Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: China Page 8 of 12

Covid and China’s Victory

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On January 6, 2022

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One of the most clarifying things about the Covid epidemic has been which countries have been able to handle it and which haven’t.

To oversimplify, China and a few other nations have handled it well. None of the major Western powers have; certainly not the US.

In biology, there’s a distinction between natural selection and sexual selection. In sexual selection, you compete against other members of your species. In natural selection, you compete against your environment.

In nations, societies, and civilizations there is something similar: internal vs. external competition. You compete against fellow members of your society for status, wealth, and power within your society, but your society as a whole competes against other societies. There are always top dogs, hegemonic powers, and so on, and losing an inter-society culture can, at worst, lead to you being genocided and, at best, lead to long periods of poverty and subjugation. (The Irish to the English, say, for hundreds of years. Native Americans to the Europeans. Indeed, almost everyone to the Europeans, but before that there have been various hegemonic powers — including China.)

In the West, with some minor exceptions, Covid was treated as a profit event. It was a way for the richest and most powerful to become even more rich and powerful. That millions would die and millions more would be crippled (Long Covid rates seem somewhere between 10 to 20 percent depending on definitions) was secondary to the possibility of funneling more power and wealth to those who already had the most. Billionaires, just one group among elites, have seen their wealth double during the pandemic.

China, or more accurately, the Chinese Communist Party did not treat the pandemic primarily as being about internal competition. To them it was important that large numbers of citizens did not die and were not disabled.

This means that China will come out of this stronger than the West, because the economy, fundamentally and always, is people, and there’s aren’t mass-disabled and/or dead. Plus the legitimacy of the ruling class, rather than being reduced by their pandemic response, has been increased.

To the CCP, the health of their citizens is integral to maintaining their power. To the West’s elites, it is an asset to be burned down to make more money and improve their internal position.

The irony of this is that by taking care of their citizens, the CCP has both improved their external and internal positions, while the West’s elites, who can be best characterized as incompetent psychopaths capable of nothing but accumulating more internal power and wealth, have been weakened despite their gains in wealth. This is because, as a group, their power is dependent on the health of their population and on their legitimacy.

As far as I can see, Covid pretty much proves that, barring outside shocks, China has already won the hegemonic competition between itself and the US. Oh, it’ll have to play out, but the CCP governs its country basically competently, and US elites are fools who let their society’s power run down.

US military superiority, in the face of nukes and the Russia/China alliance, is insufficient to alter this fact. China has the industry, it has more competent government, and its government’s legitimacy is riding high while the legitimacy of the West is in tatters.

Given these facts, and that China has a much larger population, it’s hard to see how the US can remain in its position. Just as the end of Britain as world ruler took generations after the US actually surpassed it economically, so this will take time to be seen. However, just as, by 1900, it was essentially inevitable that the US would take over from Britain, so it now seems that the hand-off to China is inevitable, or would be in a world without climate change and ecological collapse, those being the likely external shocks that even a functioning society may not be able to overcome.

I take little pleasure in this. I dedicated a decent chunk of my life to trying to help fix the US, as a Canadian-American collapse is likely to be ugly. But it is what it is, and it must be faced squarely.

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What Would Chinese Democracy Look Like?

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On December 1, 2021

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A few months ago I read a couple of books by the Singaporean intellectual Kishore Mahbubani. In Has China Already Won?: The Chinese Challenge to American Primacy, Mahbubani discusses Taiwan.

The one exceptional trigger for a war involving China is Taiwan. Most of the time, the Chinese leaders have a lot of policy flexibility. There are no strong domestic lobbies to worry about. But the one issue where the Chinese leaders cannot bend and compromise is Taiwan. Any Chinese leader, including Xi Jinping (despite all his power), could be removed if he is perceived to be weak on Taiwan. Why is Taiwan so fundamental to China? There is a very simple explanation. Every Chinese knows the century of humiliation that China suffered from the Opium War to 1949. Nearly all the historical vestiges of this century of humiliation have been removed or resolved, including Hong Kong and Macau.

Only one remains: Taiwan. It was Chinese territory until China was forced to hand it to Japan after the humiliating defeat in the Sino-Japanese War of 1894–1895.

