Imperialist Rivalry in the Pacific

The stealthy path of Chinese imperialism

We are now in the second decade of the so-called “Asian century” and there are many in the West who do not doubt that China will sooner or later come to be the world’s number one power. Its massive economic growth originally brought about through encouraging foreign investment in special economic enterprise zones since 1978 has transformed China from being a capital importer to a major capital exporter in its own right within a couple of decades. In short China, so often portrayed (and still portrayed in Chinese school history textbooks) as the victim of Western and Japanese imperialism has now become a major imperialist power in its own right.[1]

However until recently this imperialism has been of a relatively soft and stealthy kind. One of Deng Xiaoping’s permanent axioms after 1978 was taoguang yanghui (We should conceal our capabilities and avoid the limelight). On December 4, 1990, Deng enunciated a further set of principles China should uphold in dealing with the international situation:

There are many unpredictable factors affecting the international situation, and the contradictions are becoming increasingly evident. The current situation is more complex and chaotic than in the past, when the two hegemonist powers were contending for world domination. No one knows how to clear up the mess. Some developing countries would like China to become leader of the Third World. But we absolutely cannot do that …We can’t afford to do it and besides, we aren’t strong enough. There is nothing to be gained by playing that role; we would only lose most of our initiative. China will always side with the Third World countries, but we shall never seek hegemony over them or serve as their leader. Nevertheless, we cannot simply do nothing in international affairs. We have to make our contribution. In what respect? I think we should help promote the establishment of a new international political and economic order. We do not fear anyone, but we should not give offense to anyone either. We should act in accordance with the Five Principles of Peaceful Coexistence and never deviate from them.[2]

The Five Principles of Peaceful Coexistence [3] were first enunciated by Mao in his bid to win the support of the “non-aligned movement” in the 1950s. They basically say China won’t use force against neighbours but this did not stop its wars with India (1962) and Vietnam (1979). For the last twenty years it has been the lynch-pin of an “anti-imperialist” imperialist push. Chinese imperialism has advanced largely on the basis of good neighbour relations. China has played on “we know what its like to be a victim of imperialism” line to offer soft loans to the countries it seeks to penetrate. Its programme in Africa is already well known [4] but the same process is also going on across the planet, including even the smaller Pacific Islands. According to NBC China’s aid program is difficult to measure, although a report by Australia’s Lowy Institute in 2011 found China’s aid was worth around $200 million a year, with a heavy reliance on soft loans -- a loan with a below-market interest rate -- to finance public works.

In recent years, China’s aid and soft loans have helped build sports stadiums in Papua New Guinea and the Cook Islands, a swimming complex in Samoa, a new port in Tonga, as well as extensions to the Royal Palace in the Tongan capital Nuku’alofa.

China has also funded a new police station and court buildings in the Cook Islands capital Raratonga, and boosted aid to Fiji as western nations shunned its military government after the 2006 military coup.[5]

These links to the building of new infrastructure has also made it easier for Chinese imperialism to maintain that its inward investment is “different”. China also makes no moral judgements or gives lectures about the level of democracy or human rights in its partner states. This further enhances its image as a state that does things differently from the rapacious West. The main aim is to build confidence and trade and this has not been without success. China is (has become the main trading partner of such “pariah” states as Myanmar (Burma), Iran, Sudan and made great gains in trade with Venezuela, Brazil and Turkey.

At the same time, though, China has been moving its own pieces on the international chess board. Over the last decade or so it has established 12 naval bases all round the South China Seas and Indian Ocean right up to the Red Sea (the so-called “string of pearls”) [6] and is now building a navy to fill them. It launched its first aircraft carrier last year and another will be launched soon. And all this comes on top of other developments.

Since the 1990s, China has increased its military spending by an average of more than 10 percent per year as it seeks to modernize its defence forces. Beijing now has close to 50 modern diesel submarines, and is developing a new class of nuclear submarine. China also has new short-, intermediate-, and long-range ballistic missiles — both conventional and nuclear — while its medium-range missiles can already reach many parts of Asia, including Japan and several US airbases. As a result, China’s growing capabilities and its ability to reach beyond its borders are causing concern not just within the Asia-Pacific region, but in the West as well.[7]

These moves did not go unnoticed nor did they always avoid creating tensions between China and the US, as well as its Asian neighbours. However the overwhelming sense that cheap Chinese labour in the hundreds of millions was providing an impetus to a previously stagnant world economy meant that the Chinese advance was accepted as part of the process by which the rest of the world would prosper. China entered the World Trade Organisation in 2001 and thus increased scrutiny of its international trading practices. This was an irritant for the Chinese Communist Party leaders (especially as the US was putting pressure on China to revalue the renminbi) but as getting rich was now “glorious” (Deng) the WTO seemed to offer more benefits in terms of export growth than disadvantages of US criticism. China’s growth leapt, averaging 10% for years, and reached over 13% in 2007.

