I’d really hate to be China’s leadership right now. This is rock/hard place for them. If they don’t keep Russia alive, they will have no ally when it’s their turn, but the US and Europe are likely to put a ton of pressure on them for sanctions & that will start the cold war earlier than they wanted (for them — it’s already started for Russia).
Obama famously pivoted to China, calling it the biggest threat. Trump slapped on sanctions and used a ban on semiconducters to absolutely savage Huawei, the flagship Chinese tech company, whose phones were rivaling Apple and Samsung, and whose 5G technology was the most advanced and ready-to-deploy in the world.
They put immense pressure on Europe to not use Huawei 5g tech and largely succeeded.
When Biden came in, he removed none of Trumps sanctions.
In effect, the US has been declaring China its enemy for about 12 years now, through both Democratic and Republican administrations, and over the last few years, anti-China sentiment in DC has solidified. As far as I can tell, it is truly bipartisan.
China has known that a cold war with the US was inevitable for a couple of years now, though they suspected it before. They had hoped to keep Europe as a neutral customer, but Europe has bowed down to the US whenever push comes to shove, so China, like Russia, appears to regard Europe as an American satrapy — a subject state who will do what the US says.
The US and Europe will now put immense pressure on China to comply with sanctions on Russia and to not help Russia get around them.
My guess is that China will not, substantially, comply. The calculus is simple: Cold war with the US is coming, and if they let Russia get taken out, they lose a powerful ally and will then be surrounded, rather than having most of their Western flank covered by another Great Power.
Russia has repeatedly told the West to go fuck itself with regards to sanctions. They regarded, even before this war, more sanctions as inevitable. All that the war has done, they believe, is move the sanctions forward. China is likely to have the same calculus: sanctions, tariffs, and so on are never removed, only increased over time.
Both China and Russia have their own SWIFT alternatives. They will hook together and be offered to the rest of the world. As non-US allies have seen, with Venezuela, Iran, and now Russia (among others) that the US will even freeze reserves, they will join the Chinese and Russian systems and settle trade in Yuan. They will move reserves out of the US/European system.
This is, however, a huge hit to both China and the US. The US cannot currently decouple from China — it’s impossible. The US actually needs China more than China needs them. Remember, China is the largest industrial power, not the US.
It’s still a terrible trap, though, and the Chinese will, I think, play to mitigate. The US will not slap the worst sanctions on just yet, but will rush to move production to low-cost US allies.
There is an alternative, of course. China could buckle, agree to join the “rules-based order,” and play by American rules. The issues here are threefold.
First: This means China is not allowed to take control of value chains, which provides much of the real profit. Probably 15 percent or so of the value in a value chain comes just from that. They will have to keep paying US intellectual property fees, which amount to another ten to 15 percent in a lot of industries.
Intellectual property, if it’s not obvious, is on the table. Certainly Russia will stop paying these fees, that’s almost certain.
Second: Playing by Western rules means, the Chinese believe, staying stuck in the middle income trap and not making it to high income. This is one of those places which is a genuine trap: Decoupling will be a huge hit, but staying in the system and playing by the rules set up to favor the US and its allies means being in a system which keeps China from becoming a rich nation.
Third: There is an emotional component. As much as many Europeans, especially eastern Europeans, hate and fear Russia, China has a deep resevoir of hate for Europe, and the US for the “century of humiliation,” for Taiwan (to them a rebellious province which they would have retaken years ago if the West didn’t support it), and of course, a lot of hatred for Japan, the West’s primary Asian ally, for its invasion, occupation, and atrocities before and during WWII.
Emotionally, the Chinese are primed to tell the West to go fuck itself. They didn’t see why they should’ve play by rules made even when they were at their weakest. The “rules-based international order” to them is nothing but a set of rules set up by people who don’t want them to be a great, rich nation again. Rhetoric from the US has solidified this impression, and I think more correctly than not.
