China’s geopolitical strategy is economic

There is an old saying, “You can catch more flies with honey than you can with vinegar.”  While U.S. government tries to impose its will through threats of military action, covert action and economic sanctions, the Chinese have a long-range strategy based on offering economic incentives.   These two videos from Caspian Report give a good idea of what that strategy is and how it works.

The key parts of the strategy are the Belt and Road Initiative (aka New Silk Road) for extending roads, rail lines and oil and gas pipelines across the interior of Asia to connect China with other Asian nations, Russia and Europe, and also for buying rights to key seaports in the Indian Ocean and beyond.  Another is to finance infrastructure projects to Asian and African nations that can’t get credit from European and U.S. banks.

This is not altruistic.  It is a means of making China more powerful and secure, and giving the Chinese access to the world’s natural resources.  In the long run, leaders of small Third World nations may regret having got into debt to China.  But what do the USA—or, for that matter, the European Union—have to offer as an alternative?

Why U.S. business kowtows to China

In the USA, government serves the needs of business.  In China, business serves the strategic aims of government.

No foreign corporation is allowed to operate in China without conceding something of long-term benefit to China.  That can be manufacturing operations in China, transfer of technological knowledge or a Chinese stake in the company’s ownership.  It goes without saying that the CEOs do not criticize Chinese foreign policy.

Cartoon by Xu Jun for Economic Observer

Barry C. Lynn, writing in the November issue of Harper’s, said that some American corporate executives have even submitted to Communist-style self-criticism sessions, in which they volunteer confessions of misdeeds without being accused.

As China becomes more powerful, and the United States becomes more dependent on the Chinese for finance and for critical manufactured items, the leverage of Beijing over the United States becomes greater.  Lynn explained the reasons:

First is the fact that so many U.S. companies now depend on China for the products they sell.  For Walmart, it’s barbecue grills and shoes.  For Apple, it’s assembly work.  For Pfizer, it’s chemicals.

And while foreign companies have talked a lot about reducing their reliance on China, they nevertheless keep upping the ante, year after year.  Just last April, General Motors announced plans to pour another $16 billion into China.   In September, Dell pledged a whopping $125 billion over the next five years, with an ominous promise to “closely integrate Dell China strategies with [Chinese] national policies.”

A second reason corporations are so willing to accede to Chinese diktats is the allure of Chinese markets.  For General Motors, China already accounts for roughly a third of the cars it sells.  For Qualcomm, China accounts for roughly half its business.  For Rio Tinto, China accounts for considerably more than half its output of iron ore.

Chinese sales of Apple’s iPhones topped U.S. sales in 2015 — and when global markets were tanking in late August, Tim Cook helped arrest a rout in the company’s stock by publicly assuring investors that the Cupertino giant had “continued to experience strong growth for our business in China through July and August.”

Source: Harper’s Magazine.

Chinese investors own the AMC Theater chain of movie theaters in the United States, and also are major investors in American-made movies.  China also is the world’s largest market for Hollywood movies.

The result: Chinese are never the foreign villains in American movies—Russians, Arabs, Colombians, North Koreans, anybody but Chinese.

Barack Obama, a master of geopolitics?

Many of my Democratic friends think of Barack Obama as a well-meaning but naive and weak reformer.  I think of President Obama as a shrewd and strong defender of the status quo.

Alfred McCoy wrote a good article for TomDispatch arguing that this is just as true of his foreign policy as his domestic policy.

The greatest threat to American world power is the rise of China.  While the USA is dissipating its power through failed military interventions. China is extending its power by economic policies that add to its economic strength.

Obama hopes to counter China by leveraging American economic power through the Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership, which will create a global trade bloc from which China and also Russia will be locked out.

The question is how long this will be feasible.  China’s economic power is growing.  American economic power is a legacy from the past.

President Obama has been using America’s status as the planet’s number one consumer nation to create a new version of dollar diplomacy.

His strategy is aimed at drawing China’s Eurasian trading partners back into Washington’s orbit.

While Beijing has been moving to bring parts of Africa, Asia, and Europe into a unified “world island” with China at its epicenter, Obama has countered with a bold geopolitics that would trisect that vast land mass by redirecting its trade towards the United States.

During the post-9/11 decade when Washington was spilling its blood and treasure onto desert sands, Beijing was investing its trillions of dollars of surplus from trade with the U.S. in plans for the economic integration of the vast Eurasian land mass.

In the process, it has already built or is building an elaborate infrastructure of high-speed, high-volume railroads and oil and natural gas pipelines across the vast breadth of what Sir Halford Mackinder once dubbed the “world island.”  [snip]

China economic strategy outmatches US military

China represents an economic challenge to American world power.  The USA is trying to meet that challenge with a military response.  It won’t work.

The United States builds military bases and deploys troops all over the world, while allowing public infrastructure and public services to decline.  China is investing in its manufacturing industry, building infrastructure and expanding its trade to all corners of the world.

Pepe Escobar reported that China now has trains that deliver containerized freight from its Pacific Coast to Madrid.  China plans a network of highways, railroad and oil and gas pipelines that will give it access to all of the interior of Asia and bring to the threshold of Europe and the Middle East.

American spending for military and covert operations drains our national strength.  Chinese spending for construction builds up its national strength.

China has displaced the United States as the world’s largest economy.  It has replaced the United States as the largest trading partner of Australia, India, many countries of Africa and Brazil, Chile and Venezuela. America.

The U.S. government tries to enforce its will on other countries by means of our military and economic clout.  The Chinese government tries to win the friendship of other countries by means of construction projects, increased trade and befriending nations alienated from the USA.

The U.S. government is unequaled in history in its power to spread death and destruction.  The Chinese government cannot and does not compete on that level.  Instead it leverages its power to build—a power we Americans could duplicate if we so desired.