https://socialistaction.org/2019/09/20/trump-trade-and-china-a-marxist-assessment/
Trump, trade, and China: A Marxist assessment
/ 11 hours ago
Sept. 2019 China Honda-Lock
Strikers at Honda Lock factory in Zhongshan, Guangdong province, in
2010. (Tyrone Siu / Reuters)
By JEFF MACKLER
Rarely a day passes when one or another U.S. ruling-class institution or
personality fails to criticize President Trump???s unilateral imposition
of ever increasing and broad-ranging protective tariffs against Chinese
imports. Trump???s critics include the Democratic Party as well as leading
Republicans, the prestigious corporate ???newspaper of record,??? The New
York Times, and the aptly dubbed ???ruling class think tank,??? the Council
on Foreign Relations. The latter???s September/October 2019 Foreign
Affairs, headlined, ???How A Global Trading System Dies,??? features five
articles and essays warning U.S. policy makers against Trump???s course.
The titles themselves are indicative of Foreign Affairs??? viewpoint. They
include: ???The Sources of Chinese Conduct: Are Washington and Beijing
Fighting a New Cold War???? and ???Competition Without Catastrophe: How
America Can Both Challenge and Coexist With China??? as well as ???Trump???s
Assault on the Global Trading System And Why Decoupling from China Will
Change Everything.???
All Trump???s trade policy critics begin with the proposition that China
today operates on the world stage as a leading capitalist power, indeed
as a leading imperialist power with ever-increasing intentions to
dominate world markets to the disadvantage of its competitors.
There???s nothing new here! In the world of high stakes globalized
imperialist competition, there are no friendly players or permanent
???historic allies.??? Indeed, Trump???s imposition of major tariffs include
painful measures inflicted against its traditional European allies,
including France, Germany, Italy, and England, as well as Canada and
Mexico. To date, it is estimated that Trump???s tariffs???imposed or to be
imposed in stages at rates from 10% to 15% and even 30%, have been
levied on Chinese, European, Canadian and Mexican imports???are valued at
close to $700 billion, the great proportion of which are aimed at China.
But with regard to all these affected nations, which have retaliated
with their own tariffs against U.S. exports to their nations, Trump???s
critics share the view that???unlike the Cold War ???containment??? and
isolation strategies imposed on the Soviet Union for some 70 years prior
to its restoration of capitalism in the late 1980s and early
1990s???China, with a Gross Domestic Product ranked second in the world at
63 percent of the U.S. GDP and the largest trading partner with more
than half the world???s nations, cannot and must not be excluded from the
world marketplace.
Workings of the WTO
Dependent on world trade to export their commodities outside their own
limited domestic markets, Trump???s critics seek to engage U.S.
competitors in broad-ranging negotiations via the aegis of the World
Trade Organizations (WTO) and similar international bodies. This is
opposed to Trump???s belief that he can unilaterally bludgeon competitors
into submitting to his dictates, usually in accord with the specific
interests of various components of the U.S. ruling class closest to or
beholden to Trump???s personal circles.
The U.S.-led Cold War policies of previous decades were aimed at the
Soviet Union from the time of the 1917 Russian Revolution and continuing
through the post-World War II period, when Eastern Europe, via the
Soviet Union???s defeat of the largely German-occupied and pro-Hitler
capitalist governments there, laid the basis for extricating this huge
swath of Europe from capitalist domination. Central to U.S. policies was
the fear that the Soviet workers??? state???s abolition of private property,
its original world revolutionary intentions, and its instituting a
monopoly of foreign trade aimed at preventing world imperialism from
undermining its nascent domestic economy with superior technologies and
commodities.
The 70-plus years of the U.S. Cold War were aimed at bringing down the
Soviet state and its Eastern European counterparts, as well as China and
Vietnam. In Western Europe, where the wartime governments in France and
Italy embraced and collaborated with the German Nazi occupation, the
immediate post-war period was marked by massive working-class
mobilizations that posed a serious threat to capitalist rule and led to
major victories that persist to this day, including systems of free
health care and major extensions of union and workers??? rights.
Similarly, the 1946 post-war U.S. strike wave, the largest in history,
saw millions take to the streets to close down major U.S. industries
demanding union recognition and an end to the wartime wage freeze that
had brought unprecedented profits to the warmakers??? military-industrial
behemoth and misery to the working-class majority.
A frightened U.S. ruling class, fearful that Europe???s mass
anti-capitalist worker mobilization would inspire similar challenges to
capitalist prerogatives at home, but untainted with Nazi collaboration
as in France and Italy, launched the infamous McCarthy-era witch hunt
aimed at purging socialists and communists from leadership positions in
the growing trade-union movement.