The global economic crisis

However in that very year the collapse of the speculative bubble in those Western financial institutions which had first helped launch the transformation of China brought about a shift in circumstances and mentality. The bursting of the bubble which began in the USA in 2007 has often been portrayed simply as a further indication of the increasing weakness of the USA and its decline as an imperialist super-power. “The New World Order” which was hailed at the fall of the Soviet Empire in 1990 may have been global but it has not displayed much order as the continuing wars in Central Asia and the Middle East demonstrate. And the cost of imposing US order has become enormous as the wars in Iraq and Afghanistan demonstrate. Surely, argue the pundits, US economic problems will one day be translated into serious military problems? What though has been less emphasised is the impact the financial meltdown in the leading financial centres around the world has had on the global economy, and on those who thought they were on the road to riches because of it.

China itself has not escaped the consequences of global economic stagnation. By the end of 2008 China had lost 20 million jobs as growth rates fell. [8] This might not sound so dramatic as China still enjoys by far the highest growth rates in a stagnant world economy. However since China has to have a growth rate of 8% to absorb the 35 million new entrants to the job market every year this was an enormous setback to the ruling class. With the reduction in the global market for Chinese commodities the response of the Chinese Communist Party was to introduce the Economic Stimulus Plan in 2009. This was a 4 billion yuan (£400 million) investment package to cut interest rates, free up banking capital, so more loans could be advanced to individual Chinese, and boost Government spending. The idea was to stimulate domestic demand to offset the decline in overseas markets. In fact what it has fuelled is some spectacularly useless infrastructure projects [9] and a boom in property speculation like that which proceeded the collapse of the western financial institutions.

At the same time China also decided to double its outward foreign direct investment (FDI) to more than $500 million [10]. This is significant and goes beyond the usual speculative debate about when the US will be overtaken by China as the world’s richest economy. China’s future growth does not depend just on cheap Chinese labour but also on other factors. Energy and food security are paramount for a population of 1.4 billion and the search for it has become much more critical in the imperialist activities of all states. China has oil and abundant coal but neither in sufficient quantities to meet its needs (in oil it needs 9 million barrels a day but produces only 4 million and in 2010 coal consumption exceeded coal production for the first time) [11]. It is the same with food security. China has had record grain harvest for 9 years but even its own officials fear this may lead to reduced harvests in the future due to overuse of the land. Despite the drive for self-sufficiency in cereals China imported corn for the first time in 2009 and Chinese Premier Wen Jiabao visited Thailand in November 2012 to

do a deal to help resolve their rice problems. China’s need for imported rice is soaring and imports have risen almost four-fold this year. [12]

Despite the last two decades of economic growth not all Chinese have shared in it. 474 million Chinese still live on less than $2 a day and are basically food insecure.[13] For some this explains why China has leased huge tracts of African land and invested in African agricultural technology although it has to be said that China is way behind India, Korea and the Middle East monarchies in this respect.[14] But we will see more of this kind of expansion in the future given the enormous food security problems China faces.

At the same time the inequality that we referred to above, where nearly half a billion people are excluded from the fruits of the wealth created in China, has begun to erode the authority of the Communist Party. Previously Chinese who were getting wealthier did not ask too many political questions. Corruption was accepted as the necessary way to get permits to carry out any activity and workers in the Enterprise Zones who were not allowed to settle there permanently were only too glad earn the cash to send home. But this has now changed. The number of strikes in China is difficult to establish but some sources argue that there are thousands if not hundreds of thousands every year. The most dramatic get publicised so that we get some insight into what is going one. In 2012 up to the beginning of October there were 541 such strikes. The last one for which we have details was at the Xinjei Electric Company in Xinxiang [15] when 10,000 workers (50% of the workforce) struck to get the first wage rise in 10 years. There is no such thing as a legal strike in China, they are all wildcats as the Communist Party unions are operating directly for the management. In most cases, as in this one, the workers decide at mass assemblies on their list of demands and then present them to the management. If the management refuses they take to the streets sometimes blocking roads to provoke the state to intervene. A risky strategy since half the time the state sends in the police to attack them but in the rest of cases it forces the factory owners to comply (as it did at Xinjei). As these strikes have become more frequent and widespread (especially since 2010) Chinese labour costs have risen dramatically and are said to be six times that of, say, Cambodia. No wonder:

The country is already losing some of its manufacturing to countries like Vietnam. To make matters worse, productivity in China may be going backwards, according to Frederic Neumann, a Hong Kong-based economist at HSBC, it appears, he wrote last week, that a higher amount of capital investment is now needed to produce each unit of economic output.[16]

This has been confirmed by other sources. Despite China’s huge $3 trillion sovereign wealth fund, its financial system appears to be stoking up a crisis of its own. This is largely due to the fact that state banks are lending to state enterprises for all kinds of investments which are not making a profit. According to the investment organisation GMO,