So the “cut a deal and compromise” really means “accept the current world order and play by rules that China thinks are unfair to them, and are made without their input.”
My guess is that China will do whatever it takes to keep Russia alive and to stop Western sanctions from achieving their declared aim: To collapse the Russian economy and cause regime change. Viewed pragmatically, I think that is the right call if you are the Chinese leadership, because the other two options (acquiescing to Western rules or letting Russia collapse and facing the West w/o Russia) seem worse.
I would guess, and it is just a guess, that this takes about four to eight years, because the US would be insane to decouple now, and China also wants time to prepare. But emotions are running high and a lot of policies have been made without clearly thinking through their consequences lately, so I while I think it’s odds on, I won’t be surprised if emotions rule instead. The decoupling may happen sooner.
Welcome to the new Cold War. Remember, in this one, the world’s biggest industrial power and most populous nation is on the other side. This isn’t 1950 or even 2000. China is the biggest trade partner of more nations than the US, not the other way around.
And China needs what Russia has: wheat, oil, and mineral resources.
Cold War 2.0 isn’t one in which the West are necessarily the favorites to win.
Astrid
2022 China is not 2008 China, or even 2019 China. China will try to soften the blows to buy themselves a couple more years if they can, but they also know this is coming. Sooner or later, the break will come. Subjugation under a Western regime might have been thinkable before COVID, but no way I’d it acceptable now.
Xi and his couterie are also very different from the men who came before. And even before then, remember that China stood with DPRK and Pakistan through some very rough patches.
So let’s see what happens first, Joe Biden passes a budget or Putin wins a war.
marku52
The irony is spectacular—the US FP elite sought to cement the status quo with the US a the top and instead blew it into a million pieces, with the repercussions set to echo into the next 50 years, if we aren’t all obliterated in the next week.
So an “Iron curtain has descended in Europe”, lowered, this time, by the West, not the East. As David at NC commented “This is the first day of the Post-Post-Cold-War era.” Things have certainly changed.
Globalization,–he process of scattering production all over the globe—was already problematic due to the Covid production bottlenecks. It is now revealed as a critical national security risk. The West has lost about half of its available Titanium. Boeing and Airbus aren’t going to solve that with firmware. Much of the neon needed for semiconductor manufacturing is refined at a plant in Odessa. Oopsie.
My tiny amp repair business just noted that more than half of the vacuum tubes I use are manufactured in Russia.
Renationalizing production just got very important. Unfortunately, the US is run by parasites and monopolists, so this is unlikely to be done well. The US will likely bankrupt itself ala USSR trying to run a 2 front cold war. I suspect after a few aircraft carriers take up new functions as fish reefs in the South China Sea, regions of the US will simply start ignoring DC. Hopefully, the US empire dissolves quietly.
Using international finance as a tool of war is, as a twitter pointed out “A card you can only play once.” Using SWIFT and the USD is also revealed as a national security risk. Use of the USD in global trade had already fallen from ~65% to ~45%. Now look for a rush to set up alternative systems that take the US out of the process.
It was always foreign policy malpractice of the first water to drive your two adversaries together, but this war-driven by the insane desire to put NATO missiles 500 miles from Moscow–sealed the deal.
Kim Iverson has a useful analysis of the countries that are sitting out the Russia bashing. It is an interesting list. Obviously China, but India as well. The UAE. Our “allies” the Saudis were asked to up their oil production, but declined to do so. The Israelis are holding back as well. They remember Ukrainians helping kill a million Jews in WWII, and are quite aware of the very real Nazis operating in Ukraine today.
https://www.youtube.com/watch?v=rkacr7g86BY
NATO is revealed as useless, having goaded Ukraine into a fight they can’t win, and then just watching once it started. Poland was going to send some MIGS, but then thought better otf it.
Oh yeah, inflation? About to get a lot worse.