China???s 1949-54 revolution eventually abolished capitalist property
relations and ended the centuries of world imperialist division,
exploitation and colonization of the Chinese people. As with the ending
of capitalist rule in the USSR and Eastern Europe, the U.S. and the
imperialist world more generally sought restoration and/or expansion of
its ???interests??? in all these states, using ever-increasing military
measures (NATO), overt intervention in China during the Korean War,
sanctions, embargoes, and economic isolation, coupled with CIA secret
wars, assassinations and in,dustrial sabotage.
Stalinism???s role in Russia and China
They were aided in these efforts by the ceaseless disputes that emerged
between the Stalinist-led bureaucratic regimes in China and the USSR,
both of which periodically sought ???peaceful co-existence??? alliances with
U.S. imperialism against each other as opposed to advancing the
interests of the world???s working masses.
Sept. 2019 Mao & Stalin
Mao, Stalin, and allies in 1949.
The Russians, under Stalin, demanded that the Chinese refrain from
alienating the defeated Chinese capitalists in 1949 by nationalizing
their property and repeatedly insisted on Russian ownership of disputed
border areas in the Chinese East. The Chinese, under Mao Zedong, armed
and financed U.S. and apartheid South African-backed ???guerrilla
fighters??? in efforts to overthrow the Russian-allied Angolan government.
The infamous 1972 Nixon-Mao meeting in Beijing at the height of the U.S.
genocidal war against Vietnam informed world opinion that China
preferred an alliance with U.S. imperialism as a counter to its rivalry
with the USSR???the Vietnamese liberation war be damned! China was the
first nation to recognize the fascist-like Augusto Pinochet government
of Chile that came to power in 1973 via a U.S.-supported military coup.
China???s heinous 1979 invasion and war against Vietnam, in retaliation
for Vietnam???s 1978 invasion of Cambodia to stop the mass murder of
millions of Cambodian workers and peasants at the hands of the
China-allied Pol Pot regime was yet another horrific example of China???s
???Russia [not U.S. imperialism] is the main danger??? thesis.
Russia???s Stalinists too pulled out all the stops to advance their
???nationalist??? interests against China, not to mention Russia???s
reactionary invasions of Hungary (1956) and Czechoslovakia (1968), aimed
at smashing working-class rebellions against Stalinist rule.
Beginning with the 1979 rise to power in China of the
capitalist-restorationist regime of Deng Xiaoping, China???s Stalinist
leaders signaled world imperialism that they were more than willing to
re-open their nation to imperialist penetration and plunder. A decade
later, the Russian Stalinists too submitted to massive imperialist
penetration and facilitated a capitalist restoration process that
brought untold misery to the Russian people.
China enters the WTO
Convinced that capitalist restoration in China was the order of the day,
in 2001, the U.S. ended all aspects of hostility toward China and
presided over China???s admission to the WTO. The terms were simple
enough; China would allow U.S. corporations to set up shop and employ
endless numbers of Chinese workers at near slave wages and under
state-of-the-art technologies to produce unprecedented numbers of
commodities for the U.S. and world marketplace. This super-exploitation
of Chinese labor had the effect of temporarily boosting declining U.S.
profit rates, closing non-competitive U.S. factories, and freezing or
reducing U.S. wage rates???more than a 10-year bonanza for U.S.
corporations, which happily shipped back to the U.S. Chinese-made
commodities from U.S.???owned factories at nearly zero tariff rates.
Indeed, U.S. tariff rates at some 1.5 percent or zero on most Chinese
imports were among the lowest in the world. And why not? Historically,
tariffs are imposed by nations with inferior technologies that cannot
effectively compete on world markets. The age-old debate between
protectionists and free traders always comes down to which nations need
protection and which need total and unobstructed access to world markets.
In the 18-some years since China was admitted to the WTO, China went
from operating as one of the world???s lowest technology nations to today,
when Chinese technology rivals or exceeds almost all other nations on
earth. In the past 20-plus years, for example, China went from providing
???internal migrant??? teenage girls from the countryside, producing
garments in prison-like foreign-owned dormitory factories at six cents
per hour and seven days a week, to a nation with some of the most modern
factories in the world, producing world-class industrial tools and
machinery and state-of-the-art 5G (fifth generation) electronics and
telecommunication products.
Super-high-tech 5G Chinese corporations like Huawei are today capable of
challenging and exceeding the world???s most sophisticated operations. A
2017 Financial Times survey of the global mobile infrastructure market
showed that Huawei had a world market share of 28%, with Sweden???s
Ericsson at 27%, Finland???s Nokia at 23%, and ZTE, another Chinese firm,
at 13%. Japan???s Samsung had 3%. All the others, including the U.S.
corporation Cisco, had only 6% between them.
The WTO???s inherent contradiction
Established in 1995, and including more than 124 nations, the WTO is an
intergovernmental organization concerned with the regulation of
international trade in goods, services, and intellectual property. Its
functions include negotiating trade agreements and establishing dispute
resolution mechanisms to enforce them. While the free-trade-oriented WTO
prohibits tariff and other discriminatory practices between trading
partners, it provides exceptions for so-called environmental protection
and ???national security??? issues, the latter now invoked by the Trump
administration to mean the ???right??? to ignore WTO rules.
Trump, for example, recently threatened to invoke U.S. ???national
security??? concerns to ban Japanese cars from the U.S. market. Needless
to say, the most powerful WTO nations, with the ability to ban key
commodities from their markets, make the rules in the context of their
so-called ???free trade??? system. Thus, ???deal-making??? is the norm among
trade negotiators. The most powerful are able to make ???concessions??? when
they negotiate with the weaker, based on the fact that the latter
usually compete with regard to a handful of products while the former
compete on world markets with literally thousands of commodities.
Further, and perhaps less known, is the fact the WTO???s ???dispute
resolution??? mechanisms consist of a rotating group of arbitrators that
the U.S. does not always dominate, posing the possibility that
unilaterally-imposed U.S. tariffs might be reversed, hence perhaps a
clearer explanation for Trump???s public distain for WTO rules and its
leading component powers.
Decline of U.S. economic power
Of course, the most obvious aspect of Trump???s and U.S. imperialist
concerns rests in the undeniable fact that the U.S. economy is far from
stable, that the U.S. no longer operates with impunity on world markets,
that its technological supremacy is increasingly challenged by its major
competitors and that, in consequence, its corporate profit rates are
steadily in decline. In short, the inherent factors that periodically
lead all capitalist powers to crises and decline are fully operative today.
This is the primary explanation for why every serious assessment of the
state of the U.S. and world economy includes dire warnings that perhaps
another great recession, deeper than the devastating 2008-09 massive and
near financial collapse, and associated devastating effects on U.S.
workers, may well be on the horizon. When in mid-August Trump publically
attacked Federal Reserve Chair Jerome Powell, charging that Powell posed
???a greater threat to the U.S. than China???s President Xi Jinping,???
serious analysts took notice, not because of Trump???s buffoonery, but
rather because Trump sounded the alarm that the corporate elite needed
even lower interest rates to facilitate corporate ???borrowing.???
And borrowing for what purpose? As with past and recent periods of
nearly zero interest rates under the Obama administration, corporate
borrowing is qualitatively less for infrastructure investment and
building new U.S. factories than it is for a new wave of stock market
and related highly speculative ???investments??? that have lined the pockets
of the billionaire elite with ???paper money??? that has little or no
correspondence to real commodities.
Trump???s bragging that the U.S. dollar is the strongest currency in the
world is increasingly challenged when China, Japan, and a growing number
of other nations conduct business in their own currencies as opposed to
the ever-inflating U.S. dollar. Indeed, China???s deflating its own
currency, the renminbi, to counter Trump???s tariffs told the world that
two could play the same game.
And further, Trump???s public complaints about the U.S. trade deficit with
China, wherein Chinese imports to the U.S. exceeded U.S. exports to
China by $419 billion in 2018, fail to take into account that the U.S.
corporations pay for these imports with increasingly inflated dollars,
printed with abandon by the U.S. Treasury in the form of paper money or
the issuance of computer-generated federal bonds and/or related promises
to pay. Again, any government that prints money with no regard to its
material basis in commodity production risks disaster. The U.S. ???coin of
the world realm??? is, in this writer???s view, in deep trouble.
China???s transition to capitalism
China, upon its 2001 WTO entry, was incapable of competing with regard
to any commodity, except its capacity to ???sell??? its labor force in
greater quantities and cheaper than most other nations. To enter the WTO
China was compelled to open its country to every nation seeking this
super-cheap and seemingly inexhaustible supply of labor, almost zero
taxes, and other concessions.
