The US war on China’s economic model

The growing hostility of Western governments to China is more about the interests of Western investors than legitimate security fears

December 30, 2018

By Stephen Gowans

The United States stations 320,000 troops in the vicinity of China [1], maintains a continuous B-52 bomber presence in the region, including over waters claimed by the East Asian giant, [2] and has sent its “most advanced warfighting platforms to the region, including multi-mission ballistic missile defense-capable ships, submarines, and intelligence, surveillance and reconnaissance aircraft.” [3] The 2018 US National Defense Strategy lists China first among the United States’s “five central external threats” including “Russia, North Korea, Iran, and terrorist groups with global reach.” [4] The secretary of state, Mike Pompeo, has called China the “great threat for the U.S. in the long term.” [5] According to The Washington Post’s Bob Woodward, the Trump administration considers China “the real enemy.” [6]

What has China done to make successive US administrations see it as a major external threat and the real enemy? The answer is that China has developed a state-led economic model that limits the profit-making opportunities of US investors and challenges their control of high-technology sectors, including artificial intelligence (AI) and robotics, essential to US military supremacy. Washington is engaged in a multi-faceted war “to prevent Beijing from advancing with plans … to become a global leader in 10 broad areas of technology, including information technology, aerospace and electric vehicles.” [7] Washington aims to “hobble China’s plans to develop advanced technology” [8] and to “force China to allow American companies to sell their goods and operate freely” in China, under conditions conducive to maintaining US economic and military supremacy. [9]

For its part, China seeks to alter a global economic system in which it is allowed only “to produce T-shirts” while the United States produces high-tech, according to Yang Weimin, a senior economic adviser to China’s president Xi Jinping. [10] Xi is “determined that China master its own microchips, operating systems and other core technologies” [11] in order to become “technologically self-reliant.” [12] But self-reliance in industries like aerospace, telecommunications, robotics, and AI means removing China, a large market, from the ambit of US high-tech firms. [13] Moreover, since Western military supremacy has always relied on Western technological superiority, Chinese efforts to challenge the Western monopoly on high-tech translates directly into an effort to challenge Washington’s ability to use the Pentagon as an instrument for obtaining investment and trade advantages for US investors.

China’s economic model

China’s economic model is often called “state capitalist” or “market socialist.” Both terms refer to two important elements of the Chinese model: the presence of markets, for materials, products and labor, and a role for the state, through industrial planning and ownership of enterprises. [14]

The “mainstay of the economy” [15] is China’s over 100,000 state owned enterprises. [16] The state has a strong presence in the commanding heights of the economy. “Key sectors such as banking are…dominated by state-controlled companies.” [17] State-owned enterprises “account for about 96% of China’s telecom industry, 92% of power and 74% of autos.” [18] Beijing “is the biggest shareholder in the country’s 150 biggest companies.” [19] The combined profit of state-owned “China Petroleum & Chemical and China Mobile in 2009 alone was greater than all the profit of China’s 500 largest private firms.” [20]

Industrial planning is carried out by the National Development and Reform Commission. The commission uses various means to incubate Chinese industry in key sectors [21] and drafts plans “to give preferential treatment” to Chinese firms in strategic areas. [22]

Beijing is counting on state owned firms “to become global leaders in semiconductors, electric vehicles, robotics and other high-technology sectors and is funding them through subsidies and financing from state banks.” [23] The planning commission also guides the development of steel, photovoltaics, high-speed trains, and other critical industries. [24]

Beijing has closed sectors it considers strategic or vital to national security to foreign ownership. These include “finance, defense, energy, telecommunications, railways and ports” [25] as well as steel. All steel industry firms are state-owned and all are financed by state-owned banks. [26] In total, “China … has restricted or closed off 63 sectors of its own economy to foreign investors, such as stem-cell research, satellites, exploration and exploitation of numerous minerals and media, as well as humanities and social-sciences research institutes.” [27]

China also relies heavily on joint venture arrangements to acquire Western technology and know-how. This idea was initially introduced to China by General Motors, which proposed a joint venture in 1978 with the Chinese car industry. GM’s idea was to trade off its technology and know-how for access to a vast market and low-wage labor. [28]

Chinese leaders saw joint ventures as a way “to propel its industries up the value chain into more sophisticated sectors and the country into rich-nation ranks.” [29] Technology acquired from Western partnerships diffused into the Chinese economy, allowing Chinese firms to become competitors of the Western companies. [30] For example, Chinese rail companies used technology acquired through joint ventures with Japanese and European firms to become giants in high-speed rail. [31]

China seeks to achieve self-sufficiency in high-tech by 2025 under a plan called Made in China 2025. The idea is to vault into the top ranks of high-tech, matching and eventually overtaking the West. Xi has complained that Chinese “technology still generally lags that of developed countries” and that China must “catch up and overtake” the West in “core technological fields.” [32] To help achieve this goal, Beijing plans to “spend billions in the coming years to make the country the world’s leader in A.I,” [33] among other areas.

China’s economic model is not new. According to the economist, Chang Ha-joon:

“In a way, what it is doing is actually not that different from what the more advanced countries were doing in the late 19th century and early 20th century. Many countries, including Japan and Germany, like China today, were using state-owned enterprises to develop their strategic industries. You can say that China is going through what all the other economically advanced countries have been through, and examples range from the U.S. in the mid-19th century to South Korea in the 1970s and 80s.”[34]

US objections

Countries which dominated the globe economically, politically, and militarily have always been the great champions of free trade. The United States had no use for free trade until it became the dominant economic power in the wake of the Second World War. Until the end of WWII, US tariffs were among the world’s highest. Emerging from the war as the planet’s strongest economic power, the United States did all it could to impose free trade, free markets and US free enterprise on as much of the world as it could, and wasn’t shy about using economic warfare, the CIA, and military force to accomplish its goal.

Today, Washington objects strenuously to the Chinese economic model, to the point that it’s willing to use economic warfare, military intimidation, and perhaps even outright war (see below) to impede it. Access to Chinese markets and low-wage labor is highly valued by the US state, but Washington resents access being made contingent on joint venture arrangements which allow US technology to be absorbed by Chinese businesses. The United States demands that US investors be freed from such conditions, that US corporations be granted unfettered access to all Chinese markets, and that US firms be allowed to compete with Chinese enterprises on equal terms, without favor for Chinese companies. There are two reasons Washington makes these demands: to maximize the profit-making opportunities available to US investors in China and to prevent Beijing from building ‘national champions’ able to compete with US corporations. [35]

The US economic elite has for years expressed its grievances over China’s state owned enterprises. It complains that it is “denied lucrative government business, which goes instead to the state champions.” [36] US business people grouse that “In the past few years, China has significantly increased the government’s role in the economy, pumping up the state sector and crowding out private and foreign businesses.” [37] And they lament that the “heavily protected and subsidized Chinese state-owned enterprises … are pounding U.S. companies not just in China but in competition globally.” [38] In response to these grievances, Washington is pushing for “reducing the role of state-owned firms in China’s economy.” [39]

Made in China 2025 is a significant irritant to Washington. Peter Navarro, US president Donald Trump’s trade adviser, denounces it as “economic aggression” because it “threatens the U.S. technology sector.” [40] US vice-president Mike Pence calls it Beijing’s master plan to bring “90% of the world’s most advanced industries” under the control of the Chinese Communist Party. [41] An emblematic US media description of the Chinese plan is: “Made in China 2025 is Beijing’s plan to dominate global markets in a wide range of high-tech products. China’s strategy is to give large government subsidies to state-owned companies and supplement their research with technology” acquired from Chinese partnerships with, or purchase of, US firms. [42] The description contains within it a diagnosis and implied US treatment plan: Compel Beijing to a) end subsidies to state-owned enterprises; b) lift joint venture conditions which allow Chinese firms to acquire US technology; and c) prevent Chinese companies from buying Western firms as a means of acquiring Western technology.

