Obama heightens danger of war in Asia

Peter Symonds, WSWS.ORG, a socialist organization

The significance of President Barack Obama’s “shift” toward the Asia Pacific region has become evident in the course of the past week. On every front—diplomatic, economic and military—the Obama administration is aggressively confronting China, greatly heightening tensions within the region and every country of the region.

Obama’s announcement of new basing arrangements for US Marines in northern Australia, along with greater access for American warships and warplanes, is part of a broader military build-up within the region to maintain American dominance and undercut China’s growing influence. No longer able to wield the economic clout that it once did, US imperialism is recklessly deploying its military power in a confrontation with China that potentially will have far more disastrous consequences than the wars in Afghanistan, Iraq and Libya.

Obama’s declaration to the Australian parliament last Thursday that he had made “a deliberate and strategic decision” to refocus US foreign policy on the Asia Pacific reflects a process that has been underway for the past two years. Speaking in Hawaii a year ago, US Secretary of State Hillary Clinton employed military jargon to sum up her task. She spoke of using “forward deployed diplomacy” to “sustain and strengthen America’s leadership” by sending “our diplomatic assets… into every corner and every capital of the Asia Pacific region.” 

Obama is currently at the East Asia Forum in Bali where, despite China’s objections, he intends to provocatively push America’s “national interest” in the South China Sea. Under the guise of defending “freedom of navigation,” the US has encouraged South East Asian nations to assert their rival claims to China in these key strategic waterways—helping to expand the naval capacities of the Philippines and holding joint naval exercises with Vietnam. The result has been a series of naval incidents over the past year involving the Philippines, Vietnam and China that have dangerously elevated regional tensions.

There is nothing benign about Obama’s diplomatic offensive. His administration’s push to strengthen American alliances and build new ones throughout the Asia Pacific has already claimed political casualties. A major factor in the inner-Labor Party coup in June 2010 that removed Kevin Rudd and installed Julia Gillard as Australian prime minister was Washington’s hostility to Rudd’s attempts to act as a moderating go-between to ease US-China tensions.

Rudd, who has declared himself as “rock solid” on the US-Australian alliance, can in no sense be described as “anti-American.” In managing the precarious balancing act between Australia’s largest trading partner, China, and its long-term strategic ally, Rudd had proposed to establish a new regional body—the Asian Pacific Community—as a forum to prevent “a US-China strategic fault line through East Asia” from becoming a conflict that would be “a disaster for everyone.”

Obama, however, wanted a faithful political servant in Canberra, not an independent conciliator. A series of WikiLeaks cables is testimony to the rising frustration in Washington as Rudd’s diplomatic initiatives cut across Obama’s attempts to intensify, not ease, the pressure on China. Rudd had already sunk the so-called Quadrilateral plan to strengthen military cooperation between the region’s “four democracies”—the US, India, Japan and Australia—which China had denounced as “an Asian NATO” directed against itself. 

The Australian’s foreign editor, Greg Sheridan, observed last weekend that Obama had cancelled two trips to Australia—the second leading to the “cancellation of Kevin Rudd’s prime ministership.” While he put the connection down to “political inattention” on Obama’s part, the coup against Rudd—as Sheridan knows only too well—was carried out by a handful Labor and union figures with the closest connections in Washington. At the very least, Obama knew of, and gave his tacit approval for, Rudd’s ousting—calling off a planned visit that would have landed him in Canberra just days before Rudd’s removal. 

Gillard’s fawning subservience was on display throughout Obama’s 24-hour visit to Australia last week, as were the continuing tensions with Rudd, now Australia’s foreign minister. Just days before Obama arrived, Gillard announced that she intended to overturn a ban imposed by Rudd on the sale of Australian uranium ore to India. Gillard did not inform Rudd of the move in advance, even though he was about to head off for India. The decision to sell uranium to India, which undoubtedly took place at Obama’s request, is not only a boon for mining companies, but removes an obstacle to closer Australia-India military relations, and Obama’s efforts to resurrect the Quadrilateral in some form.

The ruthlessness with which Rudd was ousted underlines what is at stake in Obama’s offensive against China. Throughout the region, the ruling elites are wrestling with the same dilemma as their Australian counterparts—how to balance their burgeoning economic ties with China against the strident demands from the world’s dominant military power to side with it on every issue, from trade to military basing and strategic planning. Amid the deepening global economic crisis, Washington will not tolerate any, even limited, independence on the part of allies like Australia, as it seeks to shore up American military and economic dominance across the Indo-Pacific region.

Indonesia’s foreign minister, Marty Natalegawa, who is hosting the East Asia Summit today, expressed the fears held in Jakarta when he criticised the decision to station US Marines in Darwin, just to the south of the Indonesian archipelago. Natalegawa warned that China would most likely react by strengthening its own military capabilities, leading to “a vicious circle of tension and mistrust in the region… the challenge for all of us is to make sure that doesn’t escalate out of control.”

By opening up Australian military bases, ports and airfield to US troops, warplanes and warships, the Gillard government has put Australia and the Australian working class on the front line of any conflict between the US and China. The very real danger is that US imperialism’s provocative diplomatic skirmishing will lead to clashes in a region filled with dangerous flashpoints—from the Korean Peninsula and Taiwan to the contested borders between India and China.