The question therefore inevitably arises of how China made the
transition from a relatively poor nation, largely bereft of modern
technology, to a world-class player on international markets? The answer
lies in how China made the transition over the past 40 years from a
deformed workers??? state that essentially banned capitalist private
property, established a planned economy that focused more on addressing
human needs???including providing free health care and education to all
its citizens???than capitalist profits, to a leading capitalist and
imperialist nation with trillion-dollar infrastructure investments in
China and, increasingly around the world, as with China???s Belt and Road
initiative, aimed at increasing China???s market penetration on a world scale.
A serious approach to answering this critical question, a complex matter
to be sure, begins with China???s adoption of the key features of the
BRICS nations???Brazil, Russia, China, India and South Africa. In all
these relatively underdeveloped nations, the ruling elite focused on a
massive transfer of wealth from the poor to the rich that they expected
to result in the emergence of a relatively well-off layer of perhaps 20
to 25 percent of the population, consisting of ???middle class??? and
working-class sectors, who would be capable of purchasing a broad range
of nationally produced consumer commodities typical of their
counterparts in advanced nations. This massive transfer, of course, was
to be at the expense of the vast majority of their respective
populations, who were in turn driven into abject poverty.
This BRICS phenomenon is indeed operative internationally wherein a tiny
ruling class elite, the ???one percent,??? own and control more wealth than
the bottom half of the population. In the U.S. for example???as Bernie
Sanders often notes, without reference to a solution??????three U.S.
individuals own and control more wealth than the bottom half of the
country.???
In China, with a population of 1.3 billion, this massive transfer of
wealth from the poor to the rich and a layer of a new middle class and
some well-paid workers, is consciously pursued via the relative
impoverishment of some one billion people, who today have largely been
denied the social gains of the 1949 revolution.
In short, China???s capitalist class, through a process akin to the
???primitive accumulation of capital??? in past centuries, that is, the
massive extraction of surplus value via the super-exploitation of the
vast peasantry, amassed the initial capital to begin the process of
transforming its backward productive infrastructure into a first rate
competitor on world markets. This forced transfer of literally millions
of poor peasants, ???internal migrants??? requiring special passports, from
the countryside to the periphery of China???s cities, virtually locked
into slave labor like factories accounts for China???s ???rise??? and NOT the
wonders of the capitalist system. So intensive was this
super-exploitation that many of the near-enslaved and literally starved
peasants had to periodically transferred back to the countryside to be
rejuvenated for future use!
For the Chinese capitalists, the construction of an internal market of
300 million people, comparable to the U.S. population, is viewed as
sufficient to absorb increasing commodities manufactured by Chinese
corporations. These Chinese corporations, of course, employ
state-of-the-art technologies, including robots that allow them to
effectively compete against U.S. and other foreign corporations seeking
access to China???s massive internal market.
???Theft??? of intellectual property
Trump and his associates ever chastise China for ???stealing U.S.
intellectual property rights??? and for violating WTO rules against
government funding of private corporations. Few seriously believe these
rants. All serious players operating in the world of international
banking, finance, and world trade fully understand that the name of the
game is never-ending competition between the world???s leading
corporations, which are always backed to the hilt by their own governments.
In the U.S. this backing includes multi-trillion-dollar tax breaks and
subsidies to U.S. corporations, who really write the tax codes, and the
most massive surveillance operations in the world, overseen by the CIA
and the myriad of associated U.S. spy agencies, aimed at stealing the
technologies and secret scientific breakthroughs of all U.S. competitors.
While Donald Trump is truly the ???moron??? described by his fired Secretary
of State, former Exxon Mobile chief Rex Tillerson, he and his U.S.
critics, and the central leaders of world capitalism, from China and
Japan to Europe, are all aware not only of the declining power of U.S.
imperialism, but of the emerging crises facing the entire world
capitalist system.
China too, a major player in this world constellation of ever competing
and inherently warring nations, has seen its record growth rates of
previous decades sharply decline. None of the players in this deadly
venture of subordinating human needs, and the environment itself, to the
private profits of the few, including endless hot and cold wars to
achieve heinous ends, have any serious solutions other than more of the
same.
The bully Trump???s current weapons include embarrassing and uninformed
displays of disgusting bluster and bluff. But his critics, with zero
exceptions, accept and embrace the same basic tenets of capitalist
plunder, although they seek to sugarcoat its ongoing and inevitable
consequences with Cheshire cat smiles.
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September 20, 2019 in China.
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Clarence Darrow
??? I have always felt that doubt was the beginning of wisdom, and the fear of
God was the end of wisdom. ???
??? Clarence Darrow,