Mahbubani also discusses what sort of person would be elected if China was a democracy.

Think Theodore Roosevelt, who, if you aren’t aware, was a raging warmonger. Xi, and the CCP in general, are a moderating influence on Chinese foreign affairs. China’s population has far more aggressive feelings than China’s current rulers. They are still furious about the “century of humiliation,” and they want China to be the number one nation in the world — or certainly to be dominant in its sphere of influence, exactly as Americans did in through the late 19th century to the 20th century.

We have some really weird ideas about our own  history, or about what is normal for rising or re-establishing great powers.

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They always take control of their near abroad if they can. This is why Russia is willing to fight a war for the Ukraine, if it comes to it: The Ukraine was part of Russia for centuries. China is actually being remarkably flexible about Taiwan for a rising power. The US bent every country near it to its will and took chunks of land out of both Mexico and Canada, while replacing governments in Latin and South America regularly. Britain brought Scotland and Ireland into its “union.” Germany grabbed everything near it that it could, until defeated in World War II. Japan went on one of the biggest empire building sprees in history.

Other countries, of course, will resist as best they can, and I personally think that Taiwan should stay free. But the price of its freedom is allowing Chinese leaders to save face with their own population: They are saying “Taiwan and China are part of one country.”

This isn’t the 90s, when the US had an easy veto over a Chinese conquest of Taiwan. American aircraft carriers, if they try to intervene, will be sunk by China’s massive arsenal of missiles. China has nuclear weapons and is de-facto allied with Russia, so escalation is extremely dangerous.

Taiwan and the Ukraine are not, fundamentally, the West’s business — except, of course, that the West’s semiconductor fabrication is concentrated in Taiwan due to idiotic Western trade and industrial policies.

Both China and the West are building semiconductor fab as fast as they can in their heartlands. Soon even this vulnerability will be gone, on both sides.

In the meantime, if China wants to say “Taiwan is part of China,” which is something the US agreed to as far back as Nixon, it’s a cheap way to keep a small democratic state going and avoid a potential world war.

The EU Needs To Get Clear On Its Interests

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On November 10, 2021

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One of the more useful neoliberal writers I’ve been reading recently is Kishore Mahbubani. A point he made about US and European foreign interests really came home to me recently, seeing news of a refugee crisis at the Belarus/Poland border, where Belarus has deliberately released migrants in retaliation for EU sanctions and, this

Readers may remember that Turkey, during the last refugee crisis (still ongoing, but much reduced) used holding and releasing refugees as part of its negotiation with the EU, similar but not identical to what Belarus is doing. Those refugees, of course, came from countries like Libya and Syria which the EU had helped devastate, as well as other countries in the Middle East and Africa which could not give their residents decent lives. So the people fled to Europe.

Which brings us back to Kishore’s points. The US has no significant interests in most of Africa and none in the Middle East now that it is a net producer of oil. It should disengage from places it has no significant interests in (this includes Afghanistan.)

The EU, on the other hand, shuddered under the relatively mild recent refugee crisis. It is where refugees will go when their countries blow up, especially countries nearby, because it offers the best quality of life in Eurasia.

This means it is not in the interest of the EU to destabilize countries, to sanction them or to even to see them stagnate or fail economically. If they do, Europe is who gets the refugees, and Europe cannot handle refugees, politically or economically. (Arguably Europe might figure out how to economically, but Europe is wedded to doctrinaire technocratic neoliberalism and incapable of meaningful policy outside that framework.)

This is why the EU screamed so loudly when the US unilaterally left Afghanistan: they knew they would get the refugees.

The EU is the world’s second or third largest economy, depending on how you measure it. They could have provided sufficient aid to Afghanistan to reduce the refugee flow. They didn’t. They couldn’t continue occupying Afghanistan themselves, because their militaries are set up as auxiliaries for US troops: they aren’t capable of long term, long distance, large scale operations though France manages some in its old African possessions.

After World War II Western Europe was a US satrapy, and Eastern Europe belonged to the USSR. This was simply a fact: huge numbers of US and Russian troops were stationed in Europe.