Only the international working class can put an end to scourges of militarism and war. That requires a unified struggle of workers in Asia, America and internationally to abolish the profit system and its division of the world into rival capitalist nation states that has already produced two devastating world wars over the past century.

 

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The limitations and contradictions of the ‘Chinese Model’

By Daniel Morley, Senior Analyst, marxist.com


Consistent with its new capitalist DNA, China has quickly developed a new bourgeoisie, but this is just another sign that the inevitable problems that beset capitalism everywhere will manifest themselves in “the Middle kingdom” sooner or later.  The only question is with what ferocity and whether the authoritarian regime will be able to stem the tide when the floodgates burst open. —Eds. 

The bourgeoisie has never, anywhere, been able to find the key to unlock the mysteries of their own economic system. The only way to understand capitalism is to accept and to explain its contradictory, crisis-ridden nature. It cannot be perfected; its riddle will never be solved from within its confines. Precisely because the apologists of capitalism can never accept this fact, they are forever shifting from one side of the problem to the other.

Instead of seeing the whole picture, they respond to economic crises by abandoning the previous orthodoxy and suddenly embracing its opposite, which is equally one-sided. The evident failures of ‘monetarism’ and so-called ‘neoliberalism’ have led many to herald Keynesianism and the Chinese model as the long sought for answer to capitalism’s ills. A closer look at the Chinese economy, however, reveals equally deep contradictions.

Thanks to China’s role as a newly developing economy, with its abundance of cheap labour, it has in the past 20 years come to be the new “workshop of the world”, one of the few places where meaningful investment in the productive forces has taken place. This has led to a massive current account surplus and vast foreign exchange reserves as China exports to the West. Thanks to this build up over a twenty year boom, during the global economic crisis, which threatened to transform China’s boom into an almighty bust, the Chinese state was in the unrivalled position of being able to embark on a huge Keynesian fiscal stimulus to keep the factories producing.

But this temporary measure has served only to suppress, whilst also exacerbating, the underlying problem – the anarchy of the market and the looming crisis of overproduction that this leads to. Because Keynesians – and the Chinese state is following a Keynesian policy – leave a large part of the economy in private hands interested in producing solely for profit, the state led fiscal stimulus produces inflation and enormous speculative bubbles. Since the cheap money from the state’s coffers comes with no strings attached (where there are strings, as we shall see, the pressures and laws of the market will find it necessary to break them), it does nothing to make its private recipients invest in the useful production that society needs.

If these private companies were hitherto holding back investment and laying off workers, as they were in China in the aftermath of 2008, there was a good reason for it, which is that there is a limit to the amount of cars, clothes, computers etc., that the capitalist market can absorb, owing to the poverty of most of the world’s consumers. This problem does not go away because the central government is lending some money. The “limited demand” of the global market remains. Therefore if the state in its desperation drowns these companies in cheap credit, they will not use it to build bigger factories making more products they cannot sell, but will spend it on useless speculation.

This is precisely the situation in China today. In 2008 China’s fiscal stimulus did help to avert a global depression, but only temporarily and at the cost of a worse crisis in the future.

Recently the strategists of capital, and the Financial Times in particular, have drawn attention to the all-too-familiar signs of impending catastrophe. In an article titled “China Groups Fuel Growth of Shadow Banking” by Henny Sender, we read that,

“More than a quarter of pre-tax profits at China’s Yangzijiang ShipbuildingHoldings in the second quarter came from an unexpected source – not its core shipyard business, but from lending money to other companies.

“In a similar vein, China Mobile has set up a finance arm to lend money, while PetroChina already has a number of financial vehicles in place.

“They are part of a growing number of Chinese companies using excess cash to fund indirectly the country’s shadow banking system as Beijing’s monetary tighteningmakes it more difficult for small and medium-sized firms to access the formal banking sector. (…)

“Foreign firms with cash balances in China are contemplating similar operations, according to Jason Bedford of KPMG in Beijing who advises foreign multinationals, including German and Japanese conglomerates. ‘Many have a large build-up of yuan that can be difficult to repatriate,’ he notes.”

In other words overproduction is unavoidable. Firms, including so-called “State Owned Enterprises”, who operate in accordance with the principle of maximising profit in the market, have more cash than they know what to do with. This is the logical outcome of capitalism, where more and more wealth is concentrated in fewer and fewer hands.

Where is this excess cash, which has been irresponsibly inflated by the central government by forcing cheap credit onto firms, going? Just as in the Western credit binge that fuelled the sub-prime mortgage crisis, this excess cash is put to work in speculation, unproductive financial jiggery-pokery, schemes that merely shift money from one place to another and benefit only the middle-man. And as in the West, this speculation inevitably tends to gravitate towards property speculation. According to Jamili Anderlini in the Financial Times Times property investment now “accounts for more than 20 per cent of total fixed investment in China and UBS estimates almost 30 per cent of final products in the economy are absorbed by the property sector.” According to the Economist, “60% of informal loans now go to small time property developers.”

In 2008-9, when the worldwide crisis led to a significant contraction of China’s export market, China “saved the world” by embarking on $586bn fiscal stimulus that was in truth an irresponsible credit binge. But the strategists of capital always behave irresponsibly when they are staring into the abyss and see no alternative. It is well known that only just under one third of this figure was actually delivered directly by the central government. The rest was delivered through local governments who lent the money to the “state-owned” (but not state planned) enterprises to build housing, infrastructure, etc. But because these state-owned enterprises operate on the principle of profit in a market, much of the excess of cheap credit, as in the cases of Yangzijiang ShipbuildingHoldings, China Mobile and PetroChina mentioned above, has been used for speculation, creating a property bubble and a whole shadow banking system which serves the state-owned enterprises in their quest for profit. As we know only too well, lending at usurious rates to fund a property bubble is not sustainable and inevitably leads to an even bigger crash.

