The China Factor and the Overstretch of the US Hegemony

[lightbeam]

The following is the best work I have read on a chaning China, Asia and world. It is great for everyone.

The China Factor and the Overstretch of the US Hegemony

FIRST STORY
A view from an insider
George Zhibin Gu
CHINA IS BECOMING A GLOBAL THEATER
"A new power balance will emerge gradually and most likely indirectly"

STORY NUMBER TWO
A critical view from the center of the Global Power
Chalmers Johnson
CHINA REPLACED THE UNITED STATES AS THE TOP EXPORTER TO JAPAN
"The US is treading the same path followed by the former USSR"


THIRD STORY
A contrarian view from Europe
Andre Gunder Frank
RISING DRAGON
"We are witnessing the re-emergence of Asia"

...

http://www.gurusonline.tv/uk/conteudos/gu_report.asp

[lightbeam]

Impressive ... grand ... provocative

[lightbeam]

One author in the paper has passed away. So, unfortunately, the above is his last work.


Obituary for an ATol contributor
Andre Gunder Frank (1929-2005)
By Jeff Sommers

Editor's note: In January this year, Andre Gunder Frank submitted to Asia Times Online a lively and insightful two-part report on the dwindling economic influence of the United States under neo-conservative excesses. It was published under the title The Naked Hegemon, and was an immediate hit with our readers. They - and we - yearned for more, but tragically Frank's long battle with cancer was taking its toll, and a long-term acquaintance between him and ATol was not to be.

Among academic activists I know, the two names most frequently cited for inspiring us to pursue our work are Noam Chomsky and Andre Gunder Frank. Last weekend we lost one them - Andre Gunder Frank. Gunder must have put literally thousands on that path, who in turn reached perhaps millions of students in some fashion.

...
http://www.atimes.com/atimes/Global...y/GD27Dj01.html

[lightbeam]

So many great ideas in one paper

[qwertyu]

Lightbeam,

That was a very impressive read. I really like the website. The gurus indeed live up to their reputation. I am still skeptical about China's rise, but I agree completely about the analysis of the global bubble crisis that is the US $. What I fear most is that the sinking of the Dollar, thanks to Bush's no tax and squander all policy, will not happen without severe global convulsions, and bringing entire economic and political systems down with it, including East Asia's and Europe's. The Great Depression happened right before the meteoric rise of Fascism and the Axis wars. With a vast military empire in place, I would like to hear what other gurus have to say about the crisis the US and the rest of us will face.

[qwertyu]

So many countries are basically holding US$. If its value plunges, China too, will see its reserve and wealth evaporate, won't it? Unless as Frank suggested, it can quickly move to denominate its goods in RMB which will become immediately the most sought after currency since its products are demanded all over. Then the de-pegging that the Americans are pressuring China to do might in fact become the US$'s undoing!

Actually, when I consider this far scarier future, I don't really care so much that Japan can't come to terms with its neighbours about WWII. This same rightwing nationalists' intransigence of failing to consider fellow Asians as worthy of their effort and good will can also be seen in the way they can't reform their political system and move beyond Cold War thinking to realign with a more dynamic Asian reality. It is a structural problem for Japan, and it will ultimately be their loss. Sometimes, you might have to learn the hard way.

Very interesting read, thanks.

[lonesoullost3]

This was a long, but incredibly enlightening read. Chalmers Johnson's analysis of American imperialism and militarism was extremely astute. I couldn't have said it better myself (of course I probably couldn't have said it as well in the first place). The one thing that struck me as a surprise was that he said the US will drag Japan down with it. Surely we have strong ties to each other, but I don't think that it will lead to bringing Japan down as well. Because China has become Japan's biggest trading partner there is more benefit for Japan to trade with China than be dragged down by the USA. The only reason I can see why Japan should keep the USA on board for now is because it requires protection agains N. Korea, Russia, and China (the surrounding nuclear countries) as well as it still has a good deal of investment in and from the USA.