The New York Times has reported that the US trade representative Robert Lighthizer “wants China to reduce subsidies and other aid to Chinese firms competing internationally in advanced technology” [43] and that one US “demand is for China to halt its subsidies for its ‘Made in China 2025’ program aimed at giving its companies a foothold in aircraft, robotics and other areas of advanced manufacturing.” [44]

“Beijing believes in state-driven research to help state-owned industries,” observes The Wall Street Journal, “while the U.S. depends on the private sector, along with a healthy dose of government-funded basic research.” [45] That’s not entirely true. The privately-owned Chinese telecom equipment maker, Huawei, spent “$13 billion last year … developing its own technologies, outpacing Intel Corp. and spending almost as much as Google parent Alphabet Inc.” [46] And corporate America’s reliance on government-funded R&D is far greater than usually acknowledged.

Washington started investing heavily in R&D after the allegedly innovation-stifling Soviet economy allowed the USSR to beat the United States into space, and then chalk up a series of other firsts: the first animal in orbit, first human in orbit, first woman in orbit, first spacewalk, first moon impact, first image of the far side of the moon, first unmanned lunar soft landing, first space rover, first space station and first interplanetary probe. Beat by the Russians, the United States was galvanized to take a leaf from the Soviet book. Just as the Soviets were doing, Washington would use public funds to power research into innovations. This would be done through the Defense Advanced Research Projects Agency. The DARPA would channel public money to scientists and engineers for military, space and other research. Many of the innovations to come out of the DARPA pipeline would eventually make their way to private investors, who would use them for private profit. [47] In this way, private investors were spared the trouble of risking their own capital, as free enterprise mythology would have us believe they do. In this myth, far-seeing and bold capitalists reap handsome profits as a reward for risking their capital on research that might never pay-off. Except this is not how it works. It is far better for investors to invest their capital in ventures with less risk and quicker returns, while allowing the public to shoulder the burden of funding R&D with its many risks and uncertainties. Using their wealth, influence and connections, investors have successfully pressed politicians into putting this pleasing arrangement in place. Free enterprise reality, then, is based on the sucker system: Risk is “socialized” (i.e., borne by the public, the suckers) while benefits are “privatized” (by investors who have manipulated politicians into shifting to the public the burden of funding R&D.)

A study by Block and Keller [48] found that between 1971 and 2006, 77 out of R&D Magazine’s top 88 innovations had been fully funded by the US government. Summarizing research by economist Mariana Mazzucato, former Guardian columnist Seumas Milne pointed out that the

[a]lgorithms that underpinned Google’s success were funded by the public sector. The technology in the Apple iPhone was invented in the public sector. In both the US and Britain it was the state, not big pharma, that funded most groundbreaking ‘new molecular entity’ drugs, with the private sector then developing slight variations. And in Finland, it was the public sector that funded the early development of Nokia – and made a return on its investment. [49]

Nuclear power, satellite and rocket technology, the internet and self-driving cars are other examples of innovations that were produced with public money, and have since been used for private profit. When he was US president, Barack Obama acknowledged the nature of the swindle in his 2011 State of the Nation Address. “Our free-enterprise system,” began the president, “is what drives innovation.” However, he immediately contradicted himself by saying, “But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need.”

Today, the United States “is spending roughly $1 billion to $2 billion annually, much of it federal funds, to build the first ‘exascale’ supercomputer—capable of a quintillion calculations a second, which is at least 100 times faster than today’s champion. Such a machine would help in everything from designing futuristic weapons to investigating brain science.” [50] The US government is also “boosting spending in semiconductor research, an area of intense Chinese interest.” [51] Meanwhile, the White House’s Office of Science and Technology Policy is funding research on “quantum mechanics to eventually make computers and communications operate at speeds and efficiency well beyond anything possible today.” [52] And on top of these public R&D expenditures, the DARPA continues to fund advanced research, including on A.I. [53] Simultaneously, Washington is demanding that China halt its own R&D spending in the same areas.

All of this points to a number of important facts. (1) The United States kick-started innovation in its own economy by emulating the Soviet model of state-directed research because free enterprise was not up to the task. (2) Rather than emulate the Soviet model for public benefit, the United States channels public money into R&D for private profit. (3) US high technology supremacy relies significantly on public funding, yet (or rather because of this) Washington demands that China forbear from its own public funding of innovation research. Washington will only tolerate public funding of basic research that benefits US investors.

Explaining US hostility to China

Understanding the economic and political organization of the United States helps understand why Washington is antagonistic to China’s economic model. The following explains the US political elite’s hostility, currently expressed in the declaration of China as the United States’ top external threat; in the US-instigated trade war against China; in the blocking of Chinese purchases of US companies; and in the exclusion of, or threat to exclude, such Chinese corporations as Huawei and ZTE from Western markets.

The US political elite is interlocked with the community of major US investors. US administrations, the US senate, and the top strata of the US bureaucracy, are mainly staffed by wealthy individuals whose wealth derives from investment income. Additionally, organized business groups and major corporations exert significant influence on the political elite through lobbying, via the funding of policy formation think-tanks, and by ownership of the mass media. In their 2014 study of over 1,700 US policy issues, the political scientists Martin Gilens and Benjamin I. Page demonstrated that “economic elites and organized groups representing business interests have substantial impacts on government policy, while average citizens and mass-based interest groups have little or no independent influence.” [54] Accordingly, US foreign policy defines external threats as threats to the interests of US “economic elites and organized groups representing business interests”—the very same community which dominates the formulation of public policy.

The US National Defense Strategy does not define China as a threat to the United States but as threat to US interests. Unlike the United States, which has a significant military presence in the air, sea and land around China, the East Asian giant does not have a military presence in the Western hemisphere, and is not currently capable of projecting force into it. China does not therefore constitute a military threat to the United States. What, then, are the US interests that China’s threatens? Consistent with the interlocked nature of the US political and economic elites, US interests refer to the profit-making interests of US investors.

