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The World Power fights to assert itself
America’s “Pacific Century” and its New Rival: China

[Translated from Gegenstandpunkt: Politische Vierteljahreszeitschrift 1-12, Gegenstandpunkt Verlag, Munich]

Having fought two unproductive wars in Iraq and Afghanistan, and being in a disastrous economic condition amid the financial and the sovereign debt crises, America seeks to restore and re-assert its global leadership role. For this purpose and in this sense, the Obama administration has proclaimed the 21st century as “America’s Pacific century.”[1]

The Pacific ocean, on the one hand, stands for a gigantic sphere of growth and the American leading power’s claim to benefit from it in a big way. The fact that an entire century has been assigned to such a project demonstrates the role and epochal dimension the world power attaches to it. Alongside smaller, aspiring capitalistic states and established heavyweights like Japan, China has entered the world stage as a mighty, rising power, massively increasing the importance of the region. Taken all together, they amount to an economic potential that is not only immensely attractive but also pivotal for the continuance of global capitalism. The American leadership has targeted this potential for its own growth ambitions. This is the good news announced by the leading world power.

On the other hand, the U.S. has announced in one breath not only its economic plans but the strategic investment in the region required to implement them. This is generally accepted, and it throws a revealing light on world trade in general and America’s Pacific project in particular. It is something that proves the antagonistic character of the global economic cooperation that the U.S. intends to put on a wider footing in the Pacific. The same object — China and its periphery — which America seizes as an opportunity because of its enormous economic power is at the same time seen as a risk and threat. After all, the economic rise of the huge country in the east, which is supposed to benefit the regeneration and growth of America’s economic power, also provides the rulers in Beijing, who definitely do not rank among America’s allies, with the means for a political and military expansion that has — in perspective — the potential to ultimately challenge U.S. superiority over the Pacific region, possibly even globally. This is the bad news emanating from the Oval Office.

The message that is to shape the next century is clear. Using China and the region economically must be accompanied by controlling the complete hemisphere strategically, and by clearly containing the political and military ambitions and capacities of China. What has to be one and the same thing for America by all means — increasing its economic gains and strengthening the global power it derives from them — must be separated at all costs in the case of China, and be taken under supervision. This is what a world power’s monopoly on leadership demands.

America’s claim: the “Pacific area” as a U.S.-dominated sphere of growth

The Pacific region which the U.S. Secretary of State has in view comprises a suite of bigger and smaller nations. Japan, South Korea, Australia, New Zealand, Indonesia, Thailand, Brunei, Malaysia, the Philippines, Vietnam, Latin American countries bordering the Pacific, such as Chile and Peru, but also India and Myanmar, and of course China in the first place: these are the states whose rule reaches over the landmasses and seas of the region, and are therefore interesting for America. The economic result that these capitalistically managed locations has brought about excites America’s interest. Fifty percent of the entire world business is done here — the sheer volume of capitalistic wealth is proof enough for the United States that an engagement in this region is vastly profitable, and that much more engagement than that to date is necessary. More than seventy per cent of the annual global increase is recorded here, resulting in an enormous growth rate, of which the leading power intends to continue taking its slice, and more of it in the future. For on the one hand, the United States has long since participated in this business, maintaining a lively economic partnership with numerous Pacific Rim countries; even today, U.S. trade with Pacific Asia is twice that with Europe. But measured against its demand and need, there is much less business than possible, and secondly, far too much happening without America and passing it by.

America is primarily focusing its interest on the up-and-coming economy of China. The People’s Republic after all provides the guarantee that the transformation of the realm, which had been organized and ruled quite differently in former times, into a sphere of capitalistic enrichment is — despite all ‘social costs’ — irreversible and kept in full swing. It has demonstrated — above all with its successful exports, on which ultimately U.S. firms make lots of money — that the transition to a free market economy pays off immensely for investors. And the best thing about it is that China’s capitalism is far from complete; the untapped potential of the country is huge, even for American multinationals. With its population of 1.3 billion, the People’s Republic offers, in perspective, a market size that promises sales growth rates, and not only for the automotive industry, that cannot be achieved in the centers of world capitalism, let alone in times of crisis. Moreover, the capitalistic development of the nation has only reached part of the vast realm, so that the location offers room for further growth. With the increasing volume of business, new regions are also being taken into commercial use, contributing to the expansion of the market.

But in yet another respect is capitalistic business in China incomplete, waiting to be expanded. From the perspective of foreign interests to make money on it, the Chinese state itself is a first-class hindrance to investment. Entire spheres of production in the energy and raw material sector as well as in infrastructure are run capitalistically — but by the state. Privatizing the state-owned companies has to proceed in order that the calculations of American global players in the relevant business sectors in China can be met. A more serious factor is that the state actively constrains foreign investment in another field: in the monetary and financial industry. Insurance companies, banks, and large funds are managed by the state, or put under meticulous state surveillance. This really is a scandal for capitalistic pundits: Chinese state funds are handling sums in the trillions that ought actually to generate profits in private, best American, hedge funds or banks.

Yet it is not against the laws of the market economy but entirely inherent to the system if this sector is managed by the monopolist on power, the state, in countries that have just started to subject the entire working and living process of their society to the regime of private property, or are still doing so, employing it for the accumulation of private property. The business of the financial sector is to provide the other parts of the economy with the ultimately decisive means of command for an effective capitalistic regime over the work and the wealth of the society: it provides a monetary advance which is not limited to the private capital that has already been accumulated, slowly increasing with it, but which spurs growth. To do that, the private-sector banks centralize in their hands all the disposable monetary assets in society, all the income generated, in general all the circulating ability to pay. Centralizing that money creates the power to finance business at the banks’ own discretion. They augment this power by turning their own financial commitments into a tradable commodity, by letting the ‘risks’ — on which the credit companies enrich themselves — circulate as money capital. In this way, finance capital socializes the capitalistic power of private property, thus freeing the entire business world from the limitations of individual wealth and at the same time controlling the distribution of the means of wealth. All this, however, functions effectively as private business only under the condition — and only to the extent — that the working and living process of society has already been set up as a nationwide machinery for the accumulation of money. Then the state assumes the position of a tutor that provides the necessary legal security to the sector; of a guarantor that justifies the banks’ money creation by providing the legal tender for their requirements; and also of a beneficiary that lets the finance trade make money by satisfying the state’s need for money; and ultimately of a rescuer in a crisis, as has been seen … All this is quite different in countries that are still on their way to a settled capitalism. There the state becomes active by virtue of its sovereignty over the money of the society as creator of credit, which private business very urgently needs because it lacks the required size and which it therefore does not — yet — justify. So the state issues private power of command in the form of credit; mainly for industries and the infrastructure which appear to be essential for a functioning national capitalism and therefore must become operative even when they are not yet a profitable investment sphere for private investors. The administrative offices of this commanding power created per decree by the monopolist on force, the state-owned credit institutions with their bank officials, also foster private business, gradually imposing the capitalistic “nature” of production and livelihood. In doing so, they themselves make the transition from carrying out state tasks to marketing their services commercially, to creating financial markets and opening them up for private money owners who no longer want to hand in their nest eggs to the state but have a fortune to invest. The banking institutions provide themselves with the capacity to create credit, replacing the sovereign as source of credit; that they are still controlled by the state finally appears, in fact, to be a contradiction to the private power of property, which they socialize in the interest of their business.