Germany is re arming. The other European nations will not be happy, as a heavily armed Germany has been a problem more than once. The other problem is that one of the points of NATO (other than as a dumping ground for overpriced US MIC products) is weapons commonality. No army wants to go up against an adversary with the same weapons and tactics. You’d want some “secret sauce”. Look for the NATO countries to start independent developments. Holding back secrets during joint exercises. Weakening NATO further, As if it hadn’t already shown itself to be impotent.
So US actions designed to cement the status quo, instead blew it to bits. When historians write the sequel to “March of Folly”, this will surely be chapter one.
marku52
There certainly is a racist element to this as well. After decades of non-white people being blown up, with no western comment, we get pictures of white people hiding in a basement, and the west goes into a total freak out.
Strange, ‘innit?
Willy
In a better world, by now there’d be certain people who’ve fully achieved Zero Credibility status. They’d speak and the rest of us would immediately tell them to STFU.
Hillary, Trump, Tucker Carlson… Obviously Putin, causing millions of people misery for what goal exactly? Obama of TPP fame has been mentioned. FWIW, Dubya lays low, possibly in contrition. Be nice if he’d play the older wiser nukular guy. Biden, at least in some small ways, appears repentant for his previous actions. Not sure what his best ethical play should be, given the circumstances.
Then we have the Chinese leadership. They did put out a statement proclaiming that the USA was involved with most of the wars in the recent decades. As if two wrongs make a right, or some shit. Not sure what they think of all the misery Putin’s caused though. Probably not wise for them to come clean about their true motives in all this. Gotta keep the mob shrouded in FUD I guess.
I always thought that most perception behind that famous phrase: ”The road to hell is paved with good intentions” was folly. Maybe that phrase was memed wrong. Maybe it should be that “The road to good intentions gets diverted to hell when it’s profitable for the power devils, and most good-intentioned people are just too dumb to notice.” But that one’s not very catchy.
If you’re into political betting or trading stocks, I’d bet on whatever the PTB is going to try and personally profit from during the coming cold war with China. Watch what the soulless influencers will try to peddle, then follow the dark money back to who’s influencing the influencers. You could do well.
anon
marku52 – There is definitely a racist element to all of this. I feel bad for the people of Ukraine but I can’t help but be angered by the double standards and hypocrisy of the US media and leadership. War is awful no matter who starts it or who the victims are. The stories of the millions of people killed by American and NATO aggression were never featured prominently on the nightly news the way the Ukraine is right now.
I agree with Ian’s guess that China will not comply with the West and that this will ultimately hurt Americans in the long run more than the Chinese. It would be wise of China to protect its closest powerful ally in any way it can. China will never be able to trust the US and Europe and should not agree to play by American rules. If I were China’s leadership I’d tell the West to go f*ck themselves.
Chiron
After Huawei persecution, even arresting the CFO, the nuclear submarine for kangarooland and the Quad, accusations of “genocide”, it’s extremely, arming Taiwan,… its hard to see why China would help America with anything.
marku52
Condaleeza Rice was on the TeeVee, proclaiming that “Attacking a sovereign country is a war crime.”
Irony is officially dead.
Maybe she meant “Attacking a sovereign country with White People in it is a war crime.”
Astrid
I live in Pennsylvania, which has some of the cheapest natural gas prices around, typically less than $10 per 1,000 cubic meters. Right now, the spot natgas price in Europe is purportedly $2,200 per 1,000 cubic meters. Apparently Russia also provides much of France’s uranium supply. All this is while Russia is still delivering on all its contracts even though its Central Bank deposits are frozen.
Nevermind Europeans freezing. Are they even going to be able to cook their dinners at this rate?
marku52, you forgot Serbia in 1999 and shelling Donbass after official declaration of independence. And plenty of light eyed light skin Palestinians and Iranians too. Though I supposed Americans and Europeans didn’t see those victims’ faces.