China’s economic model threatens the profit-making interests of US economic elites and organized business groups in the following ways.

• State-owned enterprises are closed to US investors and compete against US investment.
• Protected sectors deny US investors profit-making opportunities.
• Joint venture requirements limit US investment and are used to acquire technology to develop enterprises which become capable of competing with US firms.
• State incubation of national champions develops competitors to US investment.
• Made in China 2025 locks US investment out of Chinese high-tech markets, competes against US high-tech investment globally, allows China to contest US military supremacy, and undermines US capabilities to use force to obtain trade and investment opportunities under favorable conditions.

China’s economic model also threatens US (investor) interests by offering an exemplar for other countries to follow, which, if followed, would reduce US profit-making opportunities even more significantly. The Chinese model has had undoubted success in lifting China from poverty. In 1984, three-quarters of the Chinese population still lived in extreme poverty. By 2018, extreme poverty had fallen to less than one percent. [55] And China is poised to challenge the West’s technological supremacy. These extraordinary accomplishments were not the product of Beijing following Washington’s economic advice; they are “due to planning in a socialist market, not conventional capitalism,” observes Robert C. Allen, a specialist in economic development. [55] Even The Wall Street Journal acknowledges that China’s “rapid economic development” is due to “state enterprises operating under an industrial plan.” [57] Washington cannot allow such a model to take hold and spread, for if it does, the profit-making opportunities on which US investors depend will shrink. US free enterprise, from Washington’s point of view, must be welcomed everywhere—and the division of the world between exploiting countries and exploited ones must continue ad infinitum.

Time and again, underdeveloped countries have implemented economic models at the core of which have been state-owned enterprises and industrial planning. In almost every case, Washington has used sanctions, the CIA, or the Pentagon, or all three, to put a stop to this threat to the profit-making interests of the United States’s ‘substantial’ citizens. Today, the US elite is agreed that China must be ‘contained’, even if there is no agreement on how. The think-tank, the RAND Corporation, funded by the US government, US corporations, and US investors, has even contemplated open war as a solution, in a 2016 study titled War with China: Thinking Through the Unthinkable. [58]

The words of Norman Bethune, a Canadian surgeon who served in Mao’s Eighth Route Army, come to mind.

“Behind all stands that terrible, implacable God of Business and Blood, whose name is Profit. Money, like an insatiable Molloch, demands its interest, its return, and will stop at nothing, not even the murder of millions, to satisfy its greed. Behind the army stands the militarists. Behind the militarists stands finance capital, and the capitalists. Brothers in blood; companions in crime.” [59]

1. Elisabeth Bumiller, “Words and deeds show focus of the American military on Asia”, The New York Times, September 10, 2012.

2. Jeremy Page and Gordon Lubold, “U.S. bomber flies over waters claimed by China,” The Wall Street Journal, December 18, 2015.

3. Trefor Moss and Jeremy Page, “U.S. stationing warplanes in Philippines amid South China Sea tensions,” The Wall Street Journal, April 15, 2016.

4. National Defense Strategy, 2018, https://fas.org/sgp/crs/natsec/IN10855.pdf.

5. Steven Erlanger, “Tillerson’s ouster has allies hoping for coherence, but fearing the worst,” The New York Times, March 14, 2018.

6. Bob Woodward. Fear: Trump in the White House, (Simon & Schuster, 2018), 298.

7. Bob Davis, “Trade rift within Trump administration sends stocks on wild ride,” The Wall Street Journal, June 25, 2018.

8. Bob Davis, Vivian Salama and Lingling Wei, “China issues retaliatory tariffs as trade fight heats up,” The Wall Street Journal, June 15, 2018.

9. Neil Irwin, “The Trump trade strategy is coming into focus. That doesn’t necessarily mean it will work.” The New York Times, October 6, 2018.

10. Lingling Wei, “US and China dive in for prolonged trade talks,” The Wall Street Journal, May 3, 2018.

11. Chris Buckley and Paul Mozur, “What keeps Xi Jinping awake at night,” The New York Times, May 11, 2018.

12. Ibid.

13. Adam Segal, “Why does everyone hate Made in China 2025?” Council on Foreign Relations blog, March 28, 2018.

14. Robert C. Allen, The Industrial Revolution: A Very Short Introduction. (Oxford University Press, 2017), 126.

15. James T. Areddy, “Xi Jinping aims to rebrand China—as an importer,” The Wall Street Journal, November 5, 2018.

16. New York Times, June 3, 2009.

17. The Globe and Mail, October 17, 2008.

18. John Bussey, “Tackling the many dangers of China’s state capitalism”, The Wall Street Journal, September 27, 2012.

19. “The rise of state capitalism”, The Economist, January 21, 2012.

20. Bussey, September 27, 2012.

21. Allen, 126.

22. Michael Wines, “China takes a loss to get ahead in the business of fresh water”, The New York Times, October 25, 2011.

23. Bob Davis, “When the world opened the gates of China,” The Wall Street Journal, July 27, 2019.

24. Allen, 127.

25. Michael Wines, “China fortifies state businesses to fuel growth”, The New York Times, August 29, 2010.

26. Allen, 126.

27. Steven Chase and Robert Fife, “CSIS report warns of Chinese interference in New Zealand,” The Globe and Mail, May 30, 2018.

28. Lingling Wei and Bob Davis, “How China systematically pries technology from US companies,” The Wall Street Journal, September 26, 2018.

29. Ibid.

30. Ibid.

31. Carlos Tejada, “Beg, borrow or steal: How Trump says China takes technology,” The New York Times, March 22, 2018.

32. Chris Buckley and Paul Mozur, “What keeps Xi Jinping awake at night,” The New York Times, May 11, 2018.

33. Cade Metz, “Mark Zuckerberg, Elon Musk and the feud over killer robots,” the New York Times, June 9, 2018.

34. Seung-yoon Lee, “Ha-Joon Chang: Economics Is A Political Argument,” World Post, June 4, 2014.

35. Yoko Kubota, “Trade war punctures China’s price in its technology,’ The Wall Street Journal, June 28, 2018.

36. John Bussey, “Tackling the many dangers of China’s state capitalism”, The Wall Street Journal, September 27, 2012.

37. Lingling Wei and Bob Davis, “China prepares policy to increase access for foreign companies,” The Wall Street Journal, December 12, 2018.

38. John Bussey, “U.S. attacks China Inc.”, The Wall Street Journal, February 3, 2012.

39. Bob Davis, “US tariffs on China aren’t a short-term strategy,” The Wall Street Journal, October 6, 2018.

40. Michael C. Bender, Gordon Lubold, Kate O’Keeffe and Jeremy Page, “US edges toward new Cold-War era with China,” The Wall Street Journal, October 12, 2019.

41. Martin Feldstein, “Tariffs should target Chinese lawlessness, not the trade deficit,” the Wall Street Journal, December 27, 2018.