The size of the Chinese market; the growth rate of its commodity production; the progressive development of further large parts of the country and the population so that they can be used for capitalistic purposes; and last but in no way least the privatization of the financial sector, which, measured against its liberal model is still completely underdeveloped, and which promises, once liberalized, a gigantic boom: all that adds up in the ambitious view of foreign investors and their official backers to an enormous capitalistic prospect of success that must be exploited. In principle, these guys are not miscalculating one bit. The paradox that a party still trading under the name “Communist” executes its leadership monopoly over its country’s capitalistic development that it has kindled itself does not mean in the case of China, either, that un- or even anti-capitalistic reservations on the state’s side would fetter the course of free business. The CPC energetically pushes ahead with completing Chinese capitalism, ultimately even by means of a privatized financial sector and a freely convertible yuan. It wants that and does that, however, only under its own conditions, whose yardstick is the benefit for its own nation and not the high expectations of foreign investors. Consequently, China’s further capitalistic development is a matter of dispute; and this dispute is fuelled by America’s bid for a “Pacific century.” America does not, after all, simply want growth in the Pacific area; it wrestles for its increasing share in this growth. The “opportunities” that Secretary Clinton claims to have discovered in the region are first of all demands that America makes on its cooperating partners so that the opportunities will turn out beneficial to the leading power. At the same time, the unconditional will to appropriate this region as a sphere of investment testifies to the unshaken self-confidence of the world power to come out victorious in the competition of the century it intends to unleash there with the clout of the capital based in America.

But this is only half the truth.

America’s troubles: Sovereign debt crisis and the dollar questioned as world money

Obama’s resolve for the century not only reflects the level of ambition of the world power; it also arises from a dilemma. America is aware of China’s impressive growth figures, its huge export surpluses, and its enormous foreign reserves as a counterpart to its own weak growth, its notorious trade deficit, and its excessive national debt. It is aware of an economic power that makes a lot of money in and on America, whereas the superpower itself struggles with the consequences of its huge financial crisis, unable to bring it under control. The longer and the more America suffers from its situation and from this contrast, the more uncompromising it is in holding the rising power across the Pacific responsible for its troubles. But the incumbent President is not wasting his time on who is to blame. He has resolved to use the profiteering land for the rehabilitation of his crisis-ridden country — for growth rates that would make America’s deficits irrelevant.

It is these deficits that have indeed become a problem for the world power: they put the unconditional trust of investors in American government bonds as well as the singular role of the dollar as world currency at risk. This is remarkable in that the American state has been coping quite well for half a century with a “double deficit” in foreign trade and the national budget that would have long since become a disaster for states with a normal capitalistic set-up. This success — which now appears about to falter — has its reasons; to explain them is worth a brief digression.

Digression on the productive force of America’s “double deficit”

Deficits need not really be a bad thing in a capitalistic economy. The comforting name they get when the banking sector finances them reveals that they can be good and useful: credit does not mean shortage but growth; it closes gaps in financing that arise in association with ambitious commercial growth efforts. Credit is granted in the speculative expectation that targeted gains materialize, and it establishes — even relatively independently of the actual success — a right to income that increases the creditor’s assets and can even be marketed as money capital.

Things are different when it comes to the foreign trade deficit of a nation. First of all, this is not a gap in financing that could be closed with borrowed money, but an outflow of money from the country as a result of commercial transactions that causes an oversupply of this money in relation to the demand for it on foreign exchange markets. If this becomes a permanent tendency, it can lead to the devaluation of this currency — if it is not in demand otherwise, for transactions other than trade with the country, such as credit operations, for instance. This latter normally happens — notwithstanding the quirks of currency speculators — if the home country of a money is used as an investment sphere and its money used as a means for investments. If this occurs permanently and successfully enough, the disproportion between supply and demand on the currency market that arises from the negative balance of trade is offset. Things are quite different if the currency of the country with a deficit continues to be devalued and is ultimately no longer in demand as a useful capitalistic means of business: then the deficit proves indeed to be a national gap in financing. Then import requirements can no longer be paid for with the nation’s money. A foreign currency is necessary, of which, however, too little enters the country. The state is forced to borrow foreign reserves for the country’s demand. In order to find a creditor, it is forced to service its accruing debts, which the nation’s foreign exchange revenue from foreign trade is less likely than ever to provide. As a result, such a country is as completely as possible turned into pure currency-debt-servicing machinery — and in the capitalistically optimal case becomes creditworthy again.