StewartM
This is how the Chinese “Little Pinks” are thinking:
https://truepostindia.com/2022/02/why-the-chinese-web-is-cheering-russias-invasion/
RedRosa
It seems to me that this miscalculation by Putin is going to cement Russia’s status as a Chinese vassal state. Thoughts?
lim
The CCP is holding National Congress in Oct 2022 to determine Xi’s third term. Xi should be trying to support Russia in the background while keeping conflicts with US and Western world to a min before the National Congress. However, once he gets a 3rd term in Oct, the gloves will be off in 2023.
US will also be having a mid term elections end 2022. If Russia is crushed before the mid term elections, Joe will be embolden to engage in China bashing to get more votes for mid term.
China have just came out to say that they are not joining the sanctions against Russia.
https://www.cnbc.com/2022/03/02/china-will-not-join-sanctions-against-russia-banking-regulator-says.html
Have India declared its status on the sanctions against Russia?
ptb
@Chiron – yep
@Marku52 – irony would have to be double dead if *that* is what’s going thru Condi Rice’s mind
Eric Anderson
The rub now once again plays out in the Middle East. Iran will play the proxy more openly now. If the Russian spigot remains turned off to Europe, the EU will likely get seriously re-invested in their colonial oil pumping holdings. Turkey and India are the heavy-weight wildcard tickets — both being caught in the middle of geography and traditional loyalties. Israel is the obvious light-weight wildcard ticket weighing in at just over a pack of matches in a dynamite factory.
different clue
@RedRosa,
A vassal state is still a state. If the NATOnians and the EUropeans and the DC FedRegime really want to disintegrate the Russian Federation’s economy to the point where the society and the territory delaminates, the Russian FederationGov will choose stable vassalhood under ChinaGov protection first. If that becomes the forced binary choice.
In that event, the ChinaGov will be very nice and polite about it and allow the Russian Federation to feel like hardly even a vassal at all.
KT Chong
China is allied with Putin, not necessarily Russia.
If the Putin regime collapses, Russians will most likely elect a pro-US, pro-Western President and government, then China will be surrounded by enemies on all sides and in deep shits.
Russia has what China needs: wheat, oil and mineral resources.
And women in excess. 😅
However, I don’t know if China can afford to or has enough money to prop up the Putin regime for year after year.
KT Chong
lim: “Have India declared its status on the sanctions against Russia?”
lim, Singaporean?
India and Indians HATES China. If you search for “China” videos on YouTube at any given time, you will find at least half of the the results are made by Indians… and hating and talking shits on China. If you narrow the search results to “today”, then 80 to 90 percent of the latest videos on China are made and uploaded by Indians. (Notes: but not recently since the Russo-Ukranian war started, but still a good percentage of YouTube vidoes on China are fake news and hate speech uploaded by Indians.)
Indians are OBSESSED with hating China.
And the videos made by Indians on China are so often looney and paranoid. The typical Indian videos about China could be about: the Three Gorges Dam have just collapsed! (again,) or hundreds and thousands of dams all cross China has burst and collapsed (again,) or some province in China is flooding and underwater (again,) or China is being destroyed by earthquake (again,) or how some Chinese buildings or bridges have collapsed and killed a lot of Chines (again,) or how some factory and China has exploded and burned and killed hundreds or thousands of Chinese (again,) or how some US supercarrier has shot down a Chinese jet and embarrassed China (again), etc. It’s the same lunacies recyled over and over again.
The reverse is NOT true. I search for topics on “India” in both English and Chinese, on YouTube as well as Chinese social media. Chinese rarely if ever talk or care about India.
ptb
If there was still a decision to make in China on this subject, looks like US just made it easier.
https://oilprice.com/Energy/Energy-General/US-Wants-To-Degrade-Russia-As-Oil-Gas-Power.html
I’m expecting Chinese oil/gas services firms moving in to gleefully step into the void left by their western counterparts exiting.
I think this might really be the big push, to try to prolong the US energy lever over the world, and China in particular. Here and now. Guess there’s a logic to it – whenever the fossil fuel era ends, China’s lead in solar, wind, nuclear, batteries, and new global infrastructure in general, would also make it the energy superpower. Playing those energy-lever cards now might have some use-it-or-lose-it logic behind it (though it would probably be a no-brainer anyway given high place of the domestic energy industry in the pecking order of US political sponsorship).
Z
Pretty informative by the Indian host and in the end funny. Watch until the end …
https://twitter.com/skbozphd/status/1499298691156705282
Z
bruce wilder
China has the world’s largest economy and has pursued a strategy that entails building the kind of globe-girdling business enterprises that seem necessary to escape the “middle-income trap” that has frustrated Putin’s Russia and much of Eastern Europe.
I do not know that the numbers add up for China: a large fraction of China’s enormous population cannot be productively employed in the manufacturing, marketing, distribution bureaucracies of the 21st century. For technological reasons combined with global resource depletion, the employment potential of that advanced economy is shrinking for everyone.
For the U.S., with a manageable ratio of population to continental resource base, the struggle will center on freeing the country from the grip of the financial parasites, who will try to hold everyone hostage with the threat of exploding asset bubbles.
For China, the ultimate obstacle will be the excess population and the ethical imperatives that attach. If India or the U.S. had cultural moral values that made this problem a problem, we could compare approaches.
As for the U.S. as an adversary to China, the U.S. will succumb to parasitism before China needs to worry seriously. More consequential for China will be its own arrogance, which knows few bounds that I can see.
Z
The statestream media on Ukraine: every innocent civilian life matters
The statestream media on Israeli’s violence in Palestine, Lebanon and Syria and U.S. military operations in Iraq, Libya, Afghanistan, Syria, etc., etc., etc.: mistake happen (((shrug)))
Z
Feral Finster
@ KT Chong:
Note that Putin is considered a relative dove and internationalist by the standards of internal Russian politics. Pro-western liberals have about zero influence right now.
Obviously, this could change, even western darlings such as Navalny are in some ways more hawkish and reflexively anti-western.
for that matter even if Putin were to die today and the Russian army pack up and leave Ukraine, the pressure on Russia would not stop. If anything, it would intensify.
different clue
@K T Chong,
I wonder if the Indians know that . . . ” Chinese rarely if ever talk or care about India. ”
I wonder if that in itself drives them to deeper peaks of hate and spite. Could some of their videos and etc. be a desperate plea for Chinese attention?
Altandmain
Hello Ian,
I think even this statement understates the amount of bargaining power that China has right now at this point.
Not only are the Chinese the biggest manufacturer, they are also overtaking the US in terms of scientific research.
https://www.science.org/content/article/u-s-science-no-longer-leads-world-here-s-how-top-advisers-say-nation-should-respond
Working in manufacturing here in Canada myself, one thing I have noticed is that where the manufacturing takes place is also a lot of where the innovation takes place. There’s a lot of work done in process improvements by engineers and other specialists working on the floor. Also, a lot of R&D must be close to where a product is made.
Time is on China’s side and working against the US, whose elite is increasingly desperate to try to keep US hegemony. The irony of all of this is that this is self-inflicted. China’s recovery from its “decade of humiliation” was inevitable, but the greed of the US ruling class accelerated this product by transferring so much manufacturing so quickly.
Sure, China still has some work to do, especially in the world of semiconductors and its aerospace industry. But it is making relatively rapid advancements.
Let’s just say that a lot of China doubters have been proven wrong over the past couple of decades. The Chinese have not been perfect, but the quality of leadership is head and shoulders over their Western counterparts.
Ian Welsh
Atlandmain,
yes, absolutely with regards to research/innovation moves to where the manufacturing is. I’ve said this many times, and I believe I first read it in Kevin Phillips’ “Wealth and Democracy” which is, I think, one of his best, but somehow people don’t read it.