This has led not only to an out of control property bubble, but an extremely convoluted chain of debts which the local authorities are now completely sucked into. According to a Financial Times Editorial of October 24th 2011 the “official estimates [of local authority debt], which are disputed, show this figure to have trebled since 2007. In 2010, it reached Rmb14,000bn ($2,194bn), or 35 per cent of the country’s gross domestic product.” This would take China’s total public debt to around 55% (including central government debt). This local authority debt accounts “for up to 30 per cent of all outstanding bank loans, many of which are collateralised by land and housing developments” (Jamil Anderlini, op cit.).

The transformation of “state-owned enterprises” into profit making firms leads to the undermining of the central government’s ability to control what happens in the economy, as in any other capitalist economy. The official state banks, as part of the fiscal stimulus, have been lending out at artificially low interest rates to the favoured state-owned enterprises to encourage spending. But in order to exploit their favoured access to cheap credit and increase their profits without any actual recourse to production, they have tended to “illegally” create a shadow banking system in which they lend out to small businesses at far higher interest rates(what they can and can’t get away with is vague and political). The same Henny Sender article quoted above says the following:

“At the same time it [funding shadow banking] allows the companies – some estimates say 90 per cent of the shadow lenders are state-owned – to make healthier returns than they could by leaving the cash on deposit [i.e. with the official banks].(…)

“The country’s regulated interest rates mean that borrowers in the official sector can obtain money at artificially low rates while less favoured borrowers have to pay far higher rates in the grey market.

“PetroChina has an asset management arm, a trust bank, a commercial bank as well as an internal finance unit. Baosteel Group has a 98 per cent stake in Fortune Trust, one of the largest trust firms, while Hunan Valin Iron and Steel Group has a 49 per cent stake in Huachen Trust.

“Mr Windham notes that most of these investments are less than a year in duration and collateralised with shares and property. It earns anywhere from 10 per cent to 15 per cent on these investments, far higher than the deeply negative real interest rates it would receive on bank deposits.”

The rise in inflation that the credit binge of 2008-9 has led to is now forcing the Chinese government to restrict access to credit in an attempt to reign in the bubble. But the whole point is that one cannot control the anarchy of the market; their previous attempts to do so have led directly to the present problems. Thanks to the massive boost to financial speculation they gave the system in 2008-9, the reigning in of cheap state credit only has the effect of boosting the unregulated shadow banking system (since businesses cannot get credit from elsewhere) to the point where it is now supplying more credit to the economy than the official banks do!

Moreover, the apparently state controlled banks are themselves leading this process by setting up their own unofficial banks! According to Simon Rabinovitch “Industrial and Commercial Bank of China, the world’s biggest lender by market value, previously disclosed that it sold nearly Rmb2,780bn of wealth management products [these are loans they set up to get around the state cap on interest rates and restrictions on lending] in the first half, more than triple the Rmb902bn in new deposits it attracted over the same time.” In other words, not only are the state’s own banks circumventing state restrictions, but they are lending out three times as much as they receive in deposits. This process is explained well by James Kynge:

“the most profitable activity by state-owned banks in the first half of this year was not lending to businesses but funding trusts and underground banks, bank financial reports show. Still, it is understandable that banks would wish to maximise profits, especially at a time when deposits are draining away. In the first 15 days of September, for instance, the ‘big four’ state banks suffered a net loss in deposits of RMB420bn – more than four times their lending in the same period – as savers fled to high-yielding shadow banks.”

According to the Economist, “off-balance-sheet lending added about 10.7 trillion yuan ($1.7 trillion) to the 54.7 trillion-yuan worth of loans on banks’ books in June… Informal lending, properly defined, amounts to about 4 trillion yen, Credit Suisse estimates.” What is interesting here is the way in which the logic of the market erodes state control over even the state-owned enterprises. The central government is now allowing local authorities to issue bonds for the first time since 1994. In other words, so worried are they about the immense exposure to the property bubble that the local authorities have, they are now compelled to offer up their financing to private financiers by selling them bonds. In addition “they [local authorities] have begun to sell off prized corporate assets at an unprecedented rate. Local units of the State Assets Supervision and Administration Commission sold off RMB3.31bn in corporate assets between January and July this year, up from RMB2.35bn in all of 2010” (James Kynge, op cit.)

China Daily reports that “China placed limits on salaries in 2009 – 2.8 million yuan [about $440,000] for executives of State-owned enterprises – but the policy seems to have been ignored… The highest paid CEO at a State-owned enterprise  is Han Junliang, who was paid 8.58 million yuan by Sinovel Wind Group Ltd this year… ‘The payments of CEOs do not just depend upon their performances. It’s also decided by the market,’ says Jennifer Feng… The government has allowed State-owned enterprise executives to hold and sell a small percentage of their companies’ shares since 2005.” The Chinese are learning that you cannot regulate capitalism.