Things are entirely different in the case of the U.S. For decades, it has been able to live with an enormous trade deficit, sometimes big, sometimes less big, because it has from the beginning become active in the global economy as the world’s biggest trading nation; but not only that. American multinationals have made the world around America their sphere of investment. With the volume and the clout of the credit they know to attract with their size and the accordingly large dimensions of the profits they expect, they have made practically the entire globe a source for their capital growth. American multinationals bring along the means of payment with which they buy up the world — or, more modestly, with which they make their purchases in the entire world — in the form of their national currency. And as they have produced a volume of global growth with their money such that the nations visited by them would never have achieved on their own, they have not only made money all around the globe on their investments but ensured recognition for American money — which represents the power of their credit worldwide — being a representative of successful capitalist wealth. Once established in this way, the U.S. dollar also serves capitalists of foreign nations as a reliable means for their commercial transactions, which need not have any relation to the American home country of the currency used. Sixty percent of the entire world trade is settled in dollars, be it Saudis selling oil to Europe or the Chinese delivering their wares to Japan. Someone will have worked out what percentage of cross-border investments, from setting up new production sites in foreign countries to investing on foreign stock exchanges, is settled with the American currency — international banking, for one, prefers to use this unit for creating credit and for marketing its objects of speculation. All around the globe, profits are made in dollars, with money advanced and credit given in dollars. And this not only enriches enterprising dollar owners; at the same time, they perform a service for America. They actively contribute to the equation that the legal tender of the U.S. represents credit that is globally and successfully used, i.e., growing capitalistic wealth. On this basis, the American trade deficit has not only failed to harm the world power but has been enormously useful for it. For one thing about that is certain: the sums of money continuously flowing out of America have always been in high demand; in times of economic boom, global business cannot get hold of enough of this money; capitalistic growth the world over absorbs the influx of a money ‘made in the U.S.A,’ which shows as a minus in the balance of trade. This increases the power of Wall Street to create money and provide capitalists the world over with the power of good money, and to participate in their profits; conversely, it also increases the power of Wall Street to market its credit creations — whatever their risk — in all the world and to earn on them all the more. The use of dollar credit all over the world testifies to its capitalistic quality, i.e., to America’s indestructible, limitless solvency even when domestic growth should leave much to be desired, when the conversion of credit into profitable capital functions better elsewhere, and businesses or even entire business sectors in America perish. This nation does not have to make surpluses in foreign countries, or balance out its trade account. This provides its capitalists with the freedom to look around for the best yield in the entire world and to throw themselves into those ventures in any country that can be pursued from that location in the most profitable way.

Deficits in national budgets in fact indicate a gap in financing. And even though states do not run a profit-yielding business with their debts, they, too, normally find creditors who want to make money on these debts. These financiers speculate on the capacity of the government overseeing the budget — its willingness taken for granted — to service the debts as promised, paying interest punctually on the issued bonds to confirm them, and letting them take effect as what they circulate anyway, as accumulating money capital. What financiers reckon with is the economic potential of the national economy the state commands, quantified in the sum and growth rate of the gross national product as well as in the accumulated mass of sovereign debts. Financiers don’t calculate with the chance that the debt would ultimately be paid off. What they scrutinize is the level of debt and the amount along with the rate of the nation’s capitalistic growth, whether their ratio justifies financing due loans plus interest with the purchase of new bonds. The interest rates the credit markets demand and their current valuation of securities already in circulation, give very precise information concerning the status of their assessments, and at the same time set a mark for their speculative judgment as to whether the sovereign, with its debt service obligations, is not already about to overburden the economy it lives on. The markets thereby, on the one hand, positively reckon with the fact that a sovereign administration of a national economy with its sovereignty over the national legal tender, i.e., over its definition and ultimate creation, will always technically remain solvent. On the other hand, the markets constantly critically assess to what extent the national money — which in itself does not represent a fixed value but rather the capitalistically managed credit of the nation — is suitable for the capitalistic business of accumulating value; and this crucial quality of a national money is of course put under great strain by the measure that economic pundits dismiss as “printing money” by state decree. If the usefulness of a currency dwindles — the common measure for that is the rate of inflation as calculated from the price increase of a fictitious basket of goods — the financial markets normally withdraw their support. This has all the more consequences for the entire nation if it has a deficit in its balance of trade and is therefore dependent on the inflow of credit from foreign countries. If foreign funds fail to flow in, the depreciation of the currency in international comparison worsens accordingly and so does, as a result, the financial situation of the national budget. For a normal state, such a double deficit, if habitual, spells its ruin.

Once again things are entirely different in America’s case. In the comparison of government bonds continually undertaken by investors, those of the U.S. traditionally perform especially well. They are considered to be the most secure assets by any standard. And quite rightly so: when all the world not only calculates in dollars but does business with them, it is absolutely beyond any doubt that the dollar bonds of the state that rules over the dollar economy are what they promise to be, namely money capital on which this states pays interest. If their volume increases, this does not speak against the value of the money they promise. Rather on the contrary: they offer the guarantee for all dollar owners that each sum of dollars can indeed be converted into accumulating money capital. U.S. treasuries thus contribute to the worldwide demand for dollars. And conversely, the money that the U.S. economy with its import surplus pays to foreign countries also invigorates the demand for the secure investment opportunities that the American state has on offer. An immensely productive circle!

America’s double deficit has proven so extraordinarily successful because American capital has made the world its sphere of investment, and its success has established the dollar as starting point and endpoint of its global expansion. As a result, America’s credit money functions as a means of business of world capitalism, and its status is confirmed by its universal usage. The above-mentioned ‘because,’ however, is also an ‘as long as.’ The reason for America’s exceptional economic status is also its precondition. With it stands and falls the status of the United States as the world power of capitalism, testified by the productive power of its double deficit. And the fact that the world economy has functioned in this way for a very long time is no guarantee that this will endure.

***

There are solid reasons for the mixture of fascination and horror with which those politically and economically responsible for the global dollar economy have recently looked at America’s double deficit on the one hand and at China on the other — i.e., since all ‘developed’ capitalistic nations plunged into their sovereign debt crisis. The special world-economic status of the superpower is being eroded and contested. And this is so — of all things, but also quite logically — because of the consequences of the global successes that American capitalism has accomplished.

American credit fosters and exploits capitalistic business in all the world, and American credit money functions as world currency — this is essentially an accomplishment of the American banking industry, which has in this process developed the financial needs of the global economy as well as its surpluses as a sphere of its own growth. It has incorporated investors and credit creators from all over the world — especially the fully “developed” world — in its financial markets, in which risks circulate as assets, debts as money capital, high risk insurance and speculative papers derived from it as both risky and profitable investments. In this process, it has produced a world market for financial products that manages the socialization of private ownership of business around the globe in a way that is appropriate to the system: a global network of speculative enrichment. Not least thanks to state support in creating the world market — an assistance that ironically is called ‘de-regulation’ — has America’s financial industry become so big that failed risks on the home market, which interrupted the circle of enrichment by marketing risky investments, were able to effect a worldwide financial catastrophe. Banks have renounced the speculative recognition of certain promised returns as capital assets; in the process they have reciprocally diminished their power to provide their promises recognition as money capital; they have progressively cancelled the artful socialization of global monetary wealth by finance capital, thereby themselves extinguishing this self-created wealth. As result of the successful global growth of the American financial industry, the piled-up risks no longer effect any credible growth, and the standstill of the markets on which they are traded has brought credit the world over to a collapse.