However, once trade with China increases even further and trade with the USA decreases, it will become more beneficiary for Japan to ally itself with China than the USA. Despite the difficulties of war crimes during WWII currently, I think that it is an issue that will be cured with time. Younger generations (perhaps those currently in college now) have a more global understanding (as stated in one of the interviews, I can't remember which). Also, when I talk to my friends from China, Korea, and Japan, they can't understand why their governments are so stubborn. They see why their governments are the way they are (the power they would be able to hold over the other nation by not accepting an apology or not giving one), but in the long run they think it would be most beneficiary for all parties to move on. I think that this will eventually be realized and save Japan from the sinking USS America.

I think a weakening dollar is inevitable at the current rate, only a drastic change in domestic and foreign policy can save the $ - and we'll have to wait another 3 years for that to happen. For China to successfully develop as the interviewees suggest, I think it will have to do a much better job at combating corruption. I think the 2008 Olympics in Beijing will be the first test of the new China. If it is successful, plan to see a stronger China in the future - both economically and politically.

[qwertyu]

Agreed with your incisive observation. The fears about the US economy tanking remain unresolvable. Is there a way out of this potential crisis of runaway debt coupled with military empire?

I don't think China can survive the US $ sinking, as it would wipe out all of its hard-earned savings, reserves and wealth, ditto Japan.

My fear is that the WWII's deep scars will become a potential tinder box for conflict when the economic collapse comes, and the war over resources breaks. If they do, it will be Japan-US on one side, China-Russia on the other with others caught in between and possibly dragged in, unless Japan and its neighbours resolve it first, in a "pre-emptive" peace initiative, dragging the US in, establishing trust and dialogue that forestall the greater catastrophe. Right now, Japanese and Chinese leaders are not even on speaking terms. That's really comforting, isn't it? I'm an atheist but I'll say "God help us!" if the framework for peace/crisis management doesn't occur before the former.

[lightbeam]

Do we live in an age of global progress or depression? That issue is so pressing to us all. Maybe this paper sheds some light. Still more issues are raised than answered.

[Keoland]

Agreed with your incisive observation. The fears about the US economy tanking remain unresolvable. Is there a way out of this potential crisis of runaway debt coupled with military empire?

Yes, it's called 'bankrupcy'. And then start from scratch.

It's rally not that farfatched - older Empires did it all the time. The Spanish Empire (the dominant world force in the mid-XVIth-early XVIIth centuries) declared bankrupcy three times between 1595 and 1630.

I don't think China can survive the US $ sinking, as it would wipe out all of its hard-earned savings, reserves and wealth, ditto Japan.

Note that the Euro was made specifically to challenge some of the dollars' position in the world. The idea was to make central banks switch part of their forex reserves from US$ to €uros - and the Central Bank of China has already said it was buying euros, reducing the size of their dollar reserves.

So, rest assured China will easily survive a dollar crash.

Regards,
Keoland

[donpaulo]

I don't see it as a dollar "crash" but more of a long term "correction". It could start with a major adjustment in the housing bubble, there was an excellent article in the New York Times a few days ago with an impressive graph that attempted to show benchmark housing value. The curve was most likely un-maintainable. Factor that along with the new personal bankruptcy laws in the USA it could be a further downward force on the dollar.

China on the other hand still has a long road to follow if it is to truly become the worlds next superpower. One only has to study Chinese history to reach the conclusion that china is a long history of revolt, reform and corruption followed often by bankruptcy and revolt. or a variance of this pattern.

My guess is that India will become just as much of a factor as everyone thinks China will be. India has market freedoms the chinese dont and have the advantage of an abundance of english speakers.

Of course the USA could choose to revert to its old pattern of throwing open the borders and attracting massive numbers of new immigrants to fuel its industry with rock bottom pay scales. It seems to me that our grandparents decided to have the doors closed that were open to them as young adults. Foreign workers are good enough to clean the toilet, make your burrito and watch your kids, but not good enough to carry a US passport. Then again keeping the doors tightly sealed has done a wonderful job of keeping out illegals (sic)

I will read the paper when I have the chance and post again.

[ranko]

The following is the best work I have read on a chaning China, Asia and world. It is great for everyone.

The China Factor and the Overstretch of the US Hegemony

FIRST STORY
A view from an insider
George Zhibin Gu
CHINA IS BECOMING A GLOBAL THEATER
"A new power balance will emerge gradually and most likely indirectly"

STORY NUMBER TWO
A critical view from the center of the Global Power
Chalmers Johnson
CHINA REPLACED THE UNITED STATES AS THE TOP EXPORTER TO JAPAN
"The US is treading the same path followed by the former USSR"


THIRD STORY
A contrarian view from Europe
Andre Gunder Frank
RISING DRAGON
"We are witnessing the re-emergence of Asia"

...

http://www.gurusonline.tv/uk/conteudos/gu_report.asp

Briefly , I think there still aren't enough evidence to show that China will exceed USA or threatening USA , at least in the next decade , we should always be alert that politics , military power are based on the economy , I do think China is boosting its economy much , but that's still not enough to threaten USA .So , China is developing ,it's a nice thing ,we should celebrate it.

As for China itself , it should grip the opportunity and calm down , try hard to develop its economy , I won't be surprised if China exceeds USA 20 years later.

[lightbeam]

It is a myth how China gains a fast growth despite its huge problems in place.

[noyhauser]

Well I’m going to try to respond to the assertions in this thread, but It will take some time

I believe that the United States today is treading the same path followed by the former USSR up to its collapse in 1991. There were three main causes of the Soviet disintegration, all of which are starting seriously to assail the United States.

First, extreme rigidity in economic institutions, dictated by an overly literal reading of either Marxist-Leninist or capitalist ideologies. The U.S. today is characterized by a union between capitalist robber-barons and extreme right-wing politicians, much like the so-called "gilded age" of 1890 to 1914.

I think this is a highly contestable concept. The US clearly is not a rigid economy, and likely the most dynamic in the world. Remember that countries all try to export to the United States to keep their growth, not the other way around. European states are clearly having even worse problems, the German and French governments are unable to maintain growth, consistently run high deficits and can’t seem to generate more employment. Japan has similar problems. And to claim that China is “dynamic” being a half state run system, that relies on foreign well… that’s just ludicrous.

Corruption in government-business relations is deep and institutionalized, as we see in cases like Enron, the weak governmental oversight of the pharmaceutical industry, and in the gutting of the environmental protection laws for the sake of big corporations. The second cause was imperial overstretch, as defined by historian Paul Kennedy. The U.S. today has over 700 military bases in 132 countries and is going deeply into debt maintaining them, on top of its military adventures in Iraq and Afghanistan. This is a fatal condition.

The trend of corruption happening is not unique to the US, and neither is it endemic as he would like to claim. Parmalat, Bre-X, Barings, Daiwa Bank, and Hollinger international are all examples of major scandals that had nothing to do with the US. Pointing to Worldcom/Enron/Anderson and saying this is the warning signs of American capitalism’s demise is being very naive to the fact that corruption occurs everywhere.

The US spends around 3.7% of its GDP on the military, compared to 5.0% during the Cold War, and not even close to the estimated 30% that the USSR was spending during the last years of the Brezhnev and Gorbachev. The current US deficit isn’t coming from Military spending. It is because of the 1.3 Trillion Dollar Tax cut that was instituted by the bush administration.[

I won’t deny that the US may be headed for a market correction due to high levels of public debt, but its not nearly as bad as the 1970s oil/Vietnam shocks. Even if this is the case, America will soon emerge from this. Unlike Europe and Japan, the United States and Canada maintain high levels of immigration, and have been largely successful in integrating immigrants into citizens. Inequality has been raised in the US, but I’d attribute it more to globalization (as it mirrors that trend) than a failure of US capitalism.