Economist Andrew Hunt estimates that China’s true public debt has increased by around 60% of GDP since 2007. If Beijing were to attempt to repeat the credit-fuelled stimulus package of 2009, its true debt-to-GDP ratio would exceed that of Greece.[17]

In short although China is not is immediate financial danger (after all the state still controls so much of both the banking and financial sectors) the Chinese Communist Party may not have the financial freedom for manoeuvre that has been previously supposed. And then there are the social questions relating to the latest policies which are causing more strain within the country. Forced evictions from land for housing development, a rising number of environmental protests over China’s squalid pollution as well as greater calls from within China for more “transparency” are all apparently increasing. The Chinese Communist Party has shown a surprising amount of flexibility and skill in controlling all these social conflicts but there is little doubt they are not going away. And like all ruling classes in history when faced with “a little local difficulty” one answer is to stir up nationalistic feelings against “foreign aggression”.

A new Chinese belligerence in the Asian Pacific

And China is not alone here. The South China Sea disputes are an ideal distraction from the domestic challenges facing all Asian countries (though with the added material promise in food and energy resources)[18]. The election of Abe in Japan on a promise to get tough with China and the recent decision of the Philippines under Aquino to take China to the UN for breaching international maritime law indicate that the global crisis is making the nationalist card attractive for the ruling classes of other states beyond China. China though is in the spotlight since not only is it assumed to be becoming the world’s number one power but its new policy is such a striking departure from that of the late Deng Tsaio Peng. Instead of trying to quietly shelf disputes China seems to be playing them up and not just with one Asian neighbour but with a whole string of them at the same time.

The most publicised dispute has been that with Japan. In September 2012 the purchase of the Senkaku islands, from one of its own citizens, by the Japanese Government unleashed a xenophobic backlash against all things Japanese by the Chinese leadership (for whom these uninhabited rocks are called the Diaoyu Islands). Although officially the state was supposed to have tried to prevent the looting of Japanese businesses in China there are plenty of images on the internet showing that the police not only connived at the looting of Japanese stores but actually incited people to attack them. These were not the first anti-Japanese riots in China (the last were in 2005) but they take place against a background of the deliberate fanning of a nationalist sentiment in both countries. Japanese companies’ losses are around $126 millions and even greater losses are expected in the boycott of Japanese goods (like cars) in the immediate future. China has not so far responded like it did in 2005 by halting the shipment of rare earths to Japan (in direct breach of WTO obligations) but a new cold war has begun with the Japanese Navy patrolling the area around the islands and the Chinese responding by flooding the area with hundreds, if not thousands, of small “civilian” craft.

And this is not the only territorial dispute in which China is involved with it nearest Asian neighbours. From the Kurile Islands north east of Vladivostok to the Spratlys in the South China Sea China is at loggerheads with Japan, Taiwan, the Philippines, Malaysia, Brunei and Vietnam. What has made them more significant is the increasingly aggressive actions adopted by the Chinese leadership since 2010. The Chinese have virtually driven the Philippines from the oil-rich Spratly Islands by building a base on the biggest island. In retaliation the Philippines has only protested so far but also symbolically changed the name of the “South China Sea” to the “West Philippine Sea” on its own maps.

Vietnam is the only big producer of oil in the region with the state-owned oil company PetroVietnam producing 24.4 million tons, or 26 percent of Vietnam’s total production, in 2010 from three fields in the South China Sea but its current reserves are thought to be limited. With production in established fields declining, PetroVietnam has concluded 60 oil and gas exploration and production contracts with various foreign companies to explore other areas of the South China Sea. This aroused the ire of the Chinese. In May 2011, Chinese patrol boats attacked two Vietnamese oil exploration ships near the Spratly Islands cutting their exploration equipment, and the incident sparked several anti-China protests in Vietnam (and in Vietnamese exile communities around the world). In the same month Chinese naval vessels opened fire on Vietnamese fishing vessels operating off East London Reef (also known as Da Dong Island). This was not the last incident and at least 4 Vietnamese fishing boats have been fired on in the same area since. In retaliation Vietnam’s National Assembly passed a resolution in July 2012 demarcating Vietnam’s sea borders to include both the Paracel and Spratly Islands

Not to be outdone the Chinese Government’s latest wheeze is to issue passports with a map inside of all areas that China claims. This shows not only the entire South China Sea as Chinese territory but also Taiwan, the Indian state of Arunachal Pradesh as well as the Himalayan state of Aksai Chin. Since the war of 1962 the border between India and China is still largely unmarked and the Indians claim that China occupies over 40,000 square kilometres of its territory in Aksai Chin. The Chinese strategy is quite clever as other Asian governments have to stamp a document which implies accepting Chinese claims. Whilst Vietnam and the Philippines have protested that the passports are breach of international law, India has retaliated by issuing visas to Chinese citizens with a map showing its own version of the border!