As a consequence of this escalating financial crisis, the financial power of the U.S. — based on dollar credit and represented by the dollar — is at stake. The administration of the world power — at one time under Bush, now under Obama — won’t allow this collapse to happen, of course. It is organizing a joint action of the capitalistic leading nations, i.e., in particular with the most affected Europeans, to rescue the credit industry that has all at once started ailing. The states are using their central banks to create ‘liquidity’ with a view to sustaining the commercial transactions of the banks and the money circulation dependent upon them; they are refinancing insolvent banks and insurance companies whose bankruptcy would make the global credit system crumble; they are relieving endangered financial institutions of their — “toxic” — assets that have become worthless; and so on and so forth. They are posting the enormous expenditure for all that as a deficit in their budget, re-selling the corresponding bonds to the rescued credit institutions, which on their part are allowed to draw on the national central banks to get the money necessary for that at the lowest interest rates; thus in the end, they are exchanging a great part of their devalued financial products for their own debts. The result of this rescue maneuver is a sovereign debt crisis, which can be seen in its fully developed form in the euro zone. There, the credit creators are assessing the solvency of their sovereign rescuers, who in fact have been prepared to increase their level of debt only to prevent the annulment of financial assets considered due by the financial industry, i.e., without aiming at growth in any way, let alone at achieving a volume of it that could justify their increased debts. The community of speculators are scoring negative hits with states that come out worst in the comparison of risks, and whose credit papers are considered unsound, hence comparatively useless as investment. And with their assessment, the speculators are creating a new situation. Sovereign debt instruments are being sold off and declining in value, investors are granting their credit for newly issued ones only at sharply increasing interest rates, or not at all. Bankruptcy is becoming a conceivable option in the so perfectly “developed” world of states.

The United States is facing up to such a situation at an early stage so as not to let it happen in the first place. The speculators’ economic doubts are being countered with America’s authority: the state itself, in the form of its central bank, is repurchasing the sovereign debt papers on demand, directly converting government bonds into available liquidity. On this basis, it is business as usual for the time being. In contrast to many European government securities, U.S. Treasuries continue to be sold on the market at comparatively low interest rates, precisely because the state backs them up with its repurchase guarantee, which is meant to dispel any speculative doubts. The guarantee, however, also raises these doubts to a new level. The habitual, unproductive usage of sovereign debt for merely maintaining worthless credit is being supplemented by the Fed’s method known as “quantitative easing,” which represents an official acknowledgement that the repayment of the debt to investors who submit their debt securities to the central bank is ‘secured’ by nothing but the sovereign authority of the state bank to issue money, i.e., to create it.

The financial world is thereby prevented from canceling America’s financial power, but this still looms. The sovereign debts that keep global financial capitalism going are no longer justified by the global success of America’s credit; in the circular transactions between central bank and national budget, they justify themselves through their unlimited proliferation. They now all the more depend on the capitalistic world to still accept them as money capital nonetheless, and to continue making privileged use of the dollar, thus asserting its validity as world money. But this is no longer beyond reasonable doubt, as it was in the past. With their euro, America’s European allies are looking for an alternative. Their success will depend on the response they get from international finance. And in the unresolved crisis of the rivaling, traditional centers of global capitalism, it is other actors who will play a crucial role for this success.

America is targeting China as part of the problem as well as part of the solution

In this situation, it is, of all things, America’s biggest strategic and economic success in the new millennium that causes its biggest concern. It may not have converted the People’s Republic to capitalism; but it did turn the country into the biggest new investment sphere of its capital and into an important and extremely lucrative business partner. The productive circle between foreign trade deficit and sovereign indebtedness has gained a special momentum in the trade with China. With the trillions of dollars earned from exports, the People’s Republic has contributed a good part to the U.S. trade deficit and has in return invested the bulk of its dollar proceeds in American treasuries, i.e., co-financed the deficit of the American budget; it is thus incorporated in the U.S. economy. But in this process China itself has become a mighty finance-capitalistic actor, doing its own calculations. What are U.S. treasuries actually worth if they are in essence covered by the issuing government itself, namely, by its sovereignty over the money press? This is a question not only raised by many an investor but by the Chinese state in the form of its political leaders, and it is raised in public. This calls U.S. credit into question.[2] China fears the conversion of its dollar-denominated assets into mere American debt. And China is putting its publicly raised doubts into practice, which costs U.S. credit dearly.

China has gradually shifted nearly half of its foreign reserves into different currencies in order to secure its assets. But this is still the defensive side. The offensive consists in a new strategy that is exemplarily demonstrated in an agreement sought with Japan. Both countries intend to settle their cross-border trade no longer in the dollar but in their home currencies, yen and yuan. And they intend to increasingly invest their earnings from world trade in bonds of the other party: for its surpluses, China has an alternative form of investment in Japanese sovereign debt certificates, and when China opens up its bond market as planned, Japan in the future would also be able to invest its trillions of foreign reserves in yuan rather than in dollar or euro instruments.[3] Openly challenging U.S. world money, China is working on a remarkably large sphere of global business dissociated from the dollar; and Japan, still an important American ally after all, is making, because of its own huge dollar reserves and the size of its economy — and to the extent that it takes part in this shift away from the dollar — a contribution to degrading the global dollar dominance, which inflicts harm on the world power and its currency. An ever larger part of global business and the financial industry planted on top of it is being directed away from the dollar into the currency of especially the one rival that, in perspective, intends to ascribe to its own national credit the quality of world money, which it denies the dollar to the extent that this succeeds. This is an attack against the superpower and its money. A similar attempt on the part of Saudi Arabia, in much smaller dimensions, to launch together with a few neighboring countries a dollar-free oil trade was warded off by the U.S. with all its power and a threat to stop any further delivery of arms.