The restriction of access to cheap and free flowing credit has also had unintended consequences on the government’s “plan” (in reality a guideline, as the state now calls its five year plans) for railway construction. Its own state owned railway company, China Railway Engineering Corporation, has not paid its migrant workers for months due to a lack of access to credit, underlining the lack of state control even over its own companies, which are evidently pushed by the state to meet targets and make profits in whichever way they see fit; if that involves the super-exploitation of migrant labour to survive sudden restrictions on credit, so be it.

As always in a bubble, a huge proportion of the debts will turn out to be bad debts, just as with the US sub-prime mortgage scandal, since bubbles are by definition an attempt to overcome the market’s limits, which cannot be done. As we have already seen, the rise in inflation it has produced is now forcing the government to scale back lending. But this in turn is leading to falling property and land sales, falling property prices and the resulting risk of bankruptcy for all those property speculators borrowing at such high rates from shadow banks. That in turn can push the vast network of unregulated credit, intimately tied up with State-owned enterprises and local-authorities, with their $2tn+ of outstanding debt which is collateralised against precisely the same falling land prices, into a Chinese credit crunch.

This is how George Magnus, senior economic advisor at UBS bank, puts it:

“Property developers in China are faced with a fall in prices and transaction volumes, which in 20 big cities are about a third lower than a year ago.(…)

“Local governments have significant exposure to property values and collateral and are heavily indebted with liabilities of at least 30 per cent of GDP. Many are facing cash-flow problems and are prone to default, with large refinancings and repayments due in the next two years. Some Rmb3,000bn ($470bn) of bad local government loans, or 8 per cent of GDP, are being scrutinised by regulators and the National Audit Bureau. A spate of failed land auctions, falls in land transactions and weakness in property prices could have far bigger consequences for China’s capitalist model.”

If there is a Chinese credit crunch, which could be sparked off by a financial crisis emanating from Europe, no doubt the Chinese state will bail out the local authorities and state-owned enterprises using its pool of money. But not only will that, just as in the west, only worsen the problem in the long run, which is after all the problem of the capitalist system, but it will also mean they will not be able to pump prime the economy again. They will be left to weather the storm of financial catastrophe and recession along with the rest of the world. When that happens, no amount of state repression can stop a fourth Chinese revolution.

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Hillary Blasts China on “Human Rights”

By MIKE WHITNEY | May 11, 2011

Clinton: Unlimited gall.

Is there anything more irritating than listening to US officials blabber about “human rights”?

Here’s Hillary Clinton bashing China for their “deplorable” human rights record, and meanwhile Bradley Manning sits naked and freezing in a 6′ by 8′ cinderblock cell in some far-flung American gulag waiting to get fingernails yanked out.

And that’s just for starters. What about Gitmo, Abu Ghraib, Bagram and the myriad other dungeons, concentration camps and black sites the US has scattered across the planet. The United States is the biggest human rights abuser in the world today. Clinton’s in no position to be giving other people lectures.

Just look at Falluja; a city of 300,000 that had about 40,000 of its people wiped out by US bombs, 80 per cent  of its buildings and infrastructure reduced to rubble, and a legacy of cancers and birth defects until the end of time. Now that’s how you kill people!

And then there’s the drone attacks. In fact, another 5 people were killed on Tuesday when US missiles blew up their vehicle in northwest Pakistan. What about their human rights?  And what about the rights of the other 957 people who’ve been killed in 2010 alone? Don’t they count?

And, can we please stop talking about democracy? Everyone knows it’s just shorthand for capitalism. And–not even capitalism really, but slash-and-burn, take-no-prisoners, scorched-earth predatory capitalism, the  strain of the virus that’s particular to America’s ‘oligarchy of racketeers’. So, can we just put a sock in it for a while?

Here’s a clip of Hillary moaning about the “repressive Chinese system of government.”

“We have made very clear, publicly and privately, our concern about human rights. We see reports of people, including public interest lawyers, writers, artists, and others, who are detained or disappeared. And we know over the long arch of history that societies that work toward respecting human rights are going to be more prosperous, stable, and successful.”

Can you believe the arrogance? The United States has a higher percentage of its population in prison than any other country in the world. And, Clinton dares to scold China about “detained or disappeared” people?

But, yes, it’s true; the Chinese haven’t mastered democracy like we have in the good old USA, where 5 right-wing jurists pick the president, and where the government taps your phoneline, sifts through your e mail, and gropes your scrotum before you hop on a flight to Boise. That’s capital “D” democracy; land of the free and home of the Ponzi-scamster.  We might boot you out of your home, kick you out of your job, and fleece you out of your retirement, but we’ve got our principles, dammit!

But, let’s cut to the chase. Do you know what this is really all about, all this duplicitous foot-stomping and pontificating by Ms. Clinton?

The Obama team is trying to pressure China into opening their markets to Wall Street so Big Finance can peddle their garbage paper to 1.5 billion new suckers. That’s what it’s all about.

Just take a look at this report from Bloomberg and decide for yourself.

Bloomberg:  “Geithner will say China should relax controls on the financial system and give foreign banks and insurers more access, said David Loevinger, the Treasury Department’s senior coordinator for China. Officials from both nations are meeting in Washington today and tomorrow as part of the annual Strategic and Economic Dialogue.

“….Senators Charles Schumer of New York and Jeff Merkley of Oregon called May 6 for a ‘rebalancing’ in the U.S.-China economic relationship. The two lawmakers, who just returned from a trip to China, said the Chinese need to open their financial sector, address ‘abnormally low deposit and lending rates’ and allow broader market access to foreign firms….

“The American Chamber of Commerce in China said last month that foreign banks play an “insignificant role” in China.

“Foreign lenders’ market share in China has dropped since the government first opened the industry in December 2006. Banks such as New York-based Citigroup Inc. (C) and London-based HSBC Holdings Plc (HSBA) want to tap household and corporate savings that reached $10 trillion in January as China overtook Japan to become the world’s second-biggest economy” (“U.S. Will Urge China to Boost Interest Rates as Talks Start”, Bloomberg)

Repeat: “Banks…. want to tap household and corporate savings that reached $10 trillion in January.”

That says it all, doesn’t it? Wall Street is already licking its chops over its next victim. They can’t wait to sink their teeth into all that money that Chinese workers have been scrimping and saving for the last decade or so.  That’s why they’ve ordered Clinton to castigate China’s leaders in public, because they think it will help them pry the door open wide enough to set up shop in the world’s fastest growing market.

So this isn’t about “human rights” at all. It’s about coercion; forcing China to do what we want so Wall Street can rake in even bigger profits.

Are you surprised?

Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com

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Beijing cancels debate on 1911 revolution

OpEds

By John Chan | 12 May 2011
The World Socialist Web Site (Trotskyst interpretation)

Idealized version of Mao's Long March, when the Chinese Communist Party militants and army escaped the claws of the bourgeois forces and set up quarters in a remote area of China. Revolutions are complex phenomena, affected by many factors, both internal and external, and no single reasons can account for their evolution, nor predict the final outcome. However, that's no argument to discard all revolution from human affairs.

The Beijing branch of the Communist Youth League last month abruptly cancelled a debate originally planned to open on April 9 to mark the 100th anniversary of the 1911 revolution—an upheaval that set in motion the downfall of the Manchu dynasty and three decades of political turmoil, revolutions and counter-revolutions.

The debate on the 1911 revolution was to have involved 16 universities in Beijing and Tianjin that were historically hotbeds for democratic and revolutionary ideas. Amid rising social tensions, the Chinese regime is fearful that any serious discussion of the country’s tumultuous past could help trigger a popular revolt today. 

The ban came amid the rounding up of dozens of dissidents in recent months, particularly those who have responded to or facilitated the Internet calls to emulate the “Jasmine Revolution” in Egypt and Tunisia. Beijing University professor Zhang Ming complained in his microblog that the authorities had ordered the cancellation at the very last minute: “No reason was given, just cancelled it.”

Broad layers of the population have long regarded the current regime as resembling the rotten Manchu court that desperately sought to cling to power in 1911. The cancellation of the debate will only strengthen those sentiments. One blogger said: “The longer the ailing CP [Communist Party] lives on, the more it is going backward, the fact is they are living in real fear…” Another noted: “Even frightened by the 1911 revolution? Surely they are going home soon.”

Beijing’s greatest concern was that the debate would raise questions about the political legitimacy of the Chinese Communist Party (CCP) itself. A hundred years after 1911, basic democratic rights remain a distant dream in China. More than six decades after taking power in 1949, the CCP is presiding over the return of the old evils—from official corruption and poverty to prostitution and child labour—on a vast scale.

For millions of young people unable to find a decent job and compelled to work in sweatshops, history has assumed an explosive character. The strikes last year in auto and electronics plants owned by transnational corporations were initially sparked by a young Honda worker who had drawn his inspiration from earlier revolutionary struggles of the working class, including the Hong Kong-Canton general strike in 1925.

Chinese authorities have been holding university debates on the 1911 revolution since 2002, primarily to celebrate its bourgeois democratic leaders, particularly Sun Yat-sen, who formed the nationalist Kuomintang (KMT). These debates have been part of the CCP’s broader campaign to revamp the history of the three Chinese revolutions in 1911, 1925-27 and 1949 so as to bury any lingering revolutionary traditions and transform these events into steps in the rise of the modern Chinese capitalist nation-state.

The promotion of Chinese nationalism in various activities and ceremonies to mark the 100th anniversary of the 1911 revolution has served an additional political purpose. It has been designed to pave the way for closer relations with Taiwan and the KMT—China’s former Cold War enemy. After losing power to the CCP’s armies in 1949, the KMT fled to Taiwan and imposed a military dictatorship that lasted until the 1980s. Having transformed China into the world’s largest cheap labour platform, the CCP’s appeal to a common patriotic history is aimed at helping to bring Taiwan back into the fold.

The CCP’s nationalist campaign has literally rewritten history. All the enemies of the Chinese revolutions—from the reactionary imperial rulers to various warlords and the KMT dictator Chiang Kai-shek—have been given a facelift that transforms them into humane, patriotic historical figures. Even Confucius, who encouraged absolute obedience to authority and acceptance of social inequality, has been promoted as a symbol of Chinese national identity.

By contrast, more thoughtful youth and intellectuals still regard the 1911 revolution as a source of inspiration, despite its limitations and ultimate failure. Among university students, the debates were followed with a degree of interest.

Last year’s debate in Wuhan focussed on the issue of whether the social conditions were ripe for the 1911 revolution. Students from Taiwan argued the prerequisites were present and the revolution was successful. Their mainland opponents declared that the 1911 revolution lacked mass support and was incomplete as compared to the classical bourgeois revolutions in Britain and France during the seventeenth and eighteenth centuries.

Despite its narrow focus, the debate touched on an important theoretical issue—the inability of the bourgeoisie in countries with a belated capitalist development to carry out the tasks of the earlier bourgeois revolutions. It was Leon Trotsky in his Theory of Permanent Revolution who pointed out that the democratic tasks in countries like China and Russia could be resolved only as part of the struggle of the working class for socialism internationally. The validity of the Theory of Permanent Revolution was demonstrated in the Russian Revolution of 1917, which inspired workers and intellectuals around the world, including in China where the CCP was formed in 1921.

This year’s debate was to have been about Sun Yat-sen’s “Three people’s principles”—nationalism, democracy and livelihood. The organiser, the Beijing Institute of Technology, declared in its statement that the debate “should not only look at those exciting victories of the revolution, but what is hidden beneath—the awakening of people’s awareness in this country and the spread of democracy.” However, the last thing that the CCP wants amid the current social tensions is a debate about political awakening and basic democratic rights.

While the 1911 revolution has been the subject of carefully managed university debates, the Second Chinese Revolution of 1925-1927 remains a virtual taboo topic. Apart from a small layer of academics, few in China know that the fate of that revolution was sealed by the policies of the Stalinist clique in Moscow, which tied the CCP to the bourgeois nationalist KMT that drowned the revolution in blood, killing thousands of CCP members.

Stalin bitterly opposed the demand of Trotsky and the Left Opposition for the CCP to break from the KMT and advance a genuinely revolutionary program. The official History of Chinese Communist Party only tentatively acknowledged in 2004 that Trotsky had been correct in 1925-1927. But the political implications of the Stalinist errors cannot be honestly discussed in China.

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Just 23 years after 1949, Mao reached a rapprochement with the US imperialism, laying the foundation of Deng Xiaoping’s drive to open up the economy to foreign capital from 1978. In 1989, when millions of workers rose up to oppose the regime’s “market reform,” the CCP sent in the army to crush the movement, paving the way for a flood of foreign investment and the startling growth of Chinese capitalism.

Throughout the past 60 years, the CCP has been terrified of any mass movement of the working class. It is little wonder, given this year’s upheavals in the Middle East and North Africa, that the regime has shut down a debate about revolutionary events—even though they occurred 100 years ago, and for the most part did not involve the working class and ultimately failed.

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China as Number One?

May 2, 2011

Don’t Bet Your Bottom Dollar

By TOM ENGLEHARDT

Tired of Afghanistan and all those messy, oil-ish wars in the Greater Middle East that just don’t seem to pan out? Count on one thing: part of the U.S. military feels just the way you do, especially a largely sidelined Navy — and that’s undoubtedly one of the reasons why, a few months back, the specter of China as this country’s future enemy once again reared its ugly head.

Back before 9/11, China was, of course, the favored future uber-enemy of Secretary of Defense Donald Rumsfeld and all those neocons who signed onto the Project for the New American Century and later staffed George W. Bush’s administration. After all, if you wanted to build a military beyond compare to enforce a long-term Pax Americana on the planet, you needed a nightmare enemy large enough to justify all the advanced weapons systems in which you planned to invest.

As late as June 2005, neocon journalist Robert Kaplan was still writing in the Atlantic about “How We Would Fight China,” an article with this provocative subhead: “The Middle East is just a blip. The American military contest with China in the Pacific will define the twenty-first century. And China will be a more formidable adversary than Russia ever was.” As everyone knows, however, that “blip” proved far too much for the Bush administration.

Finding itself hopelessly bogged down in two ground wars with rag-tag insurgency movements on either end of the Greater Middle Eastern “mainland,” it let China-as-Monster-Enemy slip beneath the waves. In the process, the Navy and, to some extent, the Air Force became adjunct services to the Army (and the Marines). In Iraq and Afghanistan, for instance, U.S. Navy personnel far from any body of water found themselves driving trucks and staffing prisons.

It was the worst of times for the admirals, and probably not so great for the flyboys either, particularly after Secretary of Defense Robert Gates began pushing pilotless drones as the true force of the future. Naturally, a no-dogfight world in which the U.S. military eternally engages enemies without significant air forces is a problematic basis for proposing future Air Force budgets.

There’s no reason to be surprised then that, as the war in Iraq began to wind down in 2009-2010, the “Chinese naval threat” began to quietly reemerge. China was, after all, immensely economically successful and beginning to flex its muscles in local territorial waters. The alarms sounded by military types or pundits associated with them grew stronger in the early months of 2011 (as did news of weapons systems being developed to deal with future Chinese air and sea power). “Beware America, time is running out!” warned retired Air Force lieutenant general and Fox News contributor Thomas G. McInerney while describing China’s first experimental stealth jet fighter.

Others focused on China’s “string of pearls”: a potential set of military bases in the Indian Ocean that might someday (particularly if you have a vivid imagination) give that country control of the oil lanes. Meanwhile, Kaplan, whose book about rivalries in that ocean came out in 2010, was back in the saddle, warning: “Now the United States faces a new challenge and potential threat from a rising China which seeks eventually to push the U.S. military’s area of operations back to Hawaii and exercise hegemony over the world’s most rapidly growing economies.” (Head of the U.S. Pacific Command Admiral Robert Willard claimed that China had actually taken things down a notch at sea in the early months of 2011 — but only thanks to American strength.)

Behind the overheated warnings lay a deeper (if often unstated) calculation, shared by far more than budget-anxious military types and those who wrote about them: that the U.S. was heading toward the status of late, great superpower and that, one of these years not so far down the line, China would challenge us for the number one spot on the seas — and on the planet.

The Usefulness of a Major Enemy

You know the background here: the victor in the Cold War, the self-proclaimed “sole superpower” ready to accept no other nation or bloc of nations that might challenge it (ever), the towering land that was to be the Roman Empire, the British Empire, and the Vulcans rolled into one. Well, those dreams are already in history’s dustbin. If opinion polls are to be believed, a gloomy American populace now senses that the sun has set on American fantasies of ultimate dominance with what seems like record speed. These days, the U.S. appears capable of doing little with its still staggering military might but fight Pashtun guerillas to a draw in distant Afghanistan and throw its air power and missile-armed drones at another fifth-rate power in a “humanitarian” gesture with the usual destruction and predictable non-results.

Toss in the obvious — rotting infrastructure, fiscal gridlock in Washington, high unemployment, cutbacks in crucial local services, and a general mood of paralysis, depression, and confusion — and even if the Chinese are only refurbishing a mothballed 1992 Ukrainian aircraft carrier as their first move into the imperial big time, is it really so illogical to imagine them as the next “sole superpower” on planet Earth?

After all, China passed Japan in 2010 as the globe’s number two economy, the same year it officially leaped over the United States to become the world’s number one emitter of greenhouse gases. Its growth rate came in at something close to 10% right through the great financial meltdown of 2008, making it the world’s fastest expanding major economy. By mid-2010, it had 477,000 millionaires and 64 billionaires (second only to the U.S.), and what’s always being touted as a burgeoning middle class with an urge for the better things. It also had the world’s largest car market (the U.S. came in second), and the staggering traffic jams to prove it, not to speak of a willingness to start threatening neighbors over control of the seas. In short, all the signs of classic future imperial success.

And those around the U.S. military aren’t alone in sounding the alarm. Just last week, the International Monetary Fund (IMF) quietly posted a report at its website indicating that by 2016, the “age of America” would be over and, by one measure at least, the Chinese economy would take over first place from the American one.

With growing fears in the military-industrial complex of future cuts in the Pentagon budget (even though, as of now, it’s still rising), there will undoubtedly be increased jockeying among the armed services for slices of the military pie. This means an increasing need for the sort of enemies and looming challenges that would justify the weapons systems and force levels each service so desperately wants.

And there’s nothing like having a rising power of impressive proportions sink some money into its military (even if the sums are still embarrassingly small compared to the United States). In the Chinese case, it also helps when that country uses its control over rare earth metals to threaten Japan in a dispute over territorial waters in the East China Sea, begins to muscle neighbors on the high seas, and — so rumor has it — is preparing to name its refurbished aircraft carrier, which might be launched this summer, after the Qing Dynasty admiral who conquered the island of Taiwan.

The Unpredictability of China

Still, for all those naval and air power types who would like to remove American power from a quicksand planet and put it offshore, for those who would like to return to an age of superpower enmity, in fact, for all those pundits and analysts of whatever stripe picking China as the globe’s next superstar or super evildoer, I have a small suggestion: take a deep breath. Then take this under advisement: we’ve already been through a version of this once. Might it not be worth approaching that number-one prediction with more humility the second time around?

As a start, let’s take a stroll down memory lane. Back in 1979, Ezra Vogel, Harvard professor and Asian specialist, put out a book that was distinctly ahead of its time in capturing the rise to wealth and glory of a new global power. He entitled it Japan as Number One: Lessons for America, and in praising the ways Japanese industry operated and the resulting “Japanese miracle,” the title lacked only an exclamation point. Vogel certainly caught the temper of the times, and his scholarly analysis was followed, in the 1980s, by a flood of ever more shrill articles and books predicting (in fascination or horror) that this would indeed someday be a Japanese world.

The only problem, as we now know: ’tweren’t so. The Japanese economic bubble burst around 1990 and a “lost decade” followed, which never quite ended. Then, of course, there was the 2011 earthquake-cum-tsunami-cum-nuclear-disaster that further crippled the country.

So how about China as Number One: Lessons for America? After all, its economy is threatening to leave Japan in the dust; if you were one of its neighbors, you might indeed be fretting about your offshore claims to the mineral wealth under various local seas; and everyone knows that Shanghai is now Blade Runner without the noir, just 40-story towers as far as the eye can see. So what could go wrong?

As a specialty line, our intelligence services offer new administrations predictions on the world to come by projecting present trends relatively seamlessly into a reasonably similar future. And why shouldn’t that be a logical way to proceed? So if you project Chinese growth rates into the future, as the IMF has just done, you end up with a monster of success (and assumedly a military with a global reach). It’s not that hard, in other words, to end up with the U.S. Navy’s nightmare enemy.

But so much on our present planet suggests that we’re not in a world of steady, evolutionary development but of “punctuated equilibrium,” of sudden leaps and discontinuous change. Imagine then another perfectly logical scenario: What if, like Japan, China hits some major speed bumps on the highway to number one?