The Europeans have never recovered from this: they still act as if the US rules them; they act as if satrapies, expecting the US to take the lead.

But the US does not have the same interests as Europe any more. Not only is Europe far more subject to refugee issues, as already noted, but it’s far more integrated into the Eurasian (and Chinese) economy, and its future is within that economy, not with the US.

So Europe needs to get off its knees, and stop pretending it isn’t a great power. It needs to stop damaging countries that will send refugees to it; it needs to support countries so that they don’t shed refugees, including helping them develop; and it needs to build a reasonable military, capable of operating where it has interests and certainly big enough to credibly deter Russia without American help. (That the EU is scared of Russia, a country with a much smaller population and economy, is ludicrous and pathetic.)

It may be that for its own reasons (its commitment to technocratic rules) the EU will come to oppose the rise of China, or it may be that the EU will decide to cooperate with China in developing countries whose undevelopment is a threat to the EU, but whatever Europe decides should be based on a clear-eyed look at its own interests.

If Europe continues acting weak, putting its defense off on the US (which no longer has the same interests) and refuses to look after its unique interests, there’s a good chance the EU will eventually collapse or be reduced back to its western core (German, France, hangers on). It already lost the UK, the eastern provinces are restive, and its prestige is weak compared to 20 years ago.

It’s time for the EU to either decide to be a great power, or to simply buckle under to whoever offers the best combination of threats and blandishments: the US or China.

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China’s Economic “Miracle” Was Normal

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On November 1, 2021

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Over the last few weeks I’ve been reading books by some of the smarter members of the international elite. One thing they all seem to agree on is how amazing and unprecedented China’s economic rise was.

It wasn’t.

China industrialized and modernized the way almost all nations have:

  1. Through mercantalist policies. In China’s case, keeping the value of the currency low, taking advantage of low wages, and starting with the oldest parts of industrial value chains.
  2. By exporting to large external economies which let them: the US and Europe.
  3. By grabbing as much intellectual property as possible.

This is how America did it in the 19th century. This is how Japan did it twice (Meiji, post WWII, Taiwan and South Korea did it. This is how virtually everyone did it.

Americans got greedy and stupid, from a geopolitical point of view. They believed the nonsense “End of History” bullshit about how capitalism and democracy are intertwined and capitalism inevitably leads to democracy and they were salivating over the profits they could make in China. So they traded and they let China into the WTO.

Contrary to the idea that democracy and industrialization/modernization are intertwined; Japan and Germany did most of it under authoritarian governments and with massive government direction. Even post-WWII, Japan was a one-party state, not a real democracy. Germany’s industrialization was based on Prussia’s command economy, and the great companies were practically state organs even if they were nominally civilian.

Japan didn’t become a nominal democracy because “capitalism” it became one because it lost WWII. The Kaiser had a parliament, but still a great deal of power and he didn’t step down voluntarily, he lost power because the Germans lost WWI.

But the emphasis on authoritarianism misses what is actually interesting and almost unique about China: it has the most decentralized government spending of any major country, with over 70% of spending decisions made below the Federal government. As a rule, the center made and makes goals and guidelines, but leaves it up to regional and municipal governments to figure out how to achieve them. China has a dynamic government, and there is a lot of competition between governments, as much as between firms.

It is also easier and cheaper to start a new business in most of China (free in Beijing to incorporate) than it is in most of America or Europe.

Meanwhile, the great danger to capitalism is capitalists being too successful, and buying the system, and then getting rid of necessary oversight and regulation. China has largely avoided that (though real-estate wealth is still a problem) and Xi Jingping has cracked down repeatedly those he considers bad actors. In one recent example he forced delivery app companies to treat their employees much better (better than in America). In another he got rid of the College prep industry almost entirely, which a lot of western observers thought was bad, but the industry was a pure “Red Queen’s Race” situation, because it existed everyone had to do it, and as with all such college prep industries it favored those with money over those without. Xi was entirely right to end it.

Democracy used to serve this purpose in the West. Almost everything FDR did, economically, was to stop capitalism from destroying itself.

Further, all evidence I have seen indicates that contrary to what I thought in the past, the Chinese Communist Party (CCP) goes out of its way to recruit smart, competent people and has thus, so far, been able to avoid the generational nepotism and degradation cycle.

To bring this back to Western elites, a lot of the mistakes come from drinking their own Kool-aid. While virtually no country larger than a city state has ever modernized without mercantalist policies, the orthodox economic position of the West for decades was laissez-faire, and that’s what the World Bank and IMF made most countries do. Those policies are vastly destructive and don’t work IF you want a country to modernize, but if you really want it to become a helpless satellite state they work well. (Bad Samaritans, by Ha-Joon Chang covers this well.)

“Free” trade is not what America did, Germany did, France did, Japan did or even England did to industrialize, and it’s not what China did.

What it is truly unique about China’s industrialization is its size: it’s a subcontinental power with a huge population. Japan was never really a threat to the US, for all the screaming in the 80s, because of its population size and limited geographic extent. China is by some measures already a larger economy, and the only thing might stop it from becoming the world’s greatest power and eclipsing the United States is that climate change will  hit it hard somewhat earlier than it will hit the US, as best I can tell.

So, what matters about China is just that it’s not Western, and poised to become the first Eastern hegemonic power in about 200 years. Of course the US doesn’t like that, and of course Europe (still an American satrapy) is uneasy.

This could have been avoided easily enough, though it probably shouldn’t have been, simply by refusing to cooperate with Chinese mercantalist policies and certainly, if the US didn’t want a rival who would probably eclipse it, letting China into the WTO was insanity. (This was clear at the time, and many people objected.)

The other issue is that the West no longer has a veto on who gets to industrialize. For various reasons Japan, South Korea and Taiwan couldn’t serve as the necessary markets for mercantalist expansion, but China can and that’s what they’re offering many other nations the West never let develop. The European/US monopoly is broken.

The lesson is not to believe your own lies and bullshit. Fukuyama was obviously full of shit about “The End of History” and developed world suggested “development” policies in the last half of the 20th century were meant to stop nations from developing, which was their record, and anyone with  sense who spent a few hours examining the policies of countries which actually industrialized, could know it.

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When The “Communists” Do The Right Things

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On August 4, 2021

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So, Xi Xingping, has, recently:

  1. Made all tutoring companies become non-profits as part of an attempt to reduce burdens on the middle class students and their parents: they had to spend vast time and money hiring tutors for competitive exams;
  2. Forced food delivery companies to pay couriers a living wage;
  3. Taken actions to reduce housing prices, so ordinary Chinese can afford them;
  4. Has stated that ride-sharing firms (stupid name for them) are stifling competition, suggesting action is coming
  5. (Shut down bitcoin mining.)

Xi’s priorities, “ahead of growth”, are apparently:

  • National security, which includes control of data and greater self-reliance in technology
  • Common prosperity, which aims to curb inequalities that have soared in recent decades
  • Stability, which means tamping down discontent among China’s middle class 

A lot of international investors have been burned by this, including property investors and those invested in the tech sector (which Xi has been after in particular.)

What passes for a lot of tech “innovation” these days are things like centralized apps for rides, which in countries with labor laws actually just suppress wages and ignore laws or bottleneck companies, as when someone gets a bottleneck position in an app store (Apple is having a big court fight over their 30% rates and approval process) or a market with strong network affects like social networks or Search (Google)

Such “innovations” aren’t really, they’re ways for a few people to take a larger percentage of profits or pass thru funds and leave less for everyone else. Facebook does great; news sites die. Google does great, but strangles internet content creators (who did far better in the early to mid 00s before Google got a stranglehold.)

Xi’s basically right to clamp down on this stuff, and to stop people from making excess profits on actions, like tutoring, that don’t add social value. Tutoring is Red Queen’s Race stuff, and people who can afford more or better tutoring win: that creates social discontent, while providing no actual value to society as a whole. In fact, by creating all the anger and resentment it is damaging society.

A lot of this is also happening because Xi and the Communist Party have given up on being friends with America. They now regard a cold war / clash-of-civilizations as inevitable, and are no willing to play by neoliberal rules and make sure that a chunk of Western elites can also get rich from China’s economy.

In geopolitical terms this may be a mistake, the fewer American and Western elites who are making money off the Chinese economy, the more likely even worse trade war and the sooner Cold War 2.0 happens.

But it’s also understandable. The actions against Huawei, when it took the global lead in 5th gen wireless, then the export ban on microchips made it clear to Beijing that the US was their enemy and was going to use its power to make sure China didn’t take dominance in any hi-tech fields. Since not becoming a leading tech power (remember, internet companies that simply intermediate and chips/phones are very different) means never breaking out of the middle income trap or truly being a first rank great power, that’s unacceptable to Xi.

Overall I think Xi’s been a bad leader for China. He’s fumbled foreign affairs. As a friend pointed out to me, America doesn’t treat its allies and third parties well at all. They should be falling over themselves to align with China, but they aren’t, because China has often been very aggressive and bullying to smaller nations.

This is part of Chinese geopolitical think: small nations should know their place; so should weak ones. When China was weak, it kept quiet and built up, now that it isn’t, it expects deference.

But less bullying would have led to a lot more friends. Few nations actually like America, but a lot are scared of China too.

We’ll talk more about China and the US. This cleavage is probably the most important geopolitical event necessary to understand what’s going to happen over the next twenty years. It’s not as important as climate change and environmental collapse, but almost nothing else is more important.

In a sense it’s almost comforting: the rising great power challenging the old great power and their alliance. Traditional.

But it can still destroy a lot of lives, or, if handled skillfully, leave a lot of people better off. For many, how they maneuver around the giants and the midgets who are their allies will be one of the most important decisions they make; for others simply understanding how the world will change as a result will let them make better choices.

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What Can Taiwan Do to Protect Itself from China?

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On April 15, 2021

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Article by Mark Pontin

 

Lyle Goldstein, research professor and founding director of the China Maritime Studies Institute at the U.S. Naval War College, in a YouTube video, claims, in the words of commenter someofparts ‘One clear fact that emerges is that China will be taking Taiwan back. It’s a question of when not if … if they have to use force,’ Professor Goldstein says, ‘Taiwan will be able to hold out about two weeks.’

One big factor Professor Goldstein is leaving out regarding Taiwan — for reasons to do with long-standing U.S. policy — is that no country that ever had a serious program to build nuclear fission weapons — A-bombs — ever failed to do so. South Africa developed them, for instance, though in 1989 de Klerk ensured they were dismantled before the handover to Mandela.

In fact, A-bombs such as were dropped on Hiroshima and Nagasaki are far simpler and easier to construct than most people realize. It’s a technology developed by people who listened to Benny Goodman on vacuum tube radios, after all. (For all that the scientists at Los Alamos represented, sadly, probably the greatest number of the most intelligent people gathered together for one project in history.)

H-bombs — fusion bombs aka staged thermonuclear weapons — which emerged with Ivy Mike in 1952 are a very different, more complex deal. In 2021, they’re what a nation-state seeking deterrence wants because — while Ivy Mike was the size of a very large locomotive engine, 20 feet high and weighing 140,000-plus lbs., with an additional 24,000 lbs. for its refrigeration equipment — they can be physically miniaturized to be put atop missiles and designed so the resulting explosion can be almost any size, shape, or radiation yield. Ted Thomas, the U.S.’s most talented bomb designer, even built a thermonuclear device so small he lit a cigarette with it.

To return to Taiwan: Simple fission-style A-bombs do require bomber aircraft (which can be knocked down by missiles in 2021) to deliver them — although trucks or boats will do in a pinch. But Taiwan could still build such weapons as stationary “mini-doomsday” devices, so that if China invades, the whole island goes up and large radioactive clouds sweep over the mainland. That would definitely be a deterrent.

The hardest part of building simple fission devices is accumulating enough enriched uranium and/or plutonium. Taiwan has six reactors so it has the nuclear material to enrich, to start with.

Enrichment is usually dependent on massive chains of centrifuges — which is why Iran currently is vulnerable to sabotage — but there’s a new high-tech alternative called laser isotope separation, or LIS, which can be carried out in a plant the size of a small warehouse or your local high-end auto dealer’s garage. Taiwan is, in one sense, the most technologically sophisticated country in the world, in that it has more microprocessor chip fabs than any other. Indeed, that’s another reason why mainland China shouldn’t invade in the next decade, until it’s built up its own fab plants: Global technological civilization would stagger to a halt without the chips Taiwan supplies the rest of the world, including China.

In any case, if Taiwan wants to enrich radioactive material via LIS, it can probably manage “nuclear breakout” both covertly and quickly.

So the fact that Taiwan could relatively easily gain nuclear deterrence is one factor Professor Goldstein isn’t bringing up.

And that’s because Japan and a number of other nations could achieve nuclear breakout very quickly, too. During the Cold War, the US deliberately extended its “nuclear umbrella” to allies to discourage them from having their own nuclear deterrent program. That way, proliferation was discouraged and US hegemony was preserved, in that the US nuclear umbrella also provided cover for US conventional forces to go in and flatten whomever Washington deemed should be flattened. (As in Iraq.)

Professor Goldstein isn’t talking about all this because he’s invested in maintaining US hegemony. Also, he’s at the US Naval War College and a potential scenario where China invades Taiwan with conventional forces is good promotion for the idea of naval force projection, and the Navy always wants more ships. I bet he doesn’t bring up the uselessness of aircraft carrier groups in such a scenario, however. If so, he’s being disingenuous on two counts.

Ian – this is by Mark Pontin, not me. I lifted it from comments with his permission. We’ll be talking a bit more about Taiwan (and the Ukraine) in the future. Thanks to Mark for agreeing.

Cold War 2.0 Incoming

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On August 11, 2020

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Right, with the ban on Huawei using chips made with American manufacturing equipment (one of the US’s last few places of absolute advantage), the bans on TikTok, Tencent, and WeChat, the attempt to convince other countries to not use Huawei 5G, and the arrest of the Huawei founder’s daughter for doing business with Iran, along with the US seizing a freighter full of medical supplies for Iran, I think we can state that the world is moving towards a second cold war.

The US pivoted to China containment under Obama, not Trump — though Trump has been far more aggressive. The Trans-Pacific Partnership (TPP) was created as a way of marshaling Asia-Pacific countries into an anti-Chinese trade area. While Trump didn’t go ahead with it, he’s pushed hard against China in other ways.

When the US asked Canada to seize the daughter of Huawei’s founder, for example, it destroyed Canada-China relations: Canada was forced to take sides, and the Chinese were furious. The USMC (the NAFTA replacement) included a clause that says signees cannot make new trade deals with non-free states if the others object: This was aimed squarely at China.

Britain had originally intended to use Huawei 5G, but after leaving the EU, reversed course.

It’s important to understand that the anti-China pivot is bipartisan, as are the sanctions against Huawei and others.

The United States has a number of advantages and it’s using all of them aggressively. First, the fact that it is the center of the financial universe, to the point that movement of funds often goes through the US even when the transaction doesn’t involve them, is a major one. The US has made its financial laws extra-territorial, in effect. If a transaction goes through the US at all, even if no one involved in the transaction is American-related, the US claims jurisdiction. (Famously, this was used by the US to launch an investigation in the World Cup, in which the US is a trivial player, because a bribe went through the US on its way somewhere else.)

This often happens unintentionally, and firms that do business with the US at all are thus often unwilling to do business with anyone whom the US has sanctioned.

US naval power and military presence is also important, with their ability to interdict the Strait of Malacca. China imports about 70 percent of their oil, and 80 percent goes thru the Malacca strait and the US can shut it down any time they want. This is true of much else that China imports or exports.

The Belt and Road Initiative is, in part, meant to cut out the US ability to use its navy to hurt China; it creates alternate land routes, including one right across the continent to Europe, and it includes pipelines. The alliance with Russia, fraught as it is, is also about reducing dependence on Malacca.

Indeed, even the ability to protect and control trade to nearby neighbours is in doubt, which is why China built artificial islands in the South China Sea.

Fundamentally, the post-WWII trade, financial, and military order is an American creation, with a European assist.

When the US let China into the WTO, they let the power most likely to overtake them inside, as it were, the house. They did so for the simplest of all reasons: greed. Oh, sure, there was talk of capitalism meaning democracy and all that, but basically, offshoring and outsourcing to China made a lot of money for a lot of corporations and rich people, and that’s why they allowed China in.

The US deliberately sped up the transfer of industry to China as a way of making more money and undercutting wages at home. China knew the deal it was offering; they understood Americans, and they were patient.

So now, China is a larger manufacturing country than the US and, by some measures, has a larger economy.

China is a threat.

China is seen as a threat and this perception is, again, bipartisan.

There is no reason to expect this to change. China is not going to buckle under to the US, like some third-world nation or a vassal like Canada. They now have a de-facto alliance with Russia. China has nuclear weapons, and Russia is not going to allow China to be taken out with a nuclear first strike (without China, they’d have to give the US anything it wants, and they know it.)

The US will keep using its financial and technological power to weaken and isolate China.

So what will happen is an acceleration of the creation of a banking system that routes entirely around the United States and which does not use the US dollar, but instead the Yuan. Countries will be folded into this, as part of the Belt and Road Initiative. Even core US allies may have little choice: South Korea does twice as much business with China as with the US, for example, and Australia is extremely dependent on China.

For many countries, China clearly offers the better deal: they provide far more cheap loans than the US, they provide development, and their goods and services are suitable for both developed and developing nations. Nor do they natter on about “human rights” while they bomb Yemen.

For others, China will be unacceptable.

This leads to a world with two trade areas, not a free trade world. It leads to an end of the dollar as the world reserve currency. It leads to a continued arms race. It may well lead to a breaking of world IP into two sets: one American lead, one China lead. (There’s no particular reason for China to respect US IP if the US refuses to let them use it.)

This is a recipe for Cold War 2.0.

This time, however, understand that the US is facing an “enemy” with more population and more industry than it, not a nation devastated by World War with less population. Likewise, China and Russia combined have more land and more resources, while Europe is not a sure American ally, though Britain, absent EU support, will fall completely into US vassal status.

This is especially true as the US is experiencing late-imperial rot. It is nearly completely unable to handle its internal affairs, and its social cohesion is breaking down to the point where it may soon become a failed state.

Many American supporters of Cold War 2.0 are trying to use China as the external enemy to rally Americans around and, by closing China off from the US, to drive manufacturing back to the US, or at least to its firm allies (like Taiwan).

Bringing manufacturing back is smart, it should never have been sent overseas, but American elites are confused: Their primary enemy isn’t China, their primary enemy is themselves. They are responsible for the US decline and China could not have risen so fast if they were not so corrupt, greedy, and short-sighted.

It’s a very stupid world we’re moving into, but some of what is going to happen has to happen. It’s not good that the US has the ability to sanction anyone it wants to. Those medical supplies seized off that freighter? Covid-19 medicines.

Power which is routinely abused, as the US has abused its financial and military power, is eventually removed. The US is accelerating this progress as fast as it can.

The ban on Huawei using chips manufactured with US tech will hurt, for example. But it’s time limited: China isn’t some backwards third-world country. They will advance their own chip manufacturing and erase the deficit.

By fighting the dragon, the US is making a rival an enemy.

Cold War 2.0 is coming and essentially inevitable, because it is something the leadership of both countries either wants or is willing to accept. The only monkey wrench in this are the effects of climate change and ecological collapse. More on them later.

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Japan and South Korea Agree China Will Rule SE Asia

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On August 26, 2019

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Well, the headline says “South Korea needles Tokyo with military drills around Japanese-claimed islets,” but when one reads the story one sees:

Days after Seoul scrapped intelligence-sharing with Japan, all branches of its military descended on a handful of disputed islets for two-day drills, raising ire in Tokyo and fueling a brewing trade conflict between the neighbors.

The basic truth is that the days of the Pacific being an American lake are coming to a close. China is the 800 pound gorilla. As Yang Jiechi said, “China is a big country and other countries are small countries, and that’s just a fact.”

So if the small countries don’t want to be ruled by China the way that Canada, Mexico, and most South and Central American countries are, they need to work out their differences and band together.

That is especially true for the two most powerful countries after China: Japan and South Korea.

If they can’t, well, welcome to vassalage as the Middle Kingdom rises.

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