China has the politico-economic clout to propose the Chinese yuan as suitable store of value to a successful capitalistic nation like Japan; this is based on the successful preparatory work the country has completed with its economic rise. The ‘Middle Kingdom’ has long gone past participating in world business as the contract manufacturer of Western global players, or even merely with its own cheap exports. With trillions of U.S. dollars earned in export, the country has raised up its own growth machinery plus a domestic market. With the help of large purchases of land and mining rights beyond its borders in Africa and Asia, it has not only obtained disposal over commodities and raw materials but also over their sources. Without any political dictates regarding ‘good governance,’ it gains and retains the loyalty of its contract partners by making economically unbeatable special offers; it delivers express trains, telephone and road networks — without insisting on payments in world money, i.e., dollars; payments in kind, drilling rights, and lease contracts are welcome in return. This growth is fuelled by a domestic financial sector whose own growth is based on it, which latter growth foreign investors would like so much to tap. It’s genuine capitalism that the Chinese location now represents. China has set off economically with the dollar in order, little by little, to emancipate its economy from U.S. world money, and not without success. It is on this path that the country forges ahead in the crisis of world money.

The Obama administration takes this situation as a challenge, meeting it with its Pacific offensive. It seeks to prop up America’s now precarious credit with real capitalistic business success, which cannot be achieved in the current crisis and not for the foreseeable future in the old centers of world capitalism. A bigger American share in an immensely increased Pacific growth is meant to remedy that, and recapture for American credit money its standing on the global financial markets. In particular, this offensive targets the opponent that contributes significantly to the difficult situation of U.S. credit and is now required for its solution. China is expected to let America thoroughly earn on it and its periphery, and to accept being used for carrying out the necessary repair work on U.S. credit and its global validity.

This claim on the part of the world power is meant to address China’s self-interest and be taken as an offer at the same time. Despite its emancipatory efforts away from the dollar, in parts successful already, Beijing after all is still sitting on a huge pile of American treasuries of dubious quality. So wouldn’t it be in China’s self-interest to restore the value of these credit instruments by letting their American issuer make loads of money on China, best by making use of the trillions of dollar reserves that the country possesses and should make available for private business deals to America’s benefit? This is the rhetorical question coming from the Oval Office. And it contains a tricky equation between two national interests that also comprises a full inequation. The rescue of the Chinese funds denominated in dollars would of course suit Beijing; but the purpose pursued by America is diametrically opposed to China’s plans. It is definitely not Beijing’s interest to strengthen the dollar’s supremacy; it aims at emancipating itself from the dollar as world money. It is for this purpose — and for this purpose only — that it wants to see its American assets maintained and invested.

Hence the economic cooperation in the Pacific that America envisages is not free of contradictions, including those of a higher kind between their sovereign organizers.

America is making the “Pacific area” ready: from implementing the politico-economic rules of business …

The project proclaimed by the world power to achieve useful business results in the long run is starting with a deliberately harsh correction of the business practices of the targeted cooperating partners, China’s in the first place. In the light of the crisis, the leading power considers China’s impressive economic ascent, which it seeks to utilize for its own purposes, to have been successful at the expense and to the detriment of the United States, and consequently a fruit of unfair competition that Beijing is accused of having conducted with numerous breaches of the rules to its own favor. The list of crimes is long.[4] Subsidizing state-owned companies increases the competitiveness they otherwise lack. Threatening to exclude foreign firms from the Chinese market, Beijing forces the ones on Chinese soil to transfer technology in order to increase the country’s own economic competitiveness with foreign know-how. Added to this is the perpetually decried violation of patents and copyrights. The criticism peaks in pointing at a government that manipulates an unfair exchange rate of the Chinese yuan that is said to have made successful Chinese exports to the U.S. possible in the first place.

What is pilloried, on the one hand, are the usual techniques of competing capitalistic nations that are a daily routine, and legal disputes dealt with by the appropriate institutions, such as the World Trade Organization. Nothing needs more rules, limits, and laws than free trade, in order to provide for the partners’ conflicting interests a legal guideline without which they could not be pursued at all. On the other hand, there is a logic to America’s complaint that attests to its immensely ambitious level. Among other things, China is targeted because the exchange rate of its national currency to the dollar brings about a result in the form of a negative balance of trade that is unacceptable for America, hence must be “incorrect.” The banal core of a “correct” exchange rate that the U.S. demands means pushing back successful Chinese exports on the American market, and conversely cheapening and facilitating American deliveries to China; this is only one item in its catalogue of demands — not even the most important one, in substance. It is popular because it can — with polemical intention and for the purpose of winning trust at home — be translated into jobs that a caring leadership thinks to bring home from China; and efforts to repatriate industries which have been run more profitably in China certainly also are part of the struggle for a national growth that can serve as a better justification of the national credit. What carries much more weight in the perspective of the “Pacific century,” however, is the irritating fact that special economic zones and monopolies in the infrastructure and financial sectors of the People’s Republic deprive America’s capitalists of the most interesting and profitable business opportunities. Beijing’s policy may be appropriate and even necessary in the sense of a sustainable capitalistic development of the country — for the U.S. it is simply unfair. After all, fair rules of business, as America sees them, almost inevitably result in the economic success of the American business location due to its huge corporations. Any lack of success must, conversely, result from a breach of the rules, which needs to be remedied.

So America goes into action, approaching its cooperating partners with the intent to enforce its politico-economic standards. It is not only expanding its relationship with the Asian-Pacific economic forum (APEC) but also joining the “Trans-Pacific-Partnership” (TPP) free-trade agreement, which has existed for several years. The American president not only expresses his steadfast determination to be included but is also bringing along a draft version of his new rules of business. The organization, consisting of Australia, New Zealand, Chile, Peru, Malaysia, Brunei, and Vietnam, has committed itself to broad exemptions from customs duty in order to fuel cross-border trade. The U.S. wishes the club in the future to be expanded by adding the heavyweight Japan, and to expressly help double American exports to the region. But the central point revolves around conditions of the statutes that basically amount to this: they list everything that restricts the liberties and the chances of U.S. firms to be successful in China. What is to be agreed is nothing but tailor-made stipulations for exactly this purpose: subsidy cuts for state-owned enterprises, privatization, measures against patent and copyright violation, sanctions against product piracy. The prime purpose of these clauses consists in keeping competitor China — which unlike Japan has not been invited to participate — away from the intensified trade which America expects to exploit. Yet permanent exclusion of this huge country from this zone of unfettered cross-border competition is not intended; China’s business potential is much too big and too interesting to do that. Rather, the exclusion is aimed at pushing China to fulfill the conditions so that the country can be integrated and exploited on this basis to the benefit of American business.[5] Here, the American power for once exemplarily is doing on its part what in other cases it accuses its economic opponents of, namely of trying to bring about business results by politically setting discriminating conditions.