As you think about that, keep something else in mind. China’s story over the last century-plus already represents one of the great discontinuous bursts of energy of our modern moment. To predict most of the twists and turns along the way would have been next to impossible. In 1972, in the wake of the Cultural Revolution that Mao Zedong had set in motion six years earlier, to take but one example, no intelligence service, no set of seers, no American would have predicted today’s China or, for that matter, a three-and-a-half-decade burst of Communist Party-controlled capitalist industrial expansionism. The pundit who offered such a prediction then would have been drummed out of the corps of analysts.

No one at the time could have imagined that the giant, independent but impoverished communist land would become the expansive number two capitalist economy of today. In fact, from the turn of the previous century when China was the basket case of Asia and a combined Japanese/Western force marched on Beijing, when various great powers took parts of the country as their own property or “concessions,” followed by ensuing waves of warlordism, nationalism, revolutionary ferment, war with Japan, civil war, and finally the triumph of a communist regime that united the country, the essence of China’s story has been unpredictability.

So what confidence should we now have in projections about China that assume more of the same, especially since, looking toward the future, that country seems like something of a one-trick pony? After all, the ruling Communist Party threw the dice definitively for state capitalism and untrammeled growth decades ago and now sits atop a potential volcano. As the country’s leaders undoubtedly know, only one thing may keep the present system safely in place: ever more growth.

The minute China’s economy falters, the minute some bubble bursts, whether through an overheating economy or for other reasons, the country’s rulers have a problem on their hands that could potentially make the Arab Spring look mild by comparison. What many here call its growing “middle class” remains anything but — and there are literally hundreds of millions of forgotten peasants and migrant workers who have found the Chinese success story less than a joy.

A Revolutionary Tradition for the Ages

It might take only a significant economic downturn, a period that offered little promise to Chinese workers and consumers, to unsettle that country in major ways. After all, despite its striking growth rates, it remains in some fashion a poor land. And one more factor should be taken into consideration that few of our seers ever consider. It’s no exaggeration to say that China has a revolutionary tradition unlike that of any other nation or even region on the planet.

Since at least the time of the Yellow Turban Rebellion in 184 CE, led by three brothers associated with a Taoist sect, the country has repeatedly experienced millenarian peasant movements bursting out of its interior with ferocious energy. There is no other record like it. The last of these was undoubtedly Mao Zedong’s communist revolution.

Others would certainly include the peasant uprising at the end of the Ming Dynasty in the seventeenth century and, around the time of the American Civil War, the Taiping Rebellion. It was led by a man we would today call a cultist who had created a syncretic mix of Chinese religions and Christianity (and who considered himself the younger brother of Jesus Christ). Before Qing Dynasty forces finally suppressed it and a series of other rebellions, an estimated 20 million people died.

When Chinese leaders banned and then tried to stamp out the fast-spreading Falun Gong movement, they were not — as reported here — simply “repressing religion”; they were suppressing what they undoubtedly feared could be the next Taiping Rebellion. Even if few intelligence analysts in the West are thinking about any of this, rest assured that the Communist rulers of China know their own history. That’s one reason why they have been so quick to crack down on any Arab-Spring-like demonstrations.

In addition, though I’m no economist, when I look around this planet I continue to wonder (as the Chinese must) about the limits of growth for all of us, but certainly for a vast country desperate for energy and other raw materials, with an aging population, and an environment already heavily polluted by the last 40 years of unchecked industrial expansion. There is no question that China has invested in its military, put together a powerful (if largely defensive) navy, elbowed its neighbors on questions of control of undersea mineral rights, and gone on a global search to lock up future energy resources and key raw materials.

Nonetheless, if predictions were to be made and trends projected into the future, it might be far more reasonable to predict a cautious Chinese government, focused on keeping its populace under control and solving confounding domestic problems than an expansively imperial one. It’s almost inconceivable that, in the future, China could or would ever play the role the U.S. played in 1945 as the British Empire went down. It’s hard even to imagine China as another Soviet Union in a great global struggle with the United States.

And speaking of the conjunctures of history, here’s another thought for the U.S. Navy: What if this isn’t an imperial planet any more? What if, from resource scarcity to global warming, humanity is nudging up against previously unimagined limits on unbridled growth? From at least the seventeenth century on, successive great powers have struggled over the control of vast realms of a globe in which expansion seemed eternally the name of the game. For centuries, one or more great powers were always on hand when the previous great imperial power or set of powers faltered.

In the wake of World War II, with the collapse of the Japanese and German empires, only two powers worthy of the name were left, each so mighty that together they would be called “superpowers.” After 1991, only one remained, so seemingly powerful that it was sometimes termed a “hyperpower” and many believed it had inherited the Earth.

What if, in fact, the U.S. was indeed the last empire? What if a world of rivalries, on a planet heading into resource scarcity, turned out to be less than imperial in nature? Or what if — and think of me as a devil’s advocate here — this turned out not to be an imperial world of bitter rivalries at all, but in the face of unexpectedly tough times, a partnership planet?

Unlikely? Sure, but who knows? That’s the great charm of the future. In any case, just to be safe, you might not want to start preparing for the Chinese century quite so fast or bet your bottom dollar on China as number one. Not just yet anyway.

Tom Engelhardt, co-founder of the American Empire Project, runs the Nation Institute’s TomDispatch.com, where this article originally appeared. His latest book is The American Way of War: How Bush’s Wars Became Obama’s (Haymarket Books).

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