Things finally came to a head at the ASEAN-China Summit in Phnom Penh in July 2012 where the Philippines attempted to bring up Chinese aggression in the South China Sea. The Cambodian presidency (Cambodia is a staunch ally of China) attempted to prevent the discussion only to get an angry response from Aquino, the Philippine President. For China, Wen Jibao declared that the islets in the West Philippine Sea have been “Chinese territory since ancient times and no sovereignty dispute exists” and justified Chinese actions on those seas as “appropriate and necessary”. Such a response hardly endeared China to the majority of those present but its refusal to back off is not only a reversal of Deng’s central policy it is also based on the calculation that China is economically indispensable for the future wealth of the South East Asian countries and they will therefore be forced to accept Chinese imperialist reach. The key to the response of China’s neighbours lies in the US which almost certainly gave the green light to Aquino’s challenge in Phnom Penh.

US Imperialism in the Pacific

Over the last decade or so there has been no shortage of calls amongst the US ruling class for the US administration to “do something” about the rise of China. In fact the Republican Right has become so hysterical about the issue its jingoistic rhetoric more than matches the nationalist blogs which Beijing is allowing on the web in China today. For many of the capitalist class in the US the decline of its economic and military power is increasing and it has all got to do with the “unfair” competition from China. According to many in the US ruling class Beijing might have joined the World Trade Organisation but it does not “play by the rules” nor does it have a fully convertible currency. Even then the renminbi is deliberately undervalued to boost Chinese foreign sales and undermine US production. Typically though these blinkered imperialists forget that it was US companies investing their capital in the Economic Enterprise Zones set up by Deng that kick-started the “rise of China”. It was US companies who benefited from the low cost of Chinese labour power to create the cheap goods with which they flooded the US market and thus were in a position to keep down labour costs in the US. On the other side the Chinese cannot be entirely happy sitting on $3 trillion of (mostly) US cash which has been losing value at roughly 8% a year since 2007. Little wonder that the Chinese state now insists that the renminbi be used for at least part of many new transactions in contracts in the future. More surprising was the speech by Jin Li qun (head of the China Investment Corporation which controls China’s sovereign wealth fund) at the recent Davos conference of the World Economic Forum. Taking a leaf from the US book he thought to lecture the US on not overusing the money printing press if it wanted to maintain confidence in the dollar.

Despite the talk of making the Pacific a “pivot” the US has not exactly been absent from the area for the last 60 years. It had something like 32 bases there including its largest overseas naval facility anywhere at Yokosuka in Japan. It has underwritten the defence of Japan ever since the end of the Second World War (although some Japanese leaders, including the current Prime Minister, are now talking of altering Japan’s “pacifist” constitution in order to expand its “defence forces”). The US already has more troops (50,000) in Japan than any other country in the world with a further 28,000 in South Korea and another 49,000 on home soil in Hawaii. Thus talk of a pivot to Asia can only mean an even bigger build-up of US might in the area.

But “the first Pacific President” was not free to act so quickly in his first term. Dealing with the fallout from the financial collapse of 2007-8 was more of a priority. A new initiative also required the US to extract itself, at least to a certain extent, from the mire in Iraq and Afghanistan before it really could be viable. With the retreat from Iraq and the prospect of a wind-down in Afghanistan in 2014, the US has opened up more room for manoeuvre. A clear sign of this came with Obama’s trip to Australia in November 2011. Announcing the opening of a new base for 2500 marines in Darwin Obama told a Canberra audience that

The United States is a Pacific power and it is here to stay.[19]

His National Security Adviser Tom Donilon though spelled out the idea more clearly in an article in the Financial Times a year later.

Asia Pacific will be more secure and prosperous when nations uphold the values that are universal. It is no coincidence that our closest allies in the region are strong democracies. Our common values are a fundamental source of strength, which is why America partners with growing democracies such as Indonesia.[20]

You don’t need to be a political genius to see that, with the talk of “democracy” and “values”, the Asian pivot is specifically aimed at China even if the US tries to pretend otherwise. Given this the title of Donilon’s piece “America is back in the Pacific and we will uphold the rules” makes US’ intentions clear.

In June 2012, the Defense Secretary Leon Panetta had already announced in a regional defence forum in Singapore that the US Navy would shift 60% of it resources in the Pacific over the next decade. This means that 6 aircraft carriers (at the moment there is just one), along with the majority of the Navy’s cruisers, Littoral Combat Ships and submarines will be deployed in the Pacific. The number of naval exercises with allies (Japan and South Korea) is to increase too. This is despite the fact that the Pentagon has already agreed to cut $485 billion from its budget over the next decade but “budget restrictions will not come at the expense of that critical region” (Obama) [21]. An even greater proportion of US military expenditure will thus be directed at the Pacific where it already has a large presence.