The thrust of this undertaking — discriminating against China as outsider until it submits to the competition rules set by Washington — also entails many an unpalatable demand for the friends America has called up to participate. American experts find a few things with them, too, that contravene the fairness rules, and are to be scrapped in the planned customs union. Japan is explicitly courted by the U.S. to become a new member; but it has to accept that by joining this trade union and its anti-Chinese agenda, it has to take position against its new partner China with which it intends to start cooperating on the currency issue to overcome its dependence on the dollar.

This is how America is working on new economic cooperation treaties and economic unions encircling China to enforce business rules that are conducive to its Pacific growth strategy.

…to controlling the Pacific region strategically

Creating such conditions for economic success is no longer a matter of commercial haggling — it is entering the level of international power relations. Such conditions of commerce take effect only if and to the extent that the states involved acknowledge and sustain them. Certain obstacles have to be overcome here. After all, national locations of business enter mutual business relations in order to strengthen themselves by exploiting profit sources under foreign dominion, which means at their expense. The phrase “mutual advantage” describes an ideal of competition that logically cannot be won by all participants. If sovereigns want to make an impact on the other party, they need to make sure that the latter respect the interests that are brought to its attention. States therefore in principle address the interests they pursue in their commerce not only as interested parties but as guardians of the matters that concern them: from the outset, claims made against their peers are objects of political protection, and as such only worth as much as the power that protects them. They define their urgent concerns as national rights, thus openly hinting at the force behind them that raises a need to this higher rank. America, however, does not operate on this elementary level of international disputes when it establishes rules for fairness and generally demands that everybody follow the principles of liberal competition. The world power pursues its interests directly in the form of a legal system that it expects its business partners to submit to. It acts as protecting power so that its claims that business should be useful for America are acknowledged in the form of conditions of cooperation, and are incorporated as firm and reliable constituents into the national interest of its sovereign partners. The partners are expected to orientate their interests and align their will so as to pursue their success on the basis of these conditions. America promises assistance so that they can observe that in their dealings with each other: assistance in order to enforce the respect that those national interests deserve that the world power recognizes as being in accordance with its rules, i.e., as legal; against opponents which, from that standpoint, no longer simply abuse a foreign interest but violate acknowledged laws and consequently offend against the power that protects these laws. Thus, the capitalistic competition between nations always has a militant side. For the protection of their rights, they all maintain a military force whose size in principle is based on the scope of their interests as well as the size of the wealth they can generate from exploiting the world. America complements the competitive order it wants to see respected with a strategic security policy, and, for its enforcement, a military power that needs to be able to effectively protect everything and everybody — to the extent they are legally acknowledged — against anybody and anything blacklisted by the world power.

In this spirit, the U.S. is working on its future in the Pacific area. It was not asked to do that, of course, but it acts even without being asked and with new verve as the protective power that defends nothing less than the “freedom of the seas” with its superior military capacity in the Pacific, too. No cheers were heard from China — quite the opposite. But for all that, the offer should not be overlooked for a considerable number of states. Even smaller countries such as Vietnam and Malaysia or the significantly stronger India are all — just like their bigger role models — wrestling with their economic competitors to increase their power against each other, so they always have to be prepared in case their cooperating partners turn out to be adversaries. Taking recourse to an American protective shield as a means against undesired power shifts is always a welcome option, even if it is not at all certain whether America is prepared to deploy its superior force anytime and anywhere in the interest of the claimant. The neighboring states sense the greatest danger from the side that establishes itself not only economically but now also militarily as the dominant regional power: Vietnam is in dispute with China over the oil reserves off the Spratley Islands. India cannot endure the military presence of China in the Bay of Bengal. Taiwan has for decades opposed China’s will to incorporate it into Beijing’s realm. And so on and so forth. America pays attention to these conflicts because the concerns of China’s neighbors coincide with its viewpoint that a China that powerfully reaches out to its periphery and autonomously asserts rights is incompatible with America’s position as the authority that assigns rights in this region as well, and acts as guarantor of the legal situation it defines. In order to enforce its demands, the superpower grants or promises its protective services; namely, in its calculation to align the local political sovereigns quite fundamentally to itself not — only — as a condition that restricts but also as a guarantor that empowers their self-interest, their security, and ultimately even their survival.

This is how America, with unambiguous thrust, is organizing new political partnerships and strategic alliances, and is providing them with the necessary military means. Japan and Guam, the two biggest “unsinkable” U.S. Pacific aircraft carriers, are supplemented by a third, new, main deployment base: Australia is being built up as a military control center for America’s Pacific century. This area is explicitly exempted from the military budget cuts that even the superpower considers to be unavoidable in times of a financial and sovereign debt crisis. All eleven aircraft carriers remain in operation despite tight budgets, and testify to the superpower’s unbroken will to maintain a “global power projection.”

The containment of China…

In all these activities, the U.S. has set its sights on its big rival, for which the offer to secure the “freedom of the seas” as protective power means a sheer offence: China. The country itself is a veritable nuclear power with seat and vote in the Security Council, there even acknowledged by the U.S., and is — while rising economically — about to become a military heavyweight. So much so that America is concerned about its freedom of movement in the Pacific, in the end even about its global dominance.[6]

For China has long since learned this much from the imperialistic powers that have for decades strongly recommended that it transition to a capitalistic polity: enforcing its economic and political interests will not be possible without effective power. With China’s rise to global economic power, the country is presently on an increasing number of local as well as global markets where it calls for beneficial conditions in trade and commerce, using its political clout. The main routes for the swelling streams of goods and energy into the Middle Kingdom are becoming increasingly important. With these, China presents an increasing number and size of targets to its competitors, which they can use whenever the opportunity arises. Eighty per cent of Chinese oil imports pass through the Strait of Malacca, which is about as easy to block for a capable power as the Strait of Hormuz, a prospect that Iran holds out in the event of an Israeli-American attack. China’s refusal to support U.S. sanctions against Iranian oil in the current dispute with Iran conjures up risks that would amount to significant disruption — America has after all coupled its calls for boycott with secondary sanctions against objectors.