42. Ibid.

43. Bob Davis, Peter Nicholas and Lingling Wei, “”Get moving’: How Trump ratcheted up the trade battle with China,” The New York Times, June 7, 2018.

44. Neil Irwin, “The Trump trade strategy is coming into focus. That doesn’t necessarily mean it will work.” The New York Times, October 6, 2018.

45. Bob Davis, “The country’s R&D agenda could use a shake-up, scientists say,” The Wall Street Journal, December 22, 2018.

46. Dan Strumpf, Min Jung Kim and Yifan Wang, “How Huawei took over the world,” The Wall Street Journal, December 25, 2018.
47. Mariana Mazzucato, The Entrepreneurial State, Demos, 2011,
http://www.demos.co.uk/files/Entrepreneurial_State_-_web.pdf?1310116014).

48. Fred Block and Matthew R. Keller, “Where do innovations come from? Transformations in the U.S. national innovation system, 1970-2006,” Technology and Innovation Foundation, July 2008.
http://www.itif.org/files/Where_do_innovations_come_from.pdf

49. Seumas Milne, “Budget 2012: George Osborne is stuck in a failed economic model, circa 1979,” The Guardian (UK), March 20, 2012.

50. Bob Davis, “The country’s R&D agenda could use a shake-up, scientists say,” The Wall Street Journal, December 22, 2018.

51. Ibid.

52. Ibid.

53. Ibid.

54. Martin Gilens and Benjamin I. Page, “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens,” Perspectives on Politics, Fall 2014.

55. Phillip P. Pan, “The West was sure the Chinese approach would not work. It just had to wait. It’s still waiting.” The New York Times, November 18, 2018.

56. Allen, 127.

57. Andrew Browne, “China builds bridges and highways while the US mouths slogans,” The Wall Street Journal, January 30, 2018.

58. David C. Gompert, Astrid Stuth Cevallos, and Cristina L. Garafola, War with China: Thinking Through the Unthinkable, The Rand Corporation, 2016.https://www.rand.org/content/dam/rand/pubs/research_reports/RR1100/RR1140/RAND_RR1140.pdf

59. Norman Bethune, “Wounds,” in Roderick Stewart, The Mind of Norman Bethune, (Fitzhenry and Whiteside, 2002), 183-186.

Why the Trans-Pacific Partnership Equals a U.S. Aircraft Carrier

October 17, 2015

By Stephen Gowans

The U.S. political elite is never entirely secretive about its aims. It spells them out, maybe not always clearly and maybe sometimes elliptically, but it is fairly open in declaring its objectives and how it intends to achieve them. When she was U.S. secretary of state, Hilary Clinton adumbrated the Trans-Pacific Partnership in a 2011 article in Foreign Affairs, the magazine of the Council on Foreign Relations, an elite-consensus forming organization which Laurence H. Shoup in a recent book dubbed “Wall Street’s Think Tank”, and, in an earlier book, an “imperial brain trust.” [1]

In “America’s Pacific Century,” Clinton announced that the Obama administration was “working with China to end unfair discrimination against U.S. and other foreign companies or against their innovative technologies, remove preferences for domestic firms, and end measures that disadvantage or appropriate foreign intellectual property.” [2] Which is exactly what the TPP sets out to do, except—and this is a significant point—without China.

US defense secretary  Ashton Carter has says the Trans-Pacific Partnership is as important to him as another aircraft carrier.

US defense secretary Ashton Carter says the Trans-Pacific Partnership is as important to him as another aircraft carrier.

Almost without exception, commentary on the TPP from the North American Left has focussed on the potential harm the pact will likely inflict on ordinary North Americans, the 99 percent. The emphasis has been on the TPP as a weapon of the corporate elite—a new battle tank in a class war that billionaire investor Warren Buffet famously acknowledged exists and that his class is winning. [3]

Commentary on the TPP as a weapon wielded against North American workers is important and necessary, but no less important is the reality that the TPP also exists as a weapon wielded against China, a country the U.S. ruling class designates as a rival. Even the U.S. political elite has embraced the weapon metaphor. U.S. secretary of defense, Ashton B. Carter has called the pact “as important to me as another aircraft carrier.” [4]

Who’s Involved?

TPPcountriesmapThe TPP is a U.S.-initiated pact among 11 other Asia-Pacific region countries, including Washington’s anglosphere allies, Canada, Australia and New Zealand, along with Mexico, Japan, Vietnam, Chile, Peru, Malaysia, Singapore, and Brunei Darussalam. Despite their significant place in the Pacific Rim, Russia and China were left out of the pact by Washington. The exclusion of China is significant, because the TPP is said to be the economic arm of “the much-extolled (U.S.) ‘pivot’ to Asia,” aimed at bolstering the United States’ presence in the Asia-Pacific region. [5]

Containing China

Coverage of the TPP in the two principal elite U.S. newspapers, The Wall Street Journal and The New York Times, has portrayed a major aim of the pact as containing China. “The pact…is seen as a way to” raise “a challenge to Asia’s rising power…which has pointedly been excluded from the deal,” wrote Kevin Granville in The New York Times. [6] Jane Perlez in the same newspaper described the pact “as a win for the United States in its contest with China for clout in Asia”. [7] “Critics in China,” noted The Wall Street Journal, are on the same page, viewing “the Trans-Pacific Partnership with suspicion, seeing it as one more way for Washington to seek to contain China’s influence.” [8]

What U.S. ruling circles seek to contain in the Asia-Pacific region is Chinese encroachments on U.S. profits. Chinese industry is taking an ever growing share of the region’s trade, at the expense of corporate USA. “Time is running out,” warns the U.S. defense secretary. “We already see countries in the region trying to carve up these markets.” [9]

As recently as 2004, the United States was the largest trading partner of Asean, a 10 country association of Southeast Asian economies, with total trade of $192 billion. “But now China, which was an inconsequential trading partner of Asean as recently as the late 1990s, is by far the region’s largest trading partner, with two-way trade of $293 billion in 2010.” Not only is China Asean’s biggest trading partner, it’s the top trading partner of Japan, Korea, India and Australia, notes Cui Tiankai, a Chinese vice foreign minister. [10]

What’s more, “the China Development Bank and Export-Import Bank of China now provide more loans to the region than the (U.S.-dominated) World Bank and Asia Development Bank combined.” [11] And China “has picked off American allies like Britain, Germany and South Korea to join…the Asian Infrastructure Investment Bank, a project started by China in part to keep its own state-owned firms busy building roads, dams and power plants around Asia. China is at the same time setting up other trade pacts around the region so it can use its cash and enormous market leverage to strike deals more advantageous to its interests.” [12] Needless to say, the deals China strikes, the roads, dams and power plants it builds, and the trade it carries out, represent lost opportunities for U.S. banks, corporations and investors.

China’s growing economic clout has raised concerns on Wall Street and in Washington of “being left on the outside, looking in.” Fearful that U.S. firms and investors “risked being shunted aside in Asia,” Washington initiated the Trans-Pacific Partnership [13] as a means of defending the interests of U.S. finance and business in Asia.

Re-orienting Economies from China to the United States

One of the ways the TPP defends and promotes U.S. profits is by re-orienting the economies of the pact’s other partners toward the United States and away from China. “Ichiro Fujisaki, a former Japanese ambassador to the United States, described the Trans-Pacific Partnership as ‘economic glue to cement ties with like-minded countries,’ including emerging economies such as Vietnam that are only partly integrated into the global economic order shaped by the United States.” [14] The TPP isn’t as much about free trade as it is about restricting trade and investment within a US-dominated bloc.

During talks, U.S. negotiators “aiming to bolster American exporters” stipulated “that countries joining its new Pacific trade zone cut back on imports from China.” U.S. negotiators demanded that “Vietnam, a major garments exporter, reduce its reliance on textiles made in China… to get preferential market access to the U.S.” Washington’s goal was “to create new markets in Vietnam for the U.S. textile industry.” Since the “U.S. and Mexico are especially large textile producers, Vietnam would simply have to shift its sourcing of yarns and fabrics from China to the U.S. and Mexico.” [15] This exemplifies the entire aim of the U.S.-initiated TPP: to disrupt China’s growing trade relations with its neighbors in order to bolster U.S. profits.

The Peterson Institute for International Economics in Washington estimates that the TPP will “cost China about $100 billion a year in lost exports as the partners trade more among themselves and less with China.” [16]

Pressuring China to Abandon State-Directed Development

Another way the TPP seeks to buttress U.S. profits is by leaving open the possibility of China joining the pact if it abandons its development model, which relies heavily on state-owned enterprises and assistance to domestic industry. While China was initially excluded from the partnership, “U.S. officials… say they are hopeful that the pact’s ‘open architecture’ eventually prompts China to join.” [17] But to link up with the 12 economies of the TPP club the “Chinese government would need to work harder at economic reform in order to meet the pact’s standards.” [18] Specifically, China would have to open markets and limit assistance to state-owned companies. [19]

China has “tens of thousands of state-owned enterprises that dominate half of China’s economic output and that the government heavily subsidizes and protects.” [20] They “account for about 96% of China’s telecom industry, 92% of power and 74% of autos. The combined profit of China Petroleum & Chemical and China Mobile in 2009 alone was greater than all the profit of China’s 500 largest private firms.” [21]

In addition, foreign competitors are restricted by government rules, required to share their technology in joint ventures with state companies, and are passed over for lucrative government contracts in favor of state enterprises.

China’s reliance on state-directed development has provoked ire on Wall Street and in Washington. Chinese “state capitalism” restricts profit-making opportunities within China for U.S. firms and investors. At a public forum in Davos, Switzerland, during the World Economic Forum, then U.S. Treasury Secretary Timothy Geithner complained that “China does present a really unique challenge to the global trading system, because the structure of its economy, even though it has more of a market economy now, is overwhelmingly dominated by the state.” [22] U.S. President Barack Obama, referring to Washington’s Asian rival, complained that “It’s not fair when foreign manufacturers have a leg upon ours only because they’re heavily subsidized.” [23] The point of China’s state-directed development is to raise many more hundreds of millions of Chinese from poverty, as the Chinese Communist Party has already done, even if it means irking U.S. banks, investors and corporations and their political handmaidens in Washington.

U.S. and European corporations have grown “increasingly agitated over what they regard as unfair curbs on their ability to compete with domestic companies in China’s vast and growing market.” [24] The TPP is a response to that agitation. “Prodded by corporate chiefs across the country, U.S. trade officials…launched a coordinated attack on the core of America’s commercial conflict with China: the heavily protected and subsidized Chinese state-owned enterprises that are pounding U.S. companies not just in China but in competition globally.” [25]

Accordingly, one set of the TPP’s “provisions requires that state-owned enterprises…receive fewer government subsidies in the form of low-rate loans, cheap or free land and other assistance,” notes Joseph Stiglitz, the Nobel Prize-winning economist. “The clause is initially aimed at Vietnam—as well as Malaysia and Singapore to some extent—but it offers a signpost for the direction in which the United States wants China to move.” [26] “The message to China: If you want to join, you have to change.” [27]

The TPP’s Connection to Regime Change in Libya and Syria

The preceding paragraphs point to a significant reality of U.S. foreign policy: U.S. State Department initiatives are “prodded by corporate chiefs” and aim to open up the world to U.S. trade and investment–and keep it open. Trade and investment agreements, and the Pentagon, are both instruments of the U.S. corporate and financial world, deployed by Washington’s political elite to secure the interests of the United States’ most “substantial” citizens. Hence, U.S. secretary of defense Ashton Carter can draw an equivalence between the TPP and an aircraft carrier.

To the U.S. capitalist ruling class, China, with its immense market, represents a potential cornucopia of profits, all the greater if the Chinese Communist Party can be persuaded to abandon its state-directed development model, which severely restricts the latitude of U.S. investors, banks and corporations to manoeuvre within the Chinese economy. The Chinese model has proved worthy of lifting hundreds of millions out of poverty, not surprisingly, since its aim is internal development, not the aggrandizement of super-wealthy foreigners ensconced on Wall Street. By contrast, the development model favored by the corporate-based ruling class of the United States predictably favors private enterprise and free trade (within US-dominated blocs)—a model that has proved worthy of creating fabulous wealth for a parasitic elite at the apex of U.S. society, but abject poverty at the other extreme for people in the developing world.

Finally, another reality should be acknowledged. Both Libya and Syria have followed development models that are very much similar to China’s, and have equally irked US corporate and political leaders.

A November 2007 U.S. State Department cable warned that those “who dominate Libya’s political and economic leadership are pursuing increasingly nationalistic policies in the energy sector” and that there was “growing evidence of Libyan resource nationalism.” [28] The cable cited a 2006 speech in which then Libyan leader Muamar Gaddafi said: “Oil companies are controlled by foreigners who have made millions from them. Now, Libyans must take their place to profit from this money.” [29] Gaddafi’s government had also forced companies to give their local subsidiaries Libyan names. Worse, in the view of the oil companies, “labor laws were amended to ‘Libyanize’ the economy,” that is, turn it to the advantage of Libyans. Oil firms “were pressed to hire Libyan managers, finance people and human resources directors.” The New York Times summed up Washington’s objections. “Colonel Gaddafi,” the newspaper said, “proved to be a problematic partner for international oil companies, frequently raising fees and taxes and making other demands.” [30]

Similar complaints are heard in Washington about Syria. The U.S. Library of Congress country study of Syria refers to “the socialist structure of the government and economy,” points out that “the government continues to control strategic industries,” mentions that “many citizens have access to subsidized public housing and many basic commodities are heavily subsidized,” and that “senior regime members” have “hampered” the liberalization of the economy. [31]

united-states-mother-of-terrorism-altagreerRegime change operations in Libya and Syria originated in the U.S. ruling class goals of opening the world to U.S. banks, investors and corporations and crushing development models which refuse to yoke markets, labour and resources to U.S. corporate interests, not to (contrived) alarm over an (invented) impending massacre in Libya or revulsion over the way the Syrian state has defended itself against an uprising by violent sectarian Sunni Islamists (in reality egged on, funded, trained and armed by the United States and the marionette Middle East tyrannies it counts as allies.) Equally, U.S. corporate goals of defending U.S. profit-making opportunities in Asia animated the activities which led to the TPP as an instrument of disrupting Chinese trading relations and pressuring Beijing to change its economic regime of internal development to one favoring Wall Street. U.S. military intervention against a resource nationalist government in Libya, the deployment of Islamist proxies against an economically nationalist government in Syria (in other words, the mobilization of religion for profane ends), and an exclusionary trade and investment bloc aimed at harming and pressuring China over its policy of state-directed development, have one thing in common: they are prodded by a parasitic elite at the apex of US society rooted in Wall Street and are intended to serve its interests by clearing away impediments to its further accumulation of capital on the world stage.

1. Laurence H. Shoup, Wall Street’s Think Tank: The Council on foreign Relations and the Empire of Neoliberal Geopolitics, 1976-2014, Monthly Review Press, 2015.

2. Hilary Clinton, “America’s Pacific Century”, Foreign Policy, November, 2011.

3. Ben Stein, “In class warfare, guess which class is winning,” The New York Times, November 26, 2006.

4. Jane Perlez, “U.S. allies see Trans-Pacific Partnership as a check on China,” The New York Times, October 6, 2015.

5. Perlez, October 6, 2015.

6. Kevin Granville, “The Trans-Pacific Partnership Trade Accord explained,” The New York Times, October 5, 2015.

7. Perlez, October 6, 2015.

8. Brian Spegele and Thomas Catan, “China suggests shift on U.S.-led trade pact”, The Wall Street Journal, May 31, 2013.

9. Helene Cooper, “U.S. defense secretary supports trade deal with Asia,” The New York times, April 6, 2015.

10. Jane Perlez, “Clinton makes effort to rechannel the rivalry with China”, The New York Times, July 7, 2012.

11. Perlez, “October 6, 2015.

12. David E. Sanger and Edward Wong, “As Obama plays China card on trade, Chinese pursue their own deals,” The New York Times, May 12, 2015.

13. Perlez, July 7, 2012.

14. Jonathan Soble, “Failure of Obama’s Trans-Pacific trade deal could hurt U.S. influence in Asia,” The New York Times, June 16, 2015.

15. Tom Wright and Mark Magnier, “Fabric of a trade deal: U.S. asks Vietnam to cut out Chinese textiles,” The Wall Street Journal, June 24, 2015.

16. Bob Davis, “U.S. blocks China efforts to promote Asia trade pact,” The Wall Street Journal, November 2, 2014.

17. Granville, October 5, 2015.

18. Perlez, “October 6, 2015.

19. Spegele and Catan, May 31, 2013.

20. John Bussey, “Tackling the many dangers of China’s state capitalism”, The Wall Street Journal, September 27, 2012.

21. Bussey, September 27, 2012.

22. Barack Obama, State of the Union Address, 2012.

23. Aaron Black, “U.S. raps ‘damaging’ China policies”, The Wall Street Journal, January 28, 2012.

24. Michael Wines, “Behind a military chill: A more forceful China”, The New York Times, June 8, 2010.

25. John Bussey, “U.S. attacks China Inc.”, The Wall Street Journal, February 3, 2012.

26. Joseph E. Stiglitz, “On the wrong side of globalization,” The New York Times, March 15, 2014.

27. Bussey, February 3, 2012.

28. Steven Mufson, “Conflict in Libya: U.S. oil companies sit on sidelines as Gaddafi maintains hold”, The Washington Post, June 10, 2011.

29. Mufson, June 10, 2011.

30. Clifford Kraus, “The Scramble for Access to Libya’s Oil Wealth Begins,” The New York Times, August 22, 2011.

31. U.S. Library of Congress. A Country Study: Syria. http://lcweb2.loc.gov/frd/cs/sytoc.html

Seeing the US Everywhere

By Stephen Gowans

The New York Times ran an article today about Washington’s plans to strengthen its military presence in Australia. Australia is to be used by the US military “as a new center of operations in Asia” from which the United States will seek “to reassert itself in the region and grapple with China’s rise.”

The problem for policy planners in Washington is that “China has become the largest trading partner with most of the countries in the region, undercutting American economic influence.” And so the United States will beef up its presence in the Pacific to prove that “it intends to remain a crucial military and economic power” in Asia.

In simple language this means that China has secured export and investment opportunities in its own backyard and that US corporations, banks and investors want them for themselves. So Washington will use its military to take them away from the Chinese.

For obvious reasons, China thinks this smacks of old-fashioned gun-boat imperialism.

Not so curiously, the headline of the Ian Johnson and Jackie Calmes article announcing Washington’s plan to muscle China out of economic primacy in the region put a chauvinistic spin on the story: “As US looks to Asia, it sees China everywhere.”

Imagine China setting up military bases in Venezuela and sending aircraft carriers to the Gulf of Mexico in order to “assert itself in the region.” How strange would seem a newspaper headline that read: “As China looks to the Gulf of Mexico, it sees the United States everywhere,” as if this were an unexpected discovery.

The New York Times’ headline could have been more aptly written this way: As China looks around its neighborhood, it sees the US military everywhere. But then this would have made US imperialism uncomfortably obvious.

An article by Johnson and Calmes’ New York Times’ colleagues Nada Bakri and Rick Gladstone, also in today’s edition of the newspaper (“Syria faces new threats as opposition seeks allies”) is equally worthy of comment. Their article used “one human rights group, the Syrian Observatory for Human Rights” as a source for the number of people killed in recent clashes with Syrian government forces.

One might get the impression that the Syrian Observatory for Human Rights is a neutral human rights monitor without a political agenda. After all, Bakri and Gladstone refer to it as “one human rights group”, and nothing more.

Were it an opposition group seeking to overthrow the Syrian government we might think twice about trusting it as a source of unbiased information.

Well, think twice.

A statement posted to the group’s website on November 15, 2011, makes clear that it is more than just “one human rights group.” In the statement, the group calls for a no-fly zone over Syria “in accordance with its duty and commitment to echo the voice of Syrian Popular Revolution.”

The Observatory makes no secret of the reason it wants “the international community” (which is to say, Nato) dropping bombs on Syrian military installations and Assad supporters: “the acceleration of overthrowing Syrian brutal regime.”

Meanwhile, the Gulf Cooperation Council, the group of US-allied oil autocracies that had been acting as arms and propaganda suppliers to Libyan rebels, played a key role in pushing through the recent Arab League suspension of Syria.

The Council has also become a key to Washington’s plans to continue to dominate the Persian Gulf, even as—or rather, precisely because–US troops are being withdrawn from Iraq.

Both US Defense Secretary Leon Panetta and the Chairman of the Joint Chiefs of Staff have said that the United States will “maintain a large military presence in the region, in part as a counterweight to Iran.” The US military will rely on “the six nations in the Gulf Cooperation Council — Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman. While the United States has close bilateral military relationships with each, the administration and the military are trying to foster a new ‘security architecture’ for the Persian Gulf that would integrate air and naval patrols and missile defense.”

It’s not only China that is hemmed in by the US military. As Iran looks around its neighborhood, it too sees the US everywhere.

In Libya, the end of 42 years of….

…self-directed economic development aimed at giving Libyans a stake in their economy.

I’m not saying Gaddafi’s Libya was a model society, but it did offer its own citizens advantages that are conspicuously missing in Washington’s Third World satellites.

Margaret Coker, writing in today’s Wall Street Journal (“Libya speeds oil output but sees hurdles ahead”) serves up an example of Gaddafi’s friendly-to-Libyans, not-so-friendly-to-overseas-investor policies. Among “many of (Gadaffi’s) heavy-handed state policies” were “foreign-currency exchange limits and a law that forced private enterprises to make Libyan employees shareholders of the business.” These policies “crimped corporate work during the Gadhafi regime,” writes Coker, by which she means encroached on the profits of Western banks, corporations and investors. Bad man.

In the same issue of the WSJ we learn that Washington is quietly funnelling bunker buster bombs and other ammunition to the group of anti-democratic oil monarchies that make up the Gulf Cooperation Council. The aim is to build up these despotic regimes as “a unified counter-weight to Iran” (“U.S. plans bomb sales in Gulf to counter Iran.”)

The GCC, it will be recalled, dispatched tanks and troops to crush a popular uprising in one of its member states, Bahrain, while it was also helping rebels oust the Gaddafi government in Libya. GCC member, Qatar, an absolutist state, was particularly helpful to the Libyan rebels, dispatching hundreds of ground troops to aid the cause of…

• (A) Building democracy in Libya?
• (B) Ending Gaddafi policies that crimped corporate work?

You decide.

Finally, yesterday’s WSJ ( “U.S. to build up military in Australia”) points to plans for “a new and permanent U.S. military presence in Australia…a step aimed at countering China’s influence and reasserting U.S. interests in the region.” Notes WSJ reporter Laura Meckler, the “South China Sea, which China considers as its sovereign territory…is important economically.”

Indeed it is.

Fortunately, the combined forces of the US Army, US Navy, US Marine Corps, US Air Force and the CIA exist to make sure the South China Sea—and every other economically important region of the globe—is available to Wall Street for its aggrandizement…and free from anyone who might exercise their sovereignty to impose policies that crimp corporate work.

Liu’s Nobel Prize for Capitalism

By Stephen Gowans

Liu Xiaobo, the Chinese dissident who was recently awarded the Nobel Peace Prize, has been hailed as a champion of human rights and democracy. His jailing by Chinese authorities for inciting subversion of the state is widely regarded as an unjust stifling of advocacy rights by a Chinese state intolerant of dissent and hostile to ”universal values”. But what Western accounts have failed to mention is that Charter 08, the manifesto Liu had a hand in writing and whose signing led to his arrest, is more than a demand for political and civil liberties. It is a blueprint for making over China into a replica of US society and eliminating the last vestiges of the country’s socialism. If Liu had his druthers, China would: become a free market, free enterprise paradise; welcome domination by foreign banks; hold taxes to a minimum; and allow the Chinese version of the Democrats and Republicans to keep the country safe for corporations, bankers and wealthy investors. Liu’s problem with the Communist Party isn’t that it has travelled the capitalist road, but that it hasn’t traveled it far enough, and has failed to put in place a politically pluralist republican system to facilitate the smooth and efficient operation of an unrestrained capitalist economy.

Liu taught literature at Columbia University as a visiting scholar, but decamped for his homeland in 1989 to participate in the Tiananmen Square protests, bringing with him the pro-imperialist values he imbibed in the United States. For his role in the protests—which ultimately aimed at toppling Communist Party-rule and promoting a US-style economic and political system–he served two years in prison.

Liu is committed to a pluralist political model and untrammelled capitalist system of the kind he witnessed firsthand in the United States. Charter 08, the Nobel committee, the US government, and the Western media have all anointed free markets, free enterprise, and multi-party representative democracy as “universal values”. The aim is to discredit any system that is at variance with capitalist democracy as being against universal values and therefore doomed to failure.

Liu served more jail time in the 1990s for advocating an end to Communist Party-rule and conciliation of the CIA-backed Dalai Lama, the once head of a feudal aristocracy who owned slaves and lived a sumptuous life on the backs of Tibetan serfs, before the People’s Army put an end to his oppressive rule.

Liu’s latest run-in with Chinese authorities happened in December, 2008 after he signed Charter 08, a manifesto he helped draft. The charter was published on the 60th anniversary of the Universal Declaration of Human Rights and Freedoms (UDHRF) and is a reference to Charter 77, an anti-communist manifesto issued by dissidents in Czechoslovakia. While the UDHRF endorses economic rights (the right to work and to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control), the only economic rights Charter 08 endorses are bourgeois privileges. In that respect, it is hardly in the same class as the UDHRF and, significantly, is emblematic of the kind of truncated human rights protocol favored in the United States.

On June 24 of last year Liu was charged with agitation aimed at subversion of the Chinese government and overthrowing the socialist system. He was convicted and is now serving an 11-year sentence.

The Western press describes Charter 08 as a “manifesto calling for political reform, human rights and an end to one-party rule”, but it is more than that. It is a manifesto for the untrammelled operation of capitalism in China.

The charter calls for a free and open market economy, protection of the freedom of entrepreneurship, land privatization, and the protection of property rights. Property rights, under the charter’s terms, refer not to the right to own a house or a car of a toothbrush for personal use but to the freedom of individuals to legally claim the economic surplus produced by farmers and wage laborers—that is, the right, through the private ownership of capital, to exploit the labor of others through profits, interest and rents.

While capitalism thrives in China, it does not thrive unchecked and without some oversight and direction by the Communist Party. Nor is China’s economy entirely privately owned. Many enterprises remain in state hands. The drafters of Charter 08 have in mind the elimination of all state ownership and industrial planning–in other words, the purging of the remaining socialist elements of the Chinese economy. At the same time, the Communist Party as the one mass organization with a programmatic commitment to socialism (if only to be realized in full in a distant future) and which zealously preserves China’s freedom to operate outside the US imperialist orbit, would be required to surrender its lead role in Chinese society. Political power would pass to parties that would inevitably come to be dominated by the Chinese bourgeoisie through its money power. (1) Rather than being a country with a mix of socialist and capitalist characteristics presided over by the Communist Party, it would become a thoroughly capitalist society with bankers and captains of industry firmly in control, their rule governed by the need to enrich their class, not make progress toward a distant socialism by raising standards of living and expanding the country’s productive base.

The charter also calls for the implementation of “major reforms in the tax system to reduce the tax rate”, and to “create conditions for the development of privately-owned banking.”

The US State Department itself could have written a manifesto no more congenial to corporate and financial interests.

Charter 08’s champions gathered 10,000 signatures before Beijing blocked its circulation on the Internet. While the Western media cite this as evidence of a groundswell of support for the charter’s demands (though 10,000 represents an infinitesimally small fraction of a population of one billion), the ANSWER Coalition in the United States has collected hundreds of thousands of signatures to letters calling for the lifting of the US blockade on Cuba, a level of opposition to US policy that dwarfs Charter 08’s support. Yet ANSWER’s collection of signatures in opposition to a policy aimed at promoting the interests of US capital is virtually ignored in the Western media, while a smaller movement that would benefit US capital is presented as having widespread backing. This, of course, is not unexpected. The Western media quite naturally represent the interests of the class of hereditary capitalist families and financiers from whose ranks its owners come. The class nature of capitalist society and patterns of ownership within it mean that the mass media construct a reality congruent with their owners’ interests.

Likewise, the Nobel Prize, founded by a Swedish chemist and engineer who amassed a fortune as an armaments manufacturer, is not free from politics. The Nobel committee, a five-person committee selected by the Norwegian parliament, has strayed quite a distance from Alfred Nobel’s original intentions. In his will, Nobel set out conditions for establishing and awarding the prize. “The said interest shall be divided into five equal parts, which shall be apportioned as follows: /- – -/ one part to the person who shall have done the most or the best work for fraternity between nations, the abolition or reduction of standing armies and for the holding and promotion of peace congresses.” While arguments may be made on either side of the question of whether Liu’s actions are praiseworthy, there is no question that trying to organize the transformation of People’s China into a replica of the United States of America, and getting arrested for it, amounts in no way to working for fraternity between nations, abolishing standing armies, or the holding of peace congresses.

A further double standard is evident in the condemnation of China’s crackdown on anti-communist dissent—one of the goals of awarding Liu the Nobel Prize (the others: to legitimize Charter 08 and demonize Communist Party-rule in China.) The reality is that any revolutionary society, if it is to successfully defend itself against counter-revolution, must limit the rights that would be used to organize the revolution’s reversal. To place political and civil liberties ahead of the preservation of the revolution, where the revolution is aimed at improving the economic condition of Chinese peasants and workers, would be to declare political rights to be senior to economic rights. Liu has clearly worked toward a counter-revolution that would push economic rights to the margins and bring the rights of the owners of capital to organize society exclusively in their interests to the fore. Allowing Liu to freely organize the overthrow of the current system and to replace it with one modelled on the US political and economic system would be to set political liberties above goals of achieving independence from imperialist domination and building the material basis of a communist society.

Other societies—including those which trumpet their credentials as liberal democracy’s champions—have freely violated their own pluralist and liberal principles to counter individuals, movements and parties which have threatened the capitalist mode of property ownership. The history of Western capitalist democracy is replete with instances of states running roughshod over their own supposedly cherished liberal democratic values, from the persecution, harassment and jailing of labor, socialist and communist militants to the banning of strikes and left political parties to open fascist dictatorship. Whenever militant leftists have seriously threatened to disrupt the tranquil digestion of big business profits, their freedom to openly advocate, organize and act has been abridged. Think of the Palmer raids in the United States, jailing of anti-WWI activists, the purge of communists from the civil service and Hollywood, the banning of the Socialist Workers Party, and the suppression of the Black Panthers. Similar practices were replicated in many other capitalist countries. In Italy and Germany, strong workers’ movements were suppressed by fascist dictatorship.

This is a pattern of behaviour so recurrent as to have the status of a social scientific law. The state, whether in capitalist or revolutionary societies, almost invariably violates rights of advocacy, free association, and the press, in order to preserve the dominant mode of property ownership wherever it is seriously under threat.

As a matter of politics, restrictions on the rights of individuals, movements and parties to openly advocate and organize the overthrow of the current economic system are good or bad depending on what one’s politics are. Nationalists in liberated countries will approve restrictions on the rights of foreigners and colonial settlers to own productive property unchecked; measures to prevent movements from encroaching on capitalist interests will be deemed warranted restrictions by capitalists; and communists will oppose the right of individuals and groups to openly organize a capitalist restoration within socialist societies, just as republicans opposed the right of individuals and groups to openly organize the restoration of monarchies within republican societies.

While Liu is cleverly portrayed by the Western media as a fighter for human rights and democracy, his organizing for low taxes, call for the jettisoning of the remaining elements of China’s socialism, and promotion of a robust capitalism, have received virtually no Western media attention. It is difficult to persuade people that capitalism is “a universal value”, and Liu’s commitment to making over China into a replica of the United States—with its economic crises, bail-outs for wealthy financiers and mass unemployment for the rest—is hardly the kind of thing that is going to marshal much popular support. Hence, the Western media have wisely (from their point of view) dwelled on Beijing’s seemingly unjustified crackdown on dissent and failed to elaborate on Charter 08’s implications for China, while playing up Liu’s advocacy of the pleasant sounding terms, democracy and human rights, pushing his commitment to free markets, free enterprise and low taxes into the shadows. Carrying out all the charter demands would almost certainly result in China being sucked into the US imperialist orbit, and whatever chances the country has of achieving socialism, would be forever dashed.

For anyone concerned with the promotion of economic rights, or the weakening of US imperialism, or with the chances that socialism might one day flourish in the world’s most populous country, the Nobel committee’s attempt to lend credibility to Charter 08 by conferring its peace prize on Liu Xiaobo is hardly to be welcome. It is as inimical to the interests of peace and the welfare of humanity as was last year’s awarding of the prize to US President Barack Obama, who has expanded the number of countries in which the US is waging war, and has tried to create the illusion that the continuing US combat mission in Iraq has ended by renaming it. Likewise, Liu has done nothing to advance the welfare of humanity. His remit, as that of last year’s peace prize winner, is to expand the interests of the owners of capital, particularly those based in the United States. He deserves no support, except from the tiny fraction of the world’s population that would reap the benefits of Charter 08’s demands. Instead, it is Beijing’s action to preserve its freedom and independence from outside domination, and to maintain elements of a socialist economy, that deserve our support.

1. The Chinese Communist Party has, with justification, rejected “Western-style elections …(as)a game for the rich.” As a party representative explained: “They are affected by the resources and funding that a candidate can utilize. Those who manage to win elections are easily in the shoes of their parties or sponsors and become spokespeople for the minority.”

Edward Wong, “Official in China says Western-style democracy won’t take root there,” The New York Times, March 20, 2010

See also Barry Sautman and Yan Hairong, “Do supporters of Nobel winner Liu Xiaobo really know what he stands for?” The Guardian (UK), December 15, 2010.