With nearly 30,000 U.S. troops in Korea, up to 2,500 Marines headed to Australia, and about 26,000 troops in Japan, an American presence in the region is nothing new. But the additional U.S. presence will be used to bolster alliances with countries like Singapore, the Philippines, Indonesia, Malaysia, India, Vietnam, and New Zealand. [22]

And that is not all. The building of a new missile base has begun in Japan. This is in addition to the recently opened Marine base at Darwin in Northern Australia. To bolster Philippine resistance to Chinese bullying, the old US bases closed after the fall of the Marco regime are to be re-opened. Clark Air Base and its military reservation are 244 square miles of land that played a vital role for the U.S. during the Vietnam War and is capable of hosting the largest of America’s military aircraft. Subic Bay played an even greater role in U.S. operations and until the withdrawal in 1991 it was the largest overseas US military base in the world. The waters at Subic Bay can host U.S. submarines and the largest of naval ships.

And at the same ASEAN-China summit in July 2012 that we referred to above Secretary of State Hillary Clinton after a tour of Japan, Mongolia, Vietnam and Laos arrived in Cambodia to lecture the Chinese on respecting freedom of navigation in the South China Seas. ASEAN and its connected organisations has been China’s favoured forum for advancing its interests, particularly the ASEAN Regional Forum (ARF) which excludes the US. It has used this to make generous individual trade deals with the other ASEAN countries and in return it has operated on a consensual basis with no one asking any awkward questions about China’s sovereignty claims. This is now being challenged by the US.

After years of opposition by the members of the Shanghai Cooperation Council [23] the US joined (alongside Russia) the East Asia Summit in November 2011. It immediately made its presence felt at the Seventh summit meeting just a couple of weeks after Obama was re-elected. The meeting achieved nothing thanks to the repetition of the same stand-off between the Philippines and China over the Scarborough Shoal dispute which had occurred in July. By insisting that the sovereignty disputes should be discussed in the ASEAN dominated forums the US is spoiling the Chinese aim of getting closer and closer trade links through them. No surprise then that the Chinese Communist Party media should denounce the US for “sowing the seeds of discord” in the ASEAN meetings which it does not consider the appropriate forum to discuss territorial disputes.

Shi Yinhong, an expert on international relations at Renmin University in China, said … China was concerned about maintaining good relations with Asean and that the bloc should look carefully at Beijing’s stance on the wider issue, noting: “China’s position is that for the territorial dispute they will only accept negotiations between individual countries. For maritime rights I think it is much more flexible.”[24]

US imperialism though is not content with simply acting as a spoiler for Chinese projects in Asia. It also thinks it has some big advantages in enticing the Asian countries further into its orbit. The vehicle for this is the Trans-Pacific Partnership (TPP). Whereas China, a country in which the state stills plays a dominant role in the management and even ownership of the bulk of the economy, seeks cooperation at governmental and state level the US approach is entirely different. They seek to promote international cooperation through the old fashioned capitalist values of “free trade, democracy and transparency”. Thus the TPP is supposed to be a pure trade agreement (like NAFTA) open to all in the Pacific Rim (Canada, Chile and Peru have already signed up) but only 2 of its 25 chapters are about trade. According to Foreign Policy magazine

The TPP is being structured around principles America champions in terms of transparency, protection of intellectual property, labor rights, environmental protection, and so forth (these could be considered to be “WTO plus”). While Obama noted that all who accept its principles will be welcome to join, the TPP principles differ greatly from those that guide most Chinese actions in the economic and trade arena. China is not among the initial group of countries negotiating to establish the TPP.[25]

But what kind of “transparency” are they talking about when the terms of the agreement are not actually open to the public outside the CEOs of a few huge corporations like Goldman Sachs. It is a charter for monopoly finance capitalists.

The rules it creates would override domestic laws on the environment, workplace safety, and investment. Of course, it’s not really possible to talk about the details because there are no publicly available drafts.[26]

The reason for the secrecy is that Congress has to vote on it and the President’s advisers don’t want them to scrutinise it too closely. They just want a quick debate and quick vote. Some journalists are already pointing out that it will be like NAFTA and that the net effect will be the loss of further US jobs to Asia (although naturally a higher return on investment for the US finance houses).

In fact the TPP strategy is founded on monopoly capitalist ideology. All sections of the capitalist class in the US believe that if all tariff walls came down and there was a level playing field in global trade then the superiority of US productivity would win the day. But this is like living in the past. Tariffs and regulations are not the real barriers to trade today as they were before the Second World War. The barriers are more sophisticated and hidden like currency manipulation, cartels that control distribution and the supply of materials and parts, tax and financial investment incentives, and even judicial systems that favour local business (as BP in Russia will testify). The fact that the Securities and Exchange Commission has also charged the Big Four accounting firms and their Chinese partners with failure to provide accounting data appears to be part of the same strategy [27]. The TPP looks more like part of an ideological crusade rather than a workable project.

However this has not stopped its continual promotion and no matter the ethics the race is on to get more countries to sign up to it. Obama‘s first act after re-election was to head for Thailand, Cambodia and Burma (Myanmar) as the first step of his “Asian rebalancing”. Burma’s military dictatorship has long been a pariah in the West so it has relied on Chinese (and Indian) military and economic support during the long years of sanctions. Now the cosmetic “democratic” reforms of Thein Sein in 2010, which have done little to improve its reputation as one of the most brutal regimes in the world, have led to a procession of Western leaders from Jose Manuel Barroso to Obama (including Cameron) arriving in the country. They are not just there for a photo-op with Aung San Suu Kyi. It is clear that the campaign is one to counter the long-time support of China. For China Burma is not only a source of raw materials where it has invested billions in mines and dams it is also of great strategic importance. In May this year an 800 km gas pipeline is due to open to connect Kunming in Yunnan province with the Indian Ocean. [28] An oil pipeline as well as road and rail links are set to follow in 2014. This is a major leap forward for Chinese strategic interests in the Indian Ocean as well as providing a much cheaper route for its gas and oil. It is another success for China’s non-judgemental approach to imperialism. The Burmese generals signed the contract for this in 2006 just after China vetoed a UN Security Council resolution condemning their human rights record.

Since the 2007 global crash (plus the effect of Typhoon Nargis) the Burmese economy has been in dire straits with food riots and at least 5 insurrections by ethnic minorities against the brutality of the military’s oppression. Never mind though, Burma is now “en route to democracy” and any deal benefits both sides. The regime has already seen the Paris Club of rich countries cancel $6 billion of it debt (half of this by Japanese lenders – Japan has it eyes on the port of Dawei – and the promise is that it will get much needed inward investment). The West sees it as a start to counter-balance China’s influence inside the country.

Given all of the above moves it is clear that US disclaimers that the “pivot to Asia” is not intended to counter Chinese expansion are about as believable as Adolf Hitler’s Munich promises.

The contradictions of the world imperialist order

China-US relations have arrived at a new stage. Hitherto both states economic interdependence on each other has been so great that neither has had an interest in being the first to break the mould. After the collapse of the speculative bubble and the 2011 raising of the US debt ceiling yet again many Asian states (the holders of the majority of US government bonds) saw this as direct evidence that the US was now on the definite path to decline. There was little hope but to try to curry favour with China through the ASEAN partnership and even to accept the Chinese military actions in the South China Seas (as the Philippines initially did when it abandoned the Scarborough Shoal). The US though has had to re-assert its position in Asia. Whilst the US had been careful to distance itself from getting involved in the territorial disputes up to this year, it recently told the Chinese Government that it recognises the Shenkaku Islands (which were taken by the US in 1945 but given back to Japanese administration along with Okinawa in 1972) as Japanese-administered, without referring to the question of ownership. For the Chinese ruling elite this is a further indication that the US intends not only to get involved in territorial disputes which are close to the Chinese mainland but is also intent on a policy of encirclement.

There is no doubt that the US return to the Pacific has been welcomed by many of its old allies (particularly Japan and the Philippines). On their part this is not simply an anti-Chinese policy. Many of them recognise that they have a mutual interest in trade with China (the Japanese carmakers’ response to the trashing of their cars in China’s riots in 2012 was to offer to replace them free) but the refocus of the US now means that China no longer has a free hand in the area and thus they hope the balance can be redressed. India, Vietnam, South Korea and the Philippines have all welcomed the new US policy in this respect whilst states like Burma are now clearly hoping to play one side off against another.

We thus don’t want to fall into the old error of so many Marxists in the past of exaggerating the potential for conflict in the short term. The imperialist moves we are seeing today are barring accidents unlikely to have immediate consequences in 2013. China and the US still have much mutual interest in muddling through the crisis but the problems both face in a variety of areas mean that any rapprochement is difficult. With China’s growth now not considered capable of meeting its needs as an economy which can provide more jobs (Cambodia can offer wage rates of one sixth of China’s but lacks the volume of workers with the same skills as in China) the tensions will be racked up. The US too has its problems. Leaving aside its enormous debt burdens, and its incapacity to deal with its fiscal crises, its manufacturing base now accounts for only 9% of its GDP and 25 million Americans are incapable of finding a decent job. All this creates pressure for more economic protectionism. At the highest levels there is no real dialogue between the US and China. The leaders exchange platitudes about mutual benefits from China’s growth whilst the military on both sides have no dialogue and are known to be preparing war plans against each other.

And the coming confrontation in the Pacific is not isolated from the rest of the imperialist crises around the planet. South Korea and China both import oil products massively from the Middle East where the convulsions in the Arab world continue to roll on. The rise of Islamic fundamentalism in the countries which have ditched their pro-Western dictators (and even Ghaddafi could be called one in the end) is not the end of a story but part of an ongoing imperialist struggle which has lasted decades.