China, on its part, fears attacks on its maritime supply and energy routes at the hands of strong opponents — India and America are explicitly named — which it counters by forging political and strategic alliances; this also a perfect replica of the U.S. In this respect, Myanmar is factored in as a political and strategic bridgehead. With the construction of a thirty-five-billion-dollar land bridge across Burmese territory, linking the Indian Ocean to China, the country seeks to avoid the risks of the “freedom of the seas” that it sees approaching under American supremacy.[7] With this link, it is creating a bit of security — without being granted American permission to do so — for its ever-expanding interests, which is a step too far in light of the security whose guarantee in the region the world power is not inclined to surrender. Thus America is scrapping its old hostility against the regime of generals in Myanmar, which has not prevented China from creating its bridgehead there, possibly even enabled it to do so. The country, which has had to fight for its internal order since it was founded — against the Karen ethnic group, among others — has long been subjected to an American sanctions regime targeted at replacing the pro-Chinese military authorities with a democratically installed, pro-Western opposition. The foreign pressure, for which the continuous fight with an armed internal opposition provides strong leverage, has left such an impression on the political leadership that they are reconsidering their one-sided ties to their big neighbor to the East. With the U.S. bidding farewell to the old Bush-doctrine of the “Axes of Evil” of allegedly incorrigible states, and the Obama administration offering to test cooperation with purified regimes that were formerly outlawed, the Burmese government has been encouraged to take this step. It has pulled the plug on the Beijing-financed Irrawaddy dam project, and reconciled with the military wing of the Karen movement in the spotlight of international media. And all of a sudden, the U.S. Secretary of State visits the country to have glossy photos taken of her meeting with the opposition’s icon, Kyi, who is already being treated as the winner of future elections. After decades of sanctions against Myanmar, establishing diplomatic relations is now on the agenda.

A few more or less friendly neighbors are, of course, not sufficient for the People’s Republic to secure its ever-expanding interests. Alliances are, after all, only reliable as long as they are backed up by a military power that makes participation inevitable or beneficial — or both — for the partners in terms of security policy. Hence China is upgrading its military, starting from a much lower level than the U.S. but with significantly higher growth rates in its military budget. It expressly does not aim at confrontation, but it claims to be effectively protecting its interests in the Pacific, and not only there. The People’s Liberation Army is being transformed from a mass military force to flexibly deployable units. China’s first stealth fighter, announced for 2020, is already in the hangars; the first aircraft carrier, procured from the Ukraine, is also said to be ready for use. And the country has developed a ballistic missile, the “Dongfeng,” which, if it works, can sink an entire aircraft carrier in one blow.

America considers whatever military activities China pursues and plans for its security needs as a challenge to itself. The fact that China provides itself means to bring its maritime periphery under the control of its armed forces constitutes for the world power an attack not yet on its capabilities but on the right of its armada to have unrestricted presence across the world, including the Western Pacific. The U.S. military quite modestly calls this claim “area access,” which is simply incompatible with the military capacities that Chinas pursues. These are accordingly called “area denial”; scenarios are designed in which a future Chinese sea and air fleet even blocks American access to its own base in Guam. The superpower is countering with a strategic reorientation of its plans and its armament in the Pacific. This interesting task means: rein in the adversary with a superior interplay of air and sea forces. “Air Sea Battle,” its title, is phrased in deliberate analogy to the “Air Land Battle” concept with which NATO, in a Cold War lasting for nearly forty years, orchestrated its world war front against the Soviet Union: the superpower won the fight without having to fight it.[8]

…and a new arms diplomacy to assign the unwieldy “partner” its role and place

America and China are two rivaling nuclear powers meeting in the Pacific that do not, however, operate on the same level, neither in respect to the achieved status of their nuclear armament nor in respect to the political purposes underpinned by it. America’s nuclear umbrella, whose destructive potential enables the superpower to impress the entire world, to align its sovereign cooperating partners under America’s protection, and to confront adversaries with a threat they basically cannot meet, does not make China compliant. It possesses its own nuclear armament, certainly not on a par with the American nuclear arsenal; but its nuclear counterthreat is sufficient to exempt China from the status of object of protection, and to raise the country to the rank of protecting power itself with super-regional reach. On this basis, Beijing does not operate with an ambition that is equal to America’s world ordering monopoly but pursues an autonomous safeguard of its economic, political, and military rise in the Pacific area. And this safeguard is especially directed against all restrictions that China suffers or fears as a result of the monopoly of control claimed by America. These are two antagonistic ambitions: the global control that the U.S. claims, and the Chinese emancipation to become a super-regional controlling power that, on the basis of its own sovereign power, has global interests.

The U.S. is devoting its own kind of arms diplomacy to these Chinese ambitions, in which China’s nuclear armament — at least for the time being — is not paramount, even if it remains the world power’s permanent task to get control over the Beijing leadership’s arsenal of the most powerful of all sovereign means of force, and effectively confine the threat arising from it. The diplomatic offensive with which the Obama administration deals with the Pacific rival turns out to be extremely comprehensive.[9]

America virtually welcomes China as a new, “responsible” leading power. The world power likes this form of greeting China since it also defines the content of what Beijing and its armed forces should be responsible for. When the U.S., for instance, pushes forward the nonproliferation of weapons of mass destruction, the new partner is to effectively support and not undermine this bid. America’s efforts to terminate North Korea’s nuclear policy seek to secure the services of China, which is still the most powerful ally of the unruly regime. Effective contributions to the blackmail of North Korea would be a nice occasion for China to perform a leading role in the Pacific area that would suit the U.S. And above all, the Chinese have to respect stability in the Taiwan Strait as defined in the Pentagon and underpinned by a strong American military presence in the region: they have to accept America’s military buildup of the island claimed by Beijing as part of the Chinese nation, a buildup by which all unauthorized Chinese claims in respect to Taiwan in particular and to the Pacific area in general are rejected.

It is because the U.S. recognizes a certain presence of Chinese military might in the Pacific — albeit tied to very ambitious conditions — that it asks itself, however, whether its offer to Beijing to cooperate on the basis of the leading power’s strategic aims is warranted by China’s behavior in political and military questions.[10] China is modernizing and enlarging its military forces on all levels; what is more, it not only formulates access rights but also territorial claims in respect to various islands in the South China Sea. And this alarms the superpower especially in one respect: America remains in the dark as to which military intentions the opponent pursues presently and in the long term, and whether it understands and correctly calculates how far it can go and what America can no longer tolerate. This uncertainty needs to be dispelled by military cooperation and with arms-control diplomacy. In mutually trusting negotiations, China is expected to reveal its intentions about its weaponry, how far its military ambitions to control its neighborhood reach, what capabilities it has in this respect, and to what extent it accepts in its own need for an autonomous strategic control of the region the American presence in the Pacific and worldwide. The world power, on its part, informs its transpacific rival about the strategic and tactical capacities of its armed forces and in this way, with greatest credibility, about its firm resolve to sufficiently outdistance its rival, and to ever increase its superiority in order to be able to resolve any conceivable confrontation to its indisputable advantage. China needs to know which of its military maneuvers the world power perceives to harm its security interests, which countermeasures it has to expect, and that it doesn’t have the means to match these. The conclusion that the Chinese are expected to draw from this is also spelled out to them. They should accept their inferiority and entirely refrain from making any further objections to the liberties that the world power takes in the region. If China heeds this, follows the restrictions that are expected of it and with its armament and in trusting dialogue can also convince the U.S. that it has done so, then it can be certain that misunderstandings, misinterpretations and petty causes won’t eventually lead to unwanted military collisions, which it cannot but lose.

America’s arms diplomacy with Beijing is nothing but a clarification that the antagonism between the United States, as the protective power of the legal order of the world, and China, whose nuclear armament enables it to protect its own legal claims autonomously, is too fundamental to be overcome. The world power only considers itself and world peace secure if it takes care of it; it only keeps the peace that it is its own doing. This rule is simply incompatible with an exception the size of China. And for the same reason, the world power is not able to eliminate that exception; this is what it concedes when it recognizes China as a nuclear power of strategic importance. America sees the only solution for this antagonism in a policy that strives to neutralize it — which means: to keep China away from all activities with which it might exercise its exceptional strategic position, i.e., severely disturb America’s world peace. The world power will only tolerate China if the People’s Republic doesn’t take advantage of its military autonomy underpinned by its nuclear capacity; if it doesn’t do anything, at least, that thwarts America’s global security strategy and threatens the superiority of the U.S. military that is required in any conceivable armed conflict and in any conceivable theatre of war. This condition needs to be permanently spelled out to the Chinese, clarified in case of any really or potentially critical incident; because any compromise the Americans are prepared to undertake is and remains a delicate affair.

For all that, President Obama is optimistic that the precarious balance can be kept; from the American side at least — a view not all American strategic experts share.[11] The current Administration considers a Sino-American war, a picture painted by some experts in Washington, “in no way inevitable.” Otherwise the “Pacific century” would also quickly have to be done with. Should it come to confrontation, however, America is prepared.

Notes

1 “It is becoming increasingly clear that in the 21st century, the world’s strategic and economic center of gravity will be the Asia Pacific, from the Indian subcontinent to the western shores of the Americas. And one of the most important tasks of American statecraft over the next decades will be to lock in a substantially increased investment — diplomatic, economic, strategic, and otherwise — in this region…. Events elsewhere in the world have also lined up in a way that helps makes this possible. The war in Iraq is winding down. We have begun a transition in Afghanistan. … We now can redirect some of those investments to opportunities and obligations elsewhere. And Asia stands out as a region where opportunities abound…The 21st century will be America’s Pacific century…” (U.S. Secretary of State Hillary Clinton, Honolulu, Nov. 10, 2011)

2 The Middle Kingdom has meanwhile also copied the rating agencies of the capitalistic world for its own official rating purposes: “So China’s biggest rating agency Dagong Global Credit Rating threatens to downgrade America’s creditworthiness once more, because Washington does not fight its budget deficit sufficiently…Last time Dagong downgraded the creditworthiness of the U.S. in August; the U.S. rating agency Standard & Poors followed a few days later.” (Tagesschau.de, German news channel, January 2012) Interesting sequence!

3 “The pact between the second and third biggest economies in the world would, if consistently translated into action, weaken the role of the U.S. dollar as world currency, since both meanwhile settle about 60 percent of their mutual trade — about 340 billion dollars in 2010 — via the dollar. The background: The Chinese currency is not freely convertible but pegged to the dollar…The U.S. and the euro states more than ever rely on the willingness of other countries to continue buying large quantities of government bonds denominated in dollar or euro …If China opens its own growing market for Chinese bonds to its eastern neighbors, Japan would have an alternative to the dollar and the euro.” (Financial Times Germany, FTD, January, 2012)

4 “The plan [China’s 12th Five-Year Plan] identifies seven strategic emerging industries in which the Chinese hope to become world leaders. While the desire to move up the manufacturing value chain is a common goal among nations, the web of Chinese industrial policies used to achieve this objective has often had a detrimental impact on U.S. interests and is often inconsistent with China’s obligations under the WTO. Practices such as forced technology transfer and the creation of joint venture companies as a condition to obtaining access to the Chinese market; the adoption of unique, Chinese-specific standards for high-tech equipment; and extensive intellectual property rights violations are among the faulty policies designed to help China achieve its goal of becoming a high-tech leader.” (2011 Report to Congress of the U.S.-China Economic and Security Review Commission, page 18)

Robert Zoellick, the American president of the World Bank, recently presented to the Chinese everything that is wrong in China from the standpoint of such rules of business in a 500-page report (The World Bank: China 2030: Building a Modern, Harmonious, and Creative High-Income Society, February 27, 2012), coupled with the urgent call to stop these abuses in their own interest, so that they can continue to get their due benefit from the world economy.

But the U.S. by no means intends to rely on China accepting the advantages of the business conditions America demands for participating in imperialistic competition.

5Washington wanted China in the system, playing by the rules. It worked. China signed up to, among other things, the World Trade Organisation. But now the Obama administration is seeking to shift the ground rules, moving the goalposts. […] the Chinese President, Hu Jintao, argued world trade agreements should be based on the global WTO system, while the US president recruited other countries, including Australia, for his little regional trade sub-group, the Trans-Pacific Partnership … The White House is hoping that if this thing gets big enough, China will one day want to join. The hidden agenda is that they will only admit it if China accepts a high standard of policing for its state-owned enterprises.” (Sydