump into the US camp and the former strengthen and renew its Pivot to Asia through unashamedly militaristic means. The UK is coat-tailing the US as usual, hoping to garner some jobs in nuclear reactor production, and trying yet another gambit to boost the ‘global Britain’ profile.

Just six months on from the publication of the government’s big overhaul of foreign and defence policy – the Integrated Review which included a 40% increase in the nuclear arsenal – this is the UK’s second significant provocation towards China, following on from the UK aircraft carrier’s tour to the South China Sea. Australia has the most to lose from this agreement – China is its biggest trading partner and up to recently Australia has avoided getting too sucked into US strategies against China. Earlier attempts during Bush’s presidency to build a ‘Quad’ against China with Australia, Japan and India, foundered when Kevin Rudd withdrew Australian support, but now Australia is back in the fold.

Billed by the signatories as ‘a landmark defence and security partnership’, it’s partly being sold as a values-driven agreement to support a peaceful rules-based international order (US/UK rhetoric for some time now even when the US was unilaterally withdrawing from fundamental pillars of said order); and its key military focus centres on ‘the development of joint capabilities and technology sharing’, deeper integration of security and defence-related science, technology, industrial bases and supply chains.

What this actually means is that the US and UK are going to collaborate with Australia to help provide them with nuclear-powered submarines. Bizarrely the joint governments’ statement suggests that this will ‘promote stability in the Indo-Pacific’; it looks more likely to massively ramp up tension in the region at a time when cooperation with China – in the run up to COP26 to deal with the climate emergency – should be top of the agenda. Not surprisingly, the Chinese authorities haven’t responded well. It’s also dealt a blow to Britain’s relations with France which already had a contract with Australia to provide them with 12 diesel/electric-powered subs to replace their ageing fleet. That contract has now been ripped up but in spite of comments about delays in production and escalating costs, this is not a military-industrial decision, it is a strategic one, fully entering the US orbit – and being granted access to rare nuclear reactor technology.

Nuclear – whether military or civilian – is always controversial and symbolic, and here it means Australian admission to the top level club; only six countries, all nuclear weapon states, have nuclear-powered subs. It is also an indication by the US of the priority it gives to this growing – fortunately still cold – conflict, and its determination to get Australia onside and keep it there. T he nuclear component of the subs lies in the fact they are powered by onboard nuclear reactors. They won’t have nuclear weapons – and the Australian PM Scott Morrison has been quick to insist that Australia will not be pursuing either nuclear weapons or civil nuclear capacity.

Beyond the strategic nightmare created by AUKUS there is much that is not yet clear. Will the Australians build the subs or buy them in? How will the highly enriched uranium necessary to fuel the reactors be provided? There is no doubt that the provision of reactors and the technology they require is the most significant factor here.

Reactor technology is highly prized and top secret, as the uranium used for the reactors is enriched to 95% – weapons grade. The US and UK cooperate on this under the terms of the Mutual Defence Agreement, the world’s most extensive nuclear sharing agreement which first came into force in 1958. Renewed by parliament every decade, the last time in 2014 allowed for greater cooperation on reactor technology. If the Australians were going to build the reactors themselves they would need US technology and expertise and a nuclear-sharing agreement with the US of their own. So the simplest solution would be to buy them in; Boris Johnson’s comments so far about jobs suggest he will try and get reactor orders for the Rolls-Royce factory in Derby. Maybe he will also try for the decommissioning contracts for the spent fuel that eventually needs disposing of. Presumably it will add to the nightmare build up of radioactive waste at the dangerously unsafe Sellafield complex in Cumbria. Highly enriched uranium is stored there but no safe long-term storage facility has yet been found.

Boris Johnson said in Parliament today that the AUKUS agreement did not contravene the Nuclear Non-Proliferation Treaty – that this is for nuclear power not nuclear weapons so the restrictions do not apply. But the fact is we are talking about providing weapons grade enriched uranium to a non-nuclear weapons state to power military submarines undertaking provocative action in a very fraught area of the world.

The NPT does not stop the exchange of civil nuclear technology but it stipulates it must be ‘for peaceful purposes’. Sending war-fighting subs to potential conflict in the Indo-Pacific region is hardly that. This is yet another breach of international law by our government, hard on the heels of the nuclear arsenal increase. It’s time to stand up and oppose the government’s reckless and illegal foreign policy.

This article was first published here

Through his music and life, Mikis Theodorakis, the incomparable composer, everlasting fighter, partisan, communist and activist brought new meaning to freedom and political awareness. Theodorakis remains a symbol of the fight for freedom, democracy and social justice as well as a vibrant reminder of the battle against oppression and despair, as well as resistance.

The first time Theodorakis was imprisoned and tortured for his ideals he was only 18 years old, as a resistance fighter who served in the Greek People’s Liberation Army ELAS in the German occupation of Greece. During Greece’s bloody civil war, he was deported multiple times for his communist profile and sent to the camp island of Makronisos. After his release he went to Paris where he studied music and produced his first compositions, earning international appraise. Against the political circumstances, he returned to Greece in 1960, where he was tortured and detained again by the military junta that prohibited his music, which was always deeply political. After his friend Grigoris Lambrakis, a left-wing politician, was slain during a peace march in 1963, Theodorakis entered politics. In 1968, he was taken to a prison camp. Despite his confinement, Theodorakis was able to smuggle out cassette recordings and sheet music.

In 1970, Theodorakis moved to Paris. He met Pablo Neruda and Salvador Allende in 1972. After the September 1973 coup against Allende, Theodorakis’ setting of the “Canto General” became a hymn of the Chilean resistance. He returned to Greece as a hero and a political giant after the dictatorship toppled in 1974. He was a delegate for the newly legalized Communist Party and remained politically active throughout his whole life, joining protests against austerity in the 2010s and contradicting the neo-fascist “Golden Dawn”.

On behalf of the Party of the European Left, we extend our deepest condolences to his comrades, friends and family.

Today the Taliban has re-entered Kabul, almost twenty years since the US-led intervention in 2001 drove it out. The US-trained Afghan army has melted away despite numerical superiority and a new Taliban government will no doubt emerge in short order.

The US-led war on Afghanistan has been an unmitigated failure. President Biden has conceded that after nearly 20 years of war it was clear that the US military could not transform Afghanistan into a modern, stable democracy. In fact, they created a corrupt puppet regime with negligible popular support. The truth is, the US should not have been there attempting regime change in the first place.

So let’s name the US/NATO departure from Afghanistan for what it is: a humiliating defeat after twenty years of war, regime change, occupation and brutality. According to the Brown University Costs of War study, this war has resulted in over 240,000 deaths, and countless more injured, displaced, suffering from mental health problems, and with lives blighted by poverty and deprivation. A relaxation of US rules governing air strikes in 2017 has led to a massive increase in civilian deaths in recent years, and unexploded ordinance continues to kill, injure and maim.

The monetary cost of the war has been phenomenal. The US alone has spent over $2.26 trillion to date, and that excludes future costs of interest payable on money borrowed to wage the war, as well as lifetime care for US veterans of this war.

And after all this expenditure of blood and treasure, Afghanistan is still one of the poorest countries in the world. Around 50% live in poverty and the poorest areas, largely rural, are those where the Taliban is strongest. The population needs clean water, electricity, infrastructure, yet the so-called aid money that has gone to Afghanistan has largely been used to train Afghan troops or been siphoned off by corrupt members of the Afghan elite.

One of the tragic human consequences has been the millions of people displaced or living as refugees outside of the country because of the violence and danger that they face. The United Nations High Commissioner for Refugees reports that 2.7 million Afghans have already been displaced this year because of the violence, and warns of “a looming humanitarian crisis in Afghanistan as the escalating conflict brings increased human suffering and civilian displacement”. The UK was complicit in this war, the UK helped create this humanitarian disaster and the UK must not send refugees back to Afghanistan. It is not a safe country to return to and will not be so for years, perhaps decades to come. The time has come to look at priorities – just a fraction of the money spent on military intervention in Afghanistan would make an enormous difference to Afghanistan and its future; reparations must be made, to support growth, to rebuild infrastructure and diversify agriculture away from opium growing. Twenty years of ‘nation building’ by the US and its allies have failed to eradicate the opium trade, or provide clean water and electricity for all.

It gives me no pleasure to say that what has happened in Afghanistan is exactly what the anti-war movement foretold in 2001 and that today’s humanitarian catastrophe is a direct result of the political choices of Bush and Blair at that time. After the attacks of 9/11, the US pursued regime change in Afghanistan. They got involved in a long-running civil war by backing the Northern Alliance against the Taliban, intending to install a friendly puppet regime. But they clearly had not read their history books. Foreign forces with their own agenda trying to impose an unpopular government on another country never ends well, as centuries of colonial history demonstrates. Every people wants to determine its own destiny not have it decided by war criminals in the White House or 10 Downing Street, those who saw themselves as gods to decide the fate of millions. Maybe Blair didn’t look at the history of UK intervention in Afghanistan. Maybe Bush didn’t reflect on the lessons of the Vietnam war. Now, 20 years on, it’s time to acknowledge that US and NATO forces should never have been in Afghanistan. The new propaganda developing in the media, that the withdrawal is a mistake and may lead to further terrorist attacks in the west, is wholly to be rejected and condemned.

It is political and military intervention over decades, if not centuries, that has given rise to these problems, in Afghanistan and internationally. This was widely recognised after the Iraq war and there can be no going back to a rehabilitation of the notion of western intervention being driven by humanitarian concerns. Blair’s concept of ‘humanitarian intervention’ has been roundly trashed: it was never any more than window dressing for regime change in the interests of western powers. It’s time to stop seeing Afghanistan as a pawn on a big strategic chessboard, the Great Game of former times. The challenges facing Afghanistan may seem insurmountable, but in large part they have been brought about by the US and NATO and they cannot be part of the solution. The truth is, military intervention has been a disaster and it offers no prospects for the future.

This article was first published here

As a tribute to Bobby Sands and the other hunger strikers we are proud to publish for the first time a letter that Bobby sent to Pat Arrowsmith. Well-known as a peace activist, Pat has been a strong supporter of the fight for Irish unity for decades. The letter below was written in 1979  during the so-called dirty protest when republican prisoners in the Maze demanded that they be treated as political prisoners. Their political status category had been withdrawn by the Labour government in 1976. Keiran Nugent who was the first Republican convicted after the withdrawl of special status began a blanket protest. He was joined by other IRA and INLA prisonerswho refused to wear prison uniform.

Pat Arrowsmith

Pat Arrowsmith who is 91 on the 2nd March this year has herself been imprisoned on numerous occasions for taking direct action in the cause of peace and justice. From the early Direct Action Movement, the Campaign for Nuclear Disarmament and the Committee of 100, through to the campaigns against army recruitment, against the wars in Vietnam and Iraq, and for lesbian and gay rights, she was a founder of the Anti-Nazi League and has worked tirelssly for social justice. She has stood for parliament several times on a programme of ending the war in Ireland and organised the work of the Uinted Troops Out Movement. She also participated in support for the H Blocks by taking action herself when arrested. She was force fed while in prison. Sands wrote to Pat in 1979 (see the letter below) to thank her for her work and ask for her help for support for the Hunger Strikers.

Election poster

He was 24 at the time and already a leader. Bobby Sands and the other Republican prisoners sent many letters, each painstakingly written on minute pieces of toilet paper which were then folded multiple times and smuggled out of prison. They repeatedly sought support from the British labour and trade union movement. That support was sparse in coming but there were notable exceptions, Jeremy Corbyn and John McDonnell being good examples, but none fought for the rights of the Hunger Strikers as much as Pat.

We salute Bobby Sands, as he said, ‘our revenge will be the laughter of our children’. It truly is. And we wish Pat a happy 91st birthday.

17/8/79 H Block 6

Hi ya Pat!

Bobby’s letter to Pat

How are ya? A bit of a surprise for you no doubt receiving this letter. But as I’m sure you know already by the cut of the stationery, where its origin is – H.Block. Anyway Pat I’m Bobby Sands POW H Block 6 Long Kesh. I thought it may be a change for you to hear first hand from a Blanketman on H Block. So here I am. Anyway Pat things are very much the same here, torturous. We’re still lying naked save for the bit of torn, ragged blanket upon damp pieces of foam for beds, it’s very cold already, it being only August. Our appearances seem to become more ghostly each day, we’re very thin probably explained by the meagre amount of inedible food that we get. Still being hosed down, nearly every night by the screws. it’s been going on for so long now! Believe it or not one can almost adapt to it? The cell windows also have been blocked up stemming the flow of air, we are almost three years on protest now many of [us]are physical wrecks due to the conditions that we live in with no exercise or fresh air. The usual searches, wing shifts and beatings continue, forcible bathing, hosings down etc, etc. But still we resist and they torture. An interesting point I think you might like to hear is that possibly the biggest percentage of screws here are ex-soldiers, ex-RUC men, UDR etc, I think the large wage incentive and comparative safety of living inside the prisons, being preferable to walking the streets of Belfast is the attraction. But I suppose the work is all the same oppression, besides it’s much easier in here to get away with it. Anyway Pat we heard there was 10,000 at the London march and we were quite pleased to hear it, also after hearing the Reports from the Belfast March the morale is quite high. Well we’re pushing as best we can on the propaganda front, I’ll include a few wee things that perhaps you could use, if you can Pat drop us a wee note and let us know how things are going for yous, you could send it through H Block info Bureau 170 Falls Road, Belfast. Also Pat if you could, could you enclose the names and addresses of anyone you think would like to hear from us POWs in H Blocks, or anyone who you think it would be worthwhile to write to if only to inform them of H Block and Ireland, or to seek their help, whether they be approachable or unapproachable. Every little bit helps as they say, and at the minute that could not be more true because if things continue here someone of us will surely die. Anyway I’m glad to get this chance to write to you and if at all possible I will do so again if you don’t mind to let you know how things are here, I would like also to thank you and all the members of U.T.O.M. for the great work that yous have done in the past and continue to do. Perhaps victory shall be ours soon. Sealadaigh abu, See ya!

Bobby Sands Prisoner H Block.

This letter is being donated to the Bobby Sands Trust.

István Mészáros certainly has an important and prominent place in the recent history of Marxism – mainly because in his work he never yielded to the temptation to submit to the siren voices of bourgeois philosophy. Unlike many others, he never sold his soul to the devil – as Lukács called the spirit of capitalism, a system that is always laden with fascism – right up until today.

Just as István knew exactly that it was necessary to sail between the Stalinist scylla and the capitalist charybdis, he already realised at the beginning of his career, right after 1956, what salvation could be. Salvation is to go Beyond Capital – the title of his seminal work. He knew exactly that this was the fundamental problem – the problem of socialism-communism. The loss of this perspective would lead to the death of Marxism, that is, to the death of humanity.

„Removing” the anti-capitalist perspective from the agenda, and realizing the right-wing alternative, has always signaled the historical defeat of the social-democratic-socialist-communist left throughout any region of the world system: in 1914, the collapse of social democracy; in 1919-1920 the defeat of the socialist revolutions; the fascist response to the world economic crisis of 1929-1933; Pinochet 1973; the regime change 1989 in Eastern Europe, or the pandemic today, etc. all indicate that Mészáros, the disciple of Lukács, was on the right path throughout his life, working on the philosophy and practice of humanist-self-governing socialism.

He was a philosopher who was deeply convinced that the true renaissance of Marxism after all depends on the global rise of the workers’ movement. This spirit of internationalist solidarity has also been in crisis in particular since the collapse of the Soviet Union. The causes leading to collapse are well known today.

But we also know that one cannot step into the same river twice.

In all his life Istvan remained faithful to the international tradition of Marx, Lenin, Rosa Luxemburg, Gramsci, Lukács and the Latin-American revolutionary spirit of Castro, Che Guevara and Chavez.

The fate of Marxism ultimately depends on the fate of these movements whose philosophical component is Mészáros’s work. As István Mészáros liked to paraphrase Rosa Luxemburg: socialism or the destruction of humanity.

Here, in Eastern Europe, today we are closer to the completion of the second half of the alternative. So there is reason to remain faithful to Mészáros’s work and Marxism.

Can China do much to fight back against the power wielded by the US in the world economy? At first sight, that looks unlikely. China is big, but world trade is conducted in dollars, and the US has economic, political and military influence across the globe. The usual result of a tally of US might is that its position as hegemon is unassailable. But that would overlook how measures of its strength depend upon the world staying in the form that US power has created since 1945. If it doesn’t, then these will not count for as much. As one might expect, China has been responding to US attacks, and the outcome is likely to foment a split in the world economy.

——-

Imagine you wanted to travel from one city to another, but the train company wouldn’t sell you a ticket. Neither would the bus company. Then you were not allowed to buy or hire a car. And anyone who sold you or lent you a bicycle would be fined, or would face imprisonment. With due allowance for analogy, that is similar to what has happened to Cuba, Venezuela, Iran, North Korea and anyone else that the US does not like.

Woe betide you if you are on the wrong side of the US. Then you will find it very difficult to ‘travel’ in the world economy, that is to have any trade or financial dealings. It is not only the sanctions the US imposes; these are also followed to varying degrees by its allies in Europe, Japan and elsewhere. Could the same thing happen to China? It already has, but so far only to a limited extent.

I begin by discussing important dimensions of US power in the world, with a focus on the economic, commercial and financial aspects. I will not deal with the mountains of US weaponry and its means of intimidation with worldwide military bases, although these are significant. The remainder of the article deals with how the rise of China is reshaping the world economy and acting as an alternative focal point to the US.[1] Many countries are paying attention to this, even if the ‘western’ powers do not like it.

Economy & trade in the US-China balance

In the past few years, the Trump-led US administration has stepped up anti-China moves. Even if Trump does not get re-elected in November, this direction of policy is not likely to be reversed by the Democrats. We have seen higher tariffs on China’s exports, attempts to block its companies from receiving any US-made (or designed) products, particularly in the technology sphere, as well as pressure on US allies to exclude Huawei and other important Chinese companies from their domestic markets on supposed ‘security’ grounds.[2]

China’s importance in the world economy means that these exclusion tactics cannot easily be extended. Although the US administration has trumpeted, so to speak, a new objective to cut China out of the supply chains that its big corporations have profitably been using for decades, even the ‘great again’ America must know that this would take many years to achieve.

The US is the world’s biggest economy. With a population of some 328 million people, its GDP in 2019 was $21,439 billion. China has a much bigger population of around 1.4 billion people, but a smaller GDP, estimated at $14,140 billion. China is nevertheless number two in the world, and would be a little bit closer to the US when Hong Kong’s $373bn is added to the mainland China number. Both countries have huge domestic markets of interest to foreign companies, and each has a relatively small volume of international trade when compared to GDP, giving their domestic economies some insulation from the vagaries of the world market. China and the US are the biggest two global exporters and importers of goods, but China is far ahead on exports and the US leads in imports.

A Bank of England report included an interesting chart of the international trade in goods, showing how China was bigger than the US in trade with Asia and South America, and the US was bigger than China with the rest of North America and with Europe. Unfortunately, Africa was left out of account in this chart, but China’s direct trade with Africa in 2019 was more than three times larger than that of the US.

China’s importance in international goods trade, 2018

The trade pattern shows there are already different relative strengths of the two countries in relation to the rest of the world. Geography goes some way to account for that difference, but one also has to take note of how US companies export from outside the US – including from China – and that many products from China will contain US components. China has a far smaller volume of foreign direct investment and ownership of foreign companies, so its role in world trade is overstated when compared to the US by this simple country-to-country trade picture.

FX power plays

US economic power in the world is shown most easily in the foreign exchange market. This comprises a multitude of transactions, usually across borders, for goods, services and flows of money to buy and sell equities, bonds, commodities, real estate and so forth. Most internationally traded commodities, like oil, copper, wheat and gold, are priced in terms of US dollars, as are many industrial goods like aircraft and chemicals, let alone weapons and illegal drugs. Many countries also have their own currencies directly tied or more loosely linked to the dollar, nearly all central banks hold reserves of US dollar-based securities, and all international companies have dollar bank accounts. As a result, the US dollar is involved in 88% of all exchanges between one currency and another on the international market.[3]

This gives the US government more power than you might think. If a person or a company receives money from selling, or pays money to buy something, then that money has to shift between the bank accounts of the buyer and the seller. When that money happens to be US dollars, the transaction has to go through the US banking system, perhaps indirectly, even if both the buyer and the seller are not located in the US. So, if the US government does not like you, your company, or your country, it can block your ability to use the US banking system.

That would exclude you from the usual channels of world trade and international business transactions. There may be other ways to avoid the dollar entirely and get a transaction done, but these will likely be more costly. And they will also run the risk of the US government using other means of intimidation – for example, when it levies a fine on any bank that processed a deal with you and threatens to stop that bank from operating in the US. This is one way in which the political objectives of the US administration are advanced by its economic power and influence, with no guns needing to be fired.

The centre of gravity

Not only is the US dollar by far the most widely used global currency, the US also has the biggest markets for financial securities, ie for bonds, equities, futures and options contracts.[4] US markets are the centre of gravity for world capitalism. Even though the bulk of transactions in such markets are done within the US itself, the linkages in the global system mean that they filter through quickly into other countries. That is why financial news reports focus most on policy decisions by the US central bank, the Federal Reserve, and the ups and downs of the US stock markets usually have knock on effects elsewhere.

The New York Stock Exchange is the biggest equity market by far, with a capitalisation of nearly $23,000bn at the end of 2019. Nasdaq, also in New York, was the second largest, at nearly $11,000bn capitalisation. Next in line was Japan’s Tokyo Stock Exchange, at a mere $5,700bn, with London at less than $5,000bn.

It is only when China’s three stock exchanges, in Hong Kong, Shanghai and Shenzhen, are taken together that they come anywhere near the US. At the end of 2019, their total market capitalisations amounted to around $10,500bn. However, the Chinese exchanges do have a slightly higher number of corporations listed, some 5,900 compared to a little over 5,300 in the two US markets.[5]

The reason for considering these things is that they are not narrowly financial. For example, a company’s market capitalisation – the total value of its shares – indicates the potential leverage the company has in the broader market. A higher capitalisation means that it can more easily borrow funds from banks, issue bonds itself to get funds, or use its own shares as a means of payment in its takeovers of other companies. Microsoft and Google stand out here, each having done more than 200 takeovers of actual or potential rivals, or of companies that will help them build up a monopolistic position in the market.

It is mostly US companies that figure at the top of the rankings for market capitalisation. In recent years, it has been the Big Tech corporations like Apple, Amazon and Microsoft, each having a number over $1,000bn. China’s Alibaba and Tencent are the only two non-US companies in this top rank, but with valuations of half that of the largest US corporations.

Financial markets magnify US economic power. Not only does the US stock market present its corporations with many billions of market value, that value is also denominated in US dollars, a currency readily acceptable in most of the world. In global terms, it is ‘real money’. Corporations wanting to takeover another will find it easier to do so with US dollars than euros, Japanese yen or sterling, let alone Australian dollars or Norwegian kroner. Apart from its size, liquidity and access to funds, that explains the attraction for companies of listing on the US equity market.

China and the US dollar

The US authorities run access to the dollar, especially the Treasury and the Federal Reserve central bank. So why is it that China, seen by the US as its most dangerous antagonist, has let its economy be dominated by dollars?

First, if China wanted to operate in the world economy, it had little choice 30-40 years ago but to accept the existing structure of world trade and finance. Asia’s economies in particular were, and still are, bound up with the US dollar, through close ties of their currencies and through flows of trade, investment and loans. China has also for a long time followed a policy of keeping its domestic currency relatively stable versus the dollar, even in the wake of the severe crisis that hit emerging markets in the late 1990s. This, along with capital controls, helped keep its economy growing steadily by curbing one source of potential instability.

Second, one method of limiting the impact of possible capital flight is to build up foreign exchange reserves. If foreign investors have assets in China, whether through direct investment in factories, in buying equities or debt securities, then little could be done about the domestic effect on market prices if they sold those assets. But this would not lead to a serious shortage of funds or a collapse of the currency if China’s central bank could sell dollars it already had to counter these flows.

This was an important rationale behind China boosting its official foreign exchange reserves from just $5bn in 1994 to a massive $3.84 trillion by 2014. Some reserves were shifted into state-sponsored purchases of foreign assets (often done using US dollars), some into covering the bad loans of domestic banks, some into offsetting downward pressure on the value of China’s currency in the FX market.

That has still left what may look like an extravagant volume of reserves, totalling $3.1 trillion by end-June 2020. However, such funds have been required on a ‘safety first’ policy.

Consider that China has received a large volume of foreign investment inflow. By the end of 2018, the cumulative amount was $2.8 trillion of direct investment in China, $0.7 trillion in equities and $0.4 trillion in China’s debt securities. Not all of this near-$4 trillion is at risk from capital flight – a chunk of it will also come from Hong Kong – but how much might be vulnerable is unknown. China also has foreign assets of its own that could be sold if necessary: $1.9 trillion in foreign direct investments, and roughly $0.5 trillion in foreign equity and debt securities. This reckoning puts in perspective what otherwise looks like absurdly big foreign exchange reserves.

If anyone thought that a country’s FX reserves had much to do with its international trade in goods and services, the previous figures should put paid to that. Or contrast what happens when you are not as much at the mercy of a potentially destabilising flow of funds. The US has foreign exchange reserves of just $129bn, less than 10% of China’s.

China’s dollar holdings at risk?

Close to half of China’s foreign exchange reserves is held in terms of US dollars,[6] from bank accounts to US Treasury bills and other interest-bearing securities, to gold.[7] The rest is held in other currency denominations, especially the euro. Not just the central bank, but Chinese state agencies, as well as non-state companies and investors, also hold US securities and dollar bank accounts, as well as having dollar liabilities. Could the US government seize China’s dollar assets, or limit China’s access to them?

If seizure of China’s assets looks implausible, consider what has happened to Venezuela’s gold reserves held in the Bank of England’s vaults, or to payments that have long been overdue to Iran! The US could, in principle, also say that the security certificates owned by China – often held in the big US-based custodian banks like Bank of New York Mellon, State Street, JPMorgan Chase, etc – are now invalid pieces of paper, or computer registered items, which belong to an enemy state and now will not be recognised. That would be an extreme measure, also undermining the US ability to attract further funds and investment, so it is unlikely. Such things are usually only done to ‘little’ countries to show them who is boss. But it remains a risk that China’s policy has to manage.

Over recent years, there has been lots of speculation that China could reduce its dollar risk by selling the Treasuries and other US securities that its government and companies own. This would be a foolish thing to do quickly on a large scale, since the prices of the securities could fall in response.[8] Much more importantly, it would also remove the easy access to US dollar funds that China has, and will continue to need, given the dollar-dominated global financial system. What China’s authorities have done instead is to cut back new dollar exposure and quietly offload dollars in the market.

A more comprehensive way of reducing the risk that China faces from US sanctions would be to build another economic, commercial and financial network. Over the past decade, that is exactly what China has been doing.

Your money is no good here

Almost all of the measures used to highlight US economic power depend upon a link to the dollar-based system, for example, the dollar’s domination of the global FX market, the huge capitalisation values of US corporations, and the scale and influence of US financial markets. But what if something shakes the foundations of this power and the global system begins to take on a different form?

Up to now, China’s rise has been evident in production and trade figures. By comparison, its development in the more financial sphere has been limited, but let’s take a look at some of these numbers and what they mean.

The US dollar rules the FX system, with 88% of the $6.6 trillion daily turnover involving the dollar on one side of the transaction. By comparison, even the euro is only at 32%, and China’s currency, the renminbi, is at just 4%.[9] Yet, 38% of the total volume of FX trading is between the dealing banks themselves, and 55% is between banks and other financial institutions, including 9% with hedge funds and other speculators. Only 7% of FX trading is with non-financial firms! What would happen if international financial dealing were less important, especially in US securities? This calls into question the solidity of the dollar’s pre-eminent position in FX markets and in the world at large.

A similar thing applies to the financial power of big US corporations. For example, with a market capitalisation of around $1.6 trillion each in mid-July, it would seem that Amazon, Apple and Microsoft can do pretty much what they like: buy up any budding rival company, run a predatory pricing policy or extend their monopolistic positions further in other ways. But just as a company’s share price can collapse when its prospects no longer look as rosy as before, so can its apparent financial power if it is not able to operate as it wants and finds its markets cut off.

So far these things have not affected the big US corporations very much, although they have faced more constraints than they would like in China’s domestic market. They have not been able to compete well with the domestic champions Alibaba (e-commerce, payments systems, finance), Baidu (a search engine) and Tencent (various operations, from video games to e-commerce, to finance). The boot has instead been on the other foot, as China’s big companies have been edged out of the US and face restrictions in the markets of US allies. Nevertheless, that could change if the US-dominated structure of world markets changes, a development that is well under way.

World in flux

China has prepared itself against US hostility for years. That didn’t take a lot of strategic insight, given the numerous reports to the US Congress complaining about the Chinese ‘threat’ – ie the threat to US hegemony in the world economy, not simply a military calculation. Three international projects have been key: the ‘One Belt One Road’ project launched in 2013, now called the ‘Belt and Road Initiative’ (BRI); the Asian Infrastructure Investment Bank (AIIB), launched by China in 2013-14, and the BRICS Development Bank, now called the New Development Bank (NDB), proposed in 2013-14 and starting up in 2015.

The NDB is headquartered in Shanghai, and initially had enthusiastic support from all its founding members, Brazil, Russia, India, China and South Africa (hence BRICS). They account for 20% of world GDP and 40% of the world’s population, and the NDB looked like it was going to become a big player in development finance. But little activity seems to have taken place in the last couple of years, although there have been important, separate bilateral deals between China and Russia and between China and Iran.[10]

At least partly, this has been due to renewed tensions between India and China, the latest being over their shared border in the north-west of India and India’s ban on the use of 59 Chinese phone apps, including TikTok. The election of Bolsonaro in Brazil, who has criticised China’s investments in the country, is another factor. More importantly, in recent years both India and Brazil have come more under the influence of the US and more anti-China in their policy stance. Bolsonaro has even tried to emulate Trump in this regard, as he has done in his disastrous handling of the coronavirus pandemic.

The Asian Infrastructure Investment Bank (AIIB) has had a more active time, and it now has more than 100 member countries. Not surprisingly, the US did not join, but several of its close allies did, including the UK and Australia. It is a moot point whether the latter were defying the US, or whether they saw joining as a means of keeping an eye on what China was up to – apart from also not wanting to be on the outside to tender for any new contracts. China accounts for nearly 30% of the AIIB’s capital of $100bn, and for 26% of the voting power. Since 2016, this bank has financed a number of power, energy and road projects in the Philippines, Bangladesh, Pakistan, India, Indonesia, Egypt, Turkey and elsewhere.

Belt and Road

The Belt and Road Initiative is a much more serious plan from China. It has involved more than 130 countries in its projects, and some 30 international organisations. The basic idea is to develop ports, shipping lanes, roads and other infrastructure, including high voltage electricity grids, in a vast enterprise spanning the next 30 years.

The plan’s scope can be seen in the following image, where its routes run all around Asia and Europe and extend into East Africa. It could be considered the beginning of a single market area, but it is nowhere near that yet. Although trade, investment and transit arrangements have been made with other countries along the routes, those countries may often have a cautious approach to dealing with China.

Where the Belts and Roads go

Source: Ewa Oziewicz and Joanna Bednarz, ‘Challenges and opportunities of the Maritime Silk Road initiative’, October 2019

Europe, in particular, is wary. Not only because the relevant powers are not used to a ‘developing country’ having so much leverage, but also because they have been within the US sphere of influence. Yet they are growing worried about that, given Trump’s unilateralist ‘America First’ approach that has also targeted their industries for extra import tariffs, and their fear of the role of US Big Tech corporations. While they have joined in some moves to curb Chinese companies, this has been only to a limited extent so far.

As the political leaders of the European Union, Germany and France will have to make up their minds which way to jump. Yet that process will take some time to play out. For the time being, they are working on trying to cohere the EU itself as the UK leaves, and they hope that the EU can play the role of being an independent actor in the world economy.

The UK, ex-EU and ex-much else, is far more tied to the US. It has legions of political figures and economic interests integrated with the Anglosphere global set up, from the UN Security Council, to military cooperation, to the ‘Five Eyes’ spy network, to the rules applied to finance and trade at the BIS, IMF and WTO, to deluded hopes for a special Brexity relationship with the US in the future. These things will weigh on British decision-making, and the resulting disarray in and confusion of an arrogant imperial power should be amusing to observe.

The Belt and Road project is very important for China, and opponents can easily cast it as simply a tool with which China secures safe routes for its exports and imports. It has also had negative media coverage because of signs of unequal deals, projects that have led to large indebtedness for the country concerned, or projects in which a commercial port is claimed to be a cover for a potential Chinese naval base (as in Sri Lanka), or potential Chinese takeover and ownership when the debt cannot be repaid or serviced.

Evidence I have seen points to a more positive assessment. At least some of the problems with projects have been due to local corruption as much as to any Chinese misdemeanour. It is also worth noting that China’s infrastructure development plans often include building schools and hospitals as well as improving energy supply. The BRI should act to integrate more isolated areas into the world economy, greatly speed up logistics, travel and transport, and help these regions grow. It is not in China’s long-term interests that cooperating regions and countries become mere servicing wastelands.

The Xinjian crossing

The BRI’s routes traverse areas in which US imperialism has long sought to gain influence, many of which were formerly inside the USSR – including Kazakhstan, Uzbekistan, Turkmenistan and Georgia – and also Iran and Russia itself. One area along the route that has been prominent in the news media recently is Xinjiang in north western China.

Xinjiang, or to give it the official title, the Xinjiang Uyghur Autonomous Region, is home to around 25 million people, of which 45% are of the Uyghur ethnic group, and many of these are Muslim. It is China’s largest natural gas producing region, and has been the locus for many attacks by Islamic separatists, especially since the 1990s. Plausible reports claim that this was a ‘blowback’ from previous Chinese arming and training of Islamic guerrillas to fight Russia in Afghanistan in the 1980s. China, along with Pakistan, Saudi Arabia and others, cooperated with the US CIA in this period, and trouble brewed for China in this region when the guerrillas came home.

The US, UK and other western powers have a long history of using Islamic militants to do their dirty work of political disruption and destabilisation, even though it often comes back to bite them. Just think of Osama Bin Laden and the support the US also gave his organisation to attack the Russians in Afghanistan. Or the British support for Islamic militants in Egypt against Nasser and in Libya against Gaddafi.[11] It is therefore no surprise that the US has been heavily involved in promoting Uyghur separatists, and that western news media have been full of stories about Chinese ‘concentration camps’ and brainwashing centres for Uyghurs.

BRI & the Xinjiang Region

Source: World Affairs blog, see footnote 12.

It would take too long and be too off topic to cover this in more detail, but my basic view is this. China has not been kind to separatist forces in Xinjiang and may well have clamped down on them harshly. It has also encouraged Han Chinese to move into Xinjiang. But there is no evidence of actual or cultural ‘genocide’ of Uyghurs and the region has even had some autonomy from strict regulations imposed elsewhere in the country, for example, on population and family policy. The western media view of all this is readily available; for an informed alternative view, I give some sources in a footnote.[12] Surely, anyone with any sense would see that there could not possibly be a ‘Save the Muslims’ motive behind the western propaganda about Xinjiang.

Hong Kong less important for China now

As the US anxiety and near-hysteria about China has grown, another opportunity has arisen for mischief – in Hong Kong, especially since early 2019. There have been widespread protests in this ‘special administrative region’ of China against the introduction of laws that would increase mainland China’s authority and potentially suppress dissent and opposition to government policy. Although led principally by students, the protests clearly had support from a large section of the population of Hong Kong.

Beijing was obviously none too pleased with this, and its paranoia alarm bells rang loudly when some demonstrators carried US flags and called for the US to impose sanctions on Hong Kong to force China to drop its proposals. (The US has now done it.) With the CIA-backed National Endowment for Democracy supporting the protests and with Joshua Wong, one of the leading students, cosying up to arch reactionary and regime-change interventionist, US Senator Marco Rubio, the stage was set for a Chinese clampdown.

China’s political system is authoritarian, but one should not fall for the hypocrisy of western powers lamenting the threat to a tradition of democracy in Hong Kong. Prior to UK talks with China in 1984 about the handover of Hong Kong in 1997, there was no sign of democracy, but instead an oligarchic Legislative Council, an advisory body to the British Governor. Full elections to this Council only began in 1995. So ‘democracy’ began to be introduced only just before Britain was going to lose its colony after 99 years.

What will be China’s policy towards Hong Kong now? To answer this question, it is worth noting the role it has played in relation to China.

When it was a British colony, Hong Kong specialised as an entrepot centre in Asia, with a large port operation and a big financial sector. As China grew as a global production base, particularly from the 1980s, Hong Kong also thrived as the ‘western’ gateway into China, with booming cross-border deals. In turn, China used Hong Kong to gain experience of international markets, from how best to run a port to how to manage banking and finance.

Hong Kong is now less important for China than it might seem. Its GDP is less than 3% of mainland China’s, and its 7.5 million people could be seen as barely a rounding error compared to China’s total. It is nevertheless politically inconceivable that China would allow Hong Kong to become fully ‘independent’ or to secede. In the event of continued protests about rule by mainland China, a much more likely policy would be to slowly run down the remaining economic reliance China has on Hong Kong. This is no doubt on the minds of some Hong Kong residents, not all of whom are anti-Beijing.

Hong Kong’s population has significantly higher living standards than the average in mainland China, and US dollar millionaires make up a surprising 7% of the population. Such factors will have influenced the protest movement in Hong Kong, and there have also been many signs of locals resenting mainlanders. Some of the latter have been attacked for supposedly being Beijing loyalists; others have faced opposition from locals who felt their presence was driving up prices and rents. I think that fear of an economic ‘levelling down’ is at least as significant a factor in the protests as any call for democratic rights.

Top 10 World Container Ports, Volume in millions of TEU *

Source: Worldshipping.org. Note *: The data represent total port throughput, including empty containers. A TEU is a ‘Twenty-foot Equivalent Unit’. The dimensions of one TEU are equal to a standard 20-foot shipping container.

One way of judging the ability of China to sideline Hong Kong, if it wants to, is by looking at its importance as a port. A list of the top world container ports – containers are critical in the trade of goods – has mainland China with six in the top 10. Hong Kong’s port is large, but is ranked number seven and is only roughly half the size of Shanghai’s at number one. Shenzhen, at number three and also bigger than Hong Kong, is only around 15 kilometres from Hong Kong (although a bit further to travel by sea!).

Out of control

Rivalries in the world economy can bring unexpected results, especially when a former underdog can now pro-actively resist. The world order is no longer entirely one where, as Bob Dylan put it, ‘You’re dancing with whom they tell you to, or you don’t dance at all’. How far China is able to build stable alliances for an economic area that limits US interference, and whether it too becomes oppressive, remain to be seen. But in the meantime it has offered many countries an alternative to the rich country model of development, one that has left poor countries poor.

Prospects for the Anglosphere powers are not good. Political idiocy born of generations of arrogance now adds to their difficulties in navigating a world that is changing increasingly outside their control. Examples of their recent responses to Chinese technology sum up their problem. China’s Huawei produces very good, and cheaper, 4G and 5G products, including infrastructure and smartphones, and ByteDance also has a popular media app, TikTok. Instead of saying, ‘we have something even better’, the US and others respond by claiming, with no evidence, that they pose a security risk and that Chinese products should be rejected.

By contrast, Germany, the most productivist of the European powers, has shown more enthusiasm for China-led developments than others. The Belt and Road Initiative already has an important outlet in Duisburg, the world’s largest inland port, where it is the first European stop for 80% of Chinese trains:

“Every week, around 30 Chinese trains arrive at a vast terminal in Duisburg’s inland port, their containers either stuffed with clothes, toys and hi-tech electronics from Chongqing, Wuhan or Yiwu, or carrying German cars, Scottish whisky, French wine and textiles from Milan heading the other way.”[13]

Duisberg’s main problem seems to be that ‘for every two full containers arriving in Europe from China, only one heads back the other way, and the port only earns a fifth of the fee from empty containers that have to be sent back to China’.

At the other end of the line, another German company, BMW, has praised China’s technical know how:

“The auto industry is undergoing a major transformation driven by technological development. In the midst of industrial upgrading and transformation, we need to keep an open mind and to collaborate with outstanding Chinese innovation powerhouses.”[14]

To say the least, these things suggest that China’s growing importance in the world economy will be difficult for the US to curb.

Tony Norfield, 14 July 2020

[1] Other articles on this blog have also analysed US-China relationships, including one from May 2011, looking at the growing strategic tensions, one in April 2019 on the economic and technology competition and another in September 2019 on the relative positions of the major powers. I cover the coronavirus pandemic here.

[2] The US makes much of the links, actual or alleged, between top Chinese companies and the Chinese Communist Party, the military, etc. For reasons that only an evil commie would speculate upon, it seems to forget that Amazon, Google and myriads of other US corporations, not just the arms producers, derive a lot of funding and regular contracts from the US government, the CIA and the Pentagon.

[3] See the article FX & Imperialism on this blog, 7 October 2019, for further details of the role of the US dollar compared to other currencies.

[4] Although London is the biggest market for dealing in foreign currency and for interest rate swaps.

[5] Both totals will include some companies listed on more than one exchange. Nearly 20% of companies on the two US exchanges are foreign companies; there is no comparable figure available for China, but it is likely very much lower.

[6] China does not usually disclose the currency composition of its FX reserves, but China’s SAFE has reported that the dollar component of reserves fell from 79% in 1995 to 58% in 2014. It will have fallen further since 2014, and is likely now a little under 50%. The absolute volume of dollars held will have risen up to 2014, given the big rise in total reserves, but will have likely fallen since.

[7] Over the past 10-15 years, China’s central bank has boosted its gold reserves from 600 tonnes to 1,917 tonnes. At $1,700 per troy ounce, this amounts to ‘only’ $106.5bn and a little over 3% of the reserves total at present.

[8] I say prices ‘could’ rather than ‘would’ fall because of the huge size of the US interest-bearing securities market, especially for shorter-term US Treasuries and agencies, which would limit the response to any selling by China.

[9] FX deals involve two currencies, so adding the shares of all currencies traded would give 200%, not 100%.

[10] Going against US sanctions, in July 2020, China and Iran have drafted a deal covering trade, investment and military cooperation. See New York Times, ‘Defying U.S., China and Iran Near Trade and Military Partnership’, 11 July 2020. This Iran-China cooperation has been going on for several years. Notably, most of the payments between China and Iran, if not all, exclude the US dollar.

[11] For the less well known British escapades in this respect, see the book by Mark Curtis, Secret Affairs: Britain’s Collusion with Radical Islam, 2010.

[12] See here, and for the more official Chinese responses, see here and here.

[13] The Guardian, Germany’s ‘China City’, 1 August 2018.

[14] Comment from Jochen Goller, president and CEO of BMW Group Region China, Asia Times, 6 July 2020.

The coronavirus pandemic of 2020 has slammed into the global system with almost the same impact we might expect from an asteroid strike. All aspects of economic, cultural and political activity on the planet have been devastated and disrupted in ways that seemed unimaginable just a few months ago. Almost half a million human lives around the world have been extinguished already and the danger is far from over. Aside from the immediate biological threat of the virus, probably its most fundamental effect has been to stall the already faltering recovery of the capitalist system after the crash of 2008. The developed economies have been forced to take measures such as compulsory lockdowns, massive fiscal subsidies and draconian border controls on a scale that has never been seen before in peacetime.

The symbiotic economic relationship between the two titans of the global system, China and the US, had been pivotal to that recovery, as far as it had progressed in the pre-outbreak period. In 2018 however, U.S. President Donald Trump radically changed gears by initiating a trade war against Beijing. The political fall-out of the pandemic on the global stage is now further eroding diplomatic relations as a war of words has erupted between the two superpowers over which should shoulder the burden of responsibility for the crisis. Trump has accused Beijing of covering up the initial outbreak and has repeatedly referred to it as a ‘Chinese virus’. In response, Beijing’s Foreign Ministry accuses the U.S. president of seeking to deflect attention from the disastrous failures of his own administration’s domestic management of the virus. The potential for a war of words to spill over into military confrontation cannot be ruled out.

Jude Woodward’s study of the development of US-China diplomacy predates the corona crisis but still provides many useful clues as to how this renewed period of tension in their relationship might play out in the months and years to come. She usefully reminds us that although Trump’s foreign policy has been characterised by frequent bursts of crass Sinophobia, the fear and paranoia among the U.S. elite about their greatest rival really began to take shape under the administration of his predecessor. In 2010, Obama announced a ‘pivot’ of 60% of U.S. military power away from the Middle East and towards the Pacific (250). This strategic shift was the culmination of a decade or so of mounting consternation among Washington foreign policy commentators that Beijing’s stunning economic performance in the post-Mao era was creating the first credible challenge to U.S. global hegemony since the fall of the Berlin Wall. Propagandists on the U.S. side couched this redeployment in terms of ensuring equilibrium in terms of a balance of power, but Woodward shrewdly identifies the real agenda: ‘On the economic front these demands include opening up China’s markets on terms favourable to the West, privatisation of key industries, revaluing the RMB, deregulating its capital account and not developing production in areas of more advanced technology that would directly compete with the West’ (16). In other words, the U.S. is acting in the classic manner of imperialist powers of previous eras such as Britain and France at the turn of the twentieth century, seeking to thwart the emergence of a rival. The furore today over Huawei’s input to the 5G network in North America and Europe is another expression of this completive mentality escalating among the big powers. Woodward also notes that if such an economic strangulation were to succeed, another dividend for the U.S. would be the reduced ability of Beijing to offer material and moral support to recalcitrant states such as Venezuela and Iran that have noticeably managed to resist the will of Washington thus far in the twenty-first century.

Trump’s sabre-rattling belligerence is often presented by liberal analysts as out of character with the generally benign nature of the U.S. state as it has evolved over two centuries or so. Woodward’s observation that the intensified pressure on China in this century actually commenced under Obama is just one valuable corrective to this narrative of ‘American exceptionalism’. The author’s overview of the history of U.S. foreign policy neatly dismembers the myth of the country as a uniquely normative power, only committed to the diffusion of values such as freedom, democracy and pluralism, rather than acting out of a form of self-interest we take for granted from other powers. From ‘the megalomania of Manifest Destiny’ to the straightjackets of the IMF and the World Bank (both equipped with U.S. vetoes), Washington has carved a subtler version of the template of empire, but an empire nonetheless. Woodward explains that ‘its tactics in pursuit of its ultimately Brobdingnagian global project ranged from active to passive persuasion. And such arguments allowed the construction of a myth of the U.S. as a reluctant superpower, an anti-colonial state, when it was in fact pervasively seeking to coercively influence greater and greater spheres of the world’ (61).

Woodward describes how American analysts of international relations have tried to theorise the putative challenge from China. One of the most discussed models of the state of the global chessboard is Graham Allison’s ‘Thucydides Trap’. Taking a cue from the classic history of the Peloponnesian War by the eponymous Greek historian in the fifth century BCE, Allison posits that history is full of cases of rising powers encroaching on the hegemony of established powers, often triggering conflict regardless of the efforts of diplomats at the time to broker peace. Allison presents the U.S. as the modern equivalent of Sparta as the established power and Xi’s China as the counterpart of Athens, an ascending economic and military rival. Woodward is justifiably sceptical of this transhistorical and fatalistic perspective on the causes of war: ‘Ancient Greece was not at all similar to the world that faces the U.S. and China today, particularly economically. In a world where economic growth was insignificant…war to seize assets created by others, enslave populations or steal land was a rational route to enrichment’ (64). She notes the Chinese president himself has commented on the limited value of the ‘Thucydides Trap’ as a paradigm for understanding the contemporary world.

An alternative approach to China within U.S. foreign policy circles is the liberal notion of complex interdependence. Theorists such as Joseph Nye argue that the established role of American firms such as Apple, Walmart and General Motors inside the Chinese economy, in addition to Beijing controlling over a $1 trillion of U.S. debt, means the two superpowers are mutually dependent to an extent that precludes the possibility of inter-state military conflict. Woodward cautions that similar arguments ruling out the prospect of conflict between Britain and Germany were common in the years before 1914. The author contends that great power rivalry operates on multiple levels including the political and the military, and that an exclusive focus on the economic by liberal theorists such as Nye is unduly optimistic. She suggests Trump’s alternative strategy of confronting China could equally attract the support of aggressively protectionist elements of the U.S. financial elite: ‘According to such a perspective pre-emptively halting the rise of China is vital to protect the interests of global capital and will have a longer term pay-off for U.S. domestic industry by preventing China reaching the point of competing at U.S. levels of productively and technology’ (68).

Another valuable corrective to the standard Western narrative provided by Woodward is that China’s historical evolution as a great power has been characterised by a conspicuous lack of global ambitions; while in contrast, the U.S. has been remorselessly following an agenda of global hegemony since its initial emergence as a regional power at the beginning of the nineteenth century. The author recalls the ‘Five Principles of Peaceful Existence’ as espoused by Zhou Enlai who presided over Chinese foreign policy in the 1970s (46). Similarly a decade later, the country’s paramount leader, Deng Xiaoping spoke of pursuing a policy based on the motto: ‘hide strength, bide our time’ (47). Even further back in time, the Ming dynasty in the 1400s had spurned the opportunity for global expansion created by the voyages into the Indian Ocean by Admiral Zheng He (70). Woodward contends that the historic concern of Chinese rulers throughout the ages has been to prioritise the country’s vast land borders and not to divert resources to any expansionist agenda. The current leadership in Beijing, under Xi Jinping, is also committed to this essentially conservative global outlook, according to Woodward: ‘This perspective is not against any other country including the US. On the contrary, it is premised on the idea that relations between states can be organised to their mutual benefit and that the way to secure peace and stability is precisely to build on such win-win relations’ (256).

The only weakness in Woodward’s otherwise excellent overview of the global chessboard is a tendency to take at face value statements of benign intent by the current Chinese leadership. Ultimately, China today has become thoroughly integrated into the operations of global economy and as such, is bound by the logic of the system in the same way as every other capitalist state, now or in the past. Xi may be genuine in his desire to avoid confrontation with the U.S. but the laws of motion of world capitalism, as Lenin and Bukharin argued many decades ago, ultimately operate outside the remit of politicians and twice already in the last century we have seen where that logic can lead. She also tends to dismiss legitimate struggles against the Chinese state such as those in Hong Kong and Xinjiang as little more than manifestations of CIA sponsored subversion (16).

Sadly, Jude Woodward has recently passed away. With this volume, however, she has bequeathed a valuable tool to help navigate the perils of the unfolding global crisis. In her memory, we should strive to enact the closing message of her last book: ‘in the end, the sword cannot win against the desire of human beings to go forward and improve their lives if they can see a way to do so’ (257)

Jude Woodward was an Editorial Board member of Transform journal.

The US vs China: Asia’s New Cold War?
Manchester University Press, Manchester, 2017, 304 pp.,

You can buy the book here

This article was previously published on Monthly Review online