The intervention of the Islamist monarchies in Qatar and Saudi Arabia has ensured that the murderous regime of Assad has become locked in a war claiming at least 60,000 deaths in Syria. This is no civil war but in reality another imperialist proxy war. The Qataris and Saudis are supplying the weapons whilst the Americans and Europeans look on benignly (after all it undermines the Russians and Iranians and, by proxy, the Chinese still further in that region) even though they may come to regret it later.

At the same time the war in Afghanistan “drones” on, Israel threatens to launch a pre-emptive strike against Iran, Iraq is on the brink of civil war, African states, themselves the artificial creations of colonial regimes, from Mali to the Congo are disintegrating and the Argentine government is loudly calling on the British to “give back the Malvinas”.[29] In this article we have not even found space to analyse the arms race between the two Koreas (both have been launching missiles in the last few weeks). Behind all these phenomena lies the increasing acuteness of the global capitalist crisis. The implosion of the speculative bubble on which capitalism had relied to deal with its crisis of accumulation for the last 20 years or so has laid bare all the rivalries and narrow interests of all the powers, big or small, as they whip up nationalism to hide the fact that they have no real economic solution to the fallout from 2008. On the one hand they are making their populations pay for the crisis in austerity programmes, and on the other they are pointing the finger at other countries, or the citizens of other countries, to whip a nationalist frenzy in support of the existing state. This not a paradox, but the logical response of all imperialist states in times of stress.

And whatever happens in the short term the need for global capital to engage in a massive devaluation (even greater than the banking write-offs we have seen in the last 5 years) of capital ensures that the crisis behind it all will not go away. At some point one of the major players in all this will be faced with a situation where it sees a tipping point beyond which its interests can no longer be defended.[30] It may be over energy or food security or something else, and it may not come soon, but given the nature of capitalism (which despite globalisation) has never passed to that happy state of cooperation so expected by Kautsky [31], come it will. The only force which can stand in its way is the collective internationalist might of the world working class everywhere. “Socialism or barbarism” remains our slogan.



1 For a longer explanation of our view on this see Chinese Imperialism, A New Force in Africa in Revolutionary Perspectives 47 (Third Series) now on our website at We have not repeated here the analysis made there of the rise of China or the fact that it was never a “communist” state as Maoist fantasists proclaimed. The current article should be read in conjunction with that one.

2 Chinese Foreign Relation Strategies Under Mao and Deng: A Systematic and Comparative Analysis

Joseph Yu-Sek Cheng and Franklin Wankun at

3 These principles are: Mutual respect for each other’s territorial integrity and sovereignty, Mutual non-aggression, Mutual non-interference in each other’s internal affairs, Equality and mutual benefit, and Peaceful Co-existence. They were actually first enshrined in a treaty between China and India in 1954. This did not stop the two countries fighting over a border dispute in 1962!

4 See the article in Revolutionary Perspectives 47 (Third Series) referred to above.


6 The main ones are in Marao, Maldives; Gwadar, Pakistan; Chittagong, Bangladesh; Sittwe, Burma; Lamu, Kenya; and Hambantota, Sri Lanka.


8 NBC News 7.12.2012

9 See Simon Rabinowitch China’s Road to Nowhere in the FT 16 July 2012 at

10 See Ken Davies “While Global FDI Falls China’s Outward FDI Doubles” (OECD 2009)

11 Figures from

12 Wall Street Journal 25.11.2012



15 See

16 Paul J Davies “Between the lines of China’s never-ending growth story” Financial Times 18.4.2012

17 See

18 “The waters are rich in energy resources and fisheries and an estimated $5tn (£3tn) of cargo – half the world’s shipping by weight – passes through them each year.” The Guardian 20 November 2012

19 Financial Times 18.11.2011

20 27 November 2011

21 Geoff Dyer China _and US create less pacific ocean_ in Financial Times 13.2.12

22 Read more: The figure for US troops in Japan is half the figure quoted earlier (which is also the one in Wikipedia). The higher figure may include naval and administrative personnel.

23 The Shanghai Cooperation Organisation consists of Russia, its former Central Asian satellites and China. Iran and India are among those with observer status in it. IT was Chinese opposition which prevented US adhesion to the East Asian Summit earlier and the quid pro quo of also including Russia seems to have brought this about.




27 These are BDO China Dahua Co. Ltd, Deloitte Touche Tohmatsu Certified Public Accountants Ltd, Ernst & Young Hua Ming LLP, KPMG Huazhen (Special General Partnership), PricewaterhouseCoopers Zhong Tian CPAs Limited. See

28 See David Pilling China’s pipeline marks the scramble for Myanmar in the Financial Times Jan 31 2013

29 And no doubt readers will notice that this list does not even include the joker in the pack – North Korea.

30 As with Germany in 1914. The German general staff already had a twenty year old war plan in their cupboard (the Schlieffen Plan) but they saw that if they waited until 1916 the Russians would have developed their rail network enough to mobilise more quickly than the plan allowed. On the other hand Russia and Britain were quite happy to enter what they thought initially would be a short war to divert attention from the class struggle at home.

31 For an introduction see Kautsky assumed that imperialism was an aberration which the capitalists could ditch when they did not need it (as they had previously ditched “free trade”) as peace was the best condition for capitalist accumulation. What he did not see that under monopoly conditions the competition between capitalists now meant competition between states. Imperialism was not a free choice or policy but was imposed on capitalist by the material conditions of their own accumulation process.

Wednesday, February 27, 2013


The spelling "Deng Tsaio Peng" is mistaken, and the spelling "Tsaio" is an impossibility. Either "Deng Xiaoping" or the older spelling " Teng Hsiao-p'ing " (the apostrophe often left out in journalistic use).

Oops! Agreed re impossibility (its a typo). Will correct. Thanks. Have fixed a few other typos as well. Further correctiosn welcome but not as much as political comment!

Would be very helpful to provide a update to this. The military interventions ratchet up constantly - North Korea missiles, Japan record military spending, Chinese grab of US drone etc. Parallel to it the Chinese economic imperialist adventures grow with both Greece and Great Britain providing opportunities.

Meanwhile Trumps's declared intention to withdraw from TPP has thrown spanner into the works of the US inspired strategy and caused consternation for its erstwhile partners e.g. New Zealand where TPP was signed. No surprise that the Chinese ruling class have become more bullish with their proposed "Regional Economic cooperation" proposal.

Chinese proposal should read "Regional Comprehensive Economic Partnership"

Both corrections willingly aceepted with thanks. Odd that you should look at this now asit is 3 years old but perhaps it came up the list because I made some corrections yeterday to the layout. However I did go back to it as part of preparation for an update and not just re Asia.

As there are continuing uneven unequal stages of economic development of countries around the world, is it not unlikely that any sort of simultaneous world-wide revolution will occur ? Mass movement of poverty-stricken workers from vast areas containing enormous resources are putting pressure on their destinations, where Trotskyists and others are urging local people to welcome them, irrespective of local shortages of jobs, housing, schools and health services. The arguments by the 'communist left' for what might be summarised as a nicer form of communist dictatorshiip, agreeable to workers locally and everywhere else, varies from what the CL regards as the 'not real communism' expeienced so far by workers where it has been since displaced by 'market socialism' as in Russia and China, whereas the Stalinist North Korea is not known to be welcoming poverty-stricken immigrants; on the contrary it seems intent on stopping workers from leaving its own state. All this seems likely to strengthen, rather than diminish, calls for localised nationalist views, from which the only hope of peace would be mutually advantageous co-operation, even under capitalism, whatever Lenin had to say about its highest stage producing wars. But then the vast arms industries need to sell weaponry to all and sundry, or go bust. Would the construction of air-raid shelters be profitable until, if ever, all this blows over, or up ?! Everyone welcome here, of course, as long as there's food on your plate ?! There were said to be two lessons from Auschwitz:- The first chance is the best, and look after your feet.

Hi KLZ. Your comments are pretty wide ranging but it might be interesting to comment on a few strands.

You are right that there is a "vast arms industry". This is a reflection of late imperialism's crisis-ridden proliferation of local wars and oppression together with stockpiling for a possible future cataclysmic global war. It is misunderstanding the relationship to think that the selling of arms is driving the bosses' response to their systemic crisis. The reverse is much closer to reality.

Left Communists remain confident of the possibility of proletarian revolution opening the way to a future based on the genuine needs of all of humanity. This is still our perspective because the working class "in itself" continues to exist and change. So long as that is the case then as a class, we retain our potential to be "the grave digger of capitalism". We are also heartened by the continuing vitality of organisations, nuclei and individuals across the world who share or are moving towards clear communist consciousness- understanding the potential when our class acts "for itself".

The road to a classless future lies through the destruction of the capitalist structures and its replacement by the rule of the working class, a class whose interests are not based on the exploitation of fellow humans. The period after the initial establishment of proletarian power, possibly for a short period in only part of the world, is not well described as "a nicer form of communist dictatorship". We refer to it as a period of transition where proletarian power spreads world-wide and the last vestiges of the capitalist economic and social relationships are eliminated.

It is true that historically Marxists have used the term "Dictatorship of the Proletariat" to describe that phase of control by the Councils/Soviets while vestiges of capitalism remain. The essence of the use of the term was to distinguish the phase of proletarian control from the preceding "Dictatorship of the Bourgeoisie" i.e. Capitalism whether exploitation is exercised via "strong states" or with a democratic facade.

Hi schless, thank you for your response. It seems to me that there are considerable differences between positive imagination and likelihood.

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