The world changed on November 2, 2004. Until then, ordinary citizens of the United States could claim that our foreign policy, including our invasion of Iraq, was George W. Bush's doing and that we had not voted for him. In 2000, Bush lost the popular vote. This time he won it by over 3.5 million votes. The result is that Bush's war has changed into America's war

Was Kerry really an alternative? He pushed the same policies on the international sphere, offered nothing more than better domestic management. The American public wasn’t happy about being in Iraq during the election, but Kerry didn’t give any real viable alternative to bush. Bush’s election was because of Kerry;s weakness, not because the people supported him. The Democrats are doing nothing. This is the weakest period the Dems have been since the early 1980s. Domestic support and public approval ratings for Bush are both lower than 50%. Its really a question whether or not the Dems can utilize it, especially since the disaster in New Orleans.

The U.S.'s military stance in East Asia is anachronistic. The major trends in the area are commercial, including China's decisive turn toward capitalist economic development, free-trade agreements between the Southeast Asian countries and China, and the growing economic integration between Taiwan and the Chinese Mainland. As China begins to achieve levels of wealth comparable to those of the rest of East Asia, a basis for genuine stability, not one imposed by military force, is created. The main cause for pessimism in East Asia is the political and economic situation in Japan. The twenty-first century will certainly be dominated by a rich, confident, and well-educated East Asia but it will also feature the continued integration of the European Union and the development of a genuinely anti-American bloc in Latin America and the Caribbean. The most important developments are the opening of the China market to Latin American agricultural exports, China's competition with the United States for Canadian oil, and China's long-term investments in countries like Iran and Kazakhstan. The old-fashioned reliance on military force will probably drag the United States down and Japan with it.

This statement just indicates the sheer bias and limited grasp of the situation. Competition for Canada’s oil? That’s REALLY rich. 87% of Canada’s exports go to the United States, and building a pipeline from Canada to China is would cost billions, while one from anywhere in Canada to the US is only millions. Culturally the two countries are closer. China doesn’t have a chance.

Moreover China is being balanced against, whether it likes it or not. Russia is making deals with Japan and India more than it is with the Chinese. With the exception of the Kuril Islands dispute, Russia and Japan are well matched trade partners. China and Russia are less so. Chinese immigration into the east is starting to become a worrying problem, and a balancing alliance with Japan will only add to its security in the east, rather than one with China which would keep the status quo or slowly degrade Russia’s hand.

The main feature to watch for within the United States is the progressive enlargement of the power of the Pentagon leading eventually to a military take-over of the government. The Roman Republic, from which the founders of the United States drew many institutional precedents (separation of powers, term limits, fixed elections, toleration of slavery), offers the best example of the pattern. The Roman republic, which collapsed in 27 BC, failed to adjust to the unintended consequences of its imperialism, leading to a drastic alteration in its form of government. The militarism that inescapably accompanied Rome's imperial projects slowly undermined its constitution as well as the very considerable political and human rights its citizens enjoyed. The American republic, of course, has not yet collapsed; it is just under considerable strain as the imperial presidency-and its supporting military legions-undermine congress and the courts. However, the Roman outcome-turning over power to an autocracy backed by military force and welcomed by ordinary citizens because it seemed to bring stability-suggests what might happen after Bush and his neoconservatives are thrown out of office.

When you don’t have any argument desperately grasp at straws by invoking history. That’s what this author has done here. Make some really vague comparisons and voila, you have a theory. The US military has seen budget cutback after budget cutback, and the US isn’t a military controlled state. The US has made terrible errors before in foreign policy. And its still far too early to understand what the implications of Iraq will be. Its not clear that it will change over to a completely Islamic government Aka S. Vietnam 1975, or if that sort of regime will be fundamentally against the US. This assertion here is pure fabrication.

Oh and KEoland. If the US goes down, China goes with it. It and japan have been buying massive amounts of US securities to keep the Yuan artificially low to the dollar... I suspect most of its reserves are denominated in dollars. Buying Euros does little for them in this case

[lightbeam]

The US problem is internal. Two economic factors stand out: rising debt and trade deficit.

[lightbeam]

But one must understand that US can continue its global leadership if it can become more open and confident. Somehow, one may see that the US is very depressed and directionless as now. That does happen when any nation sits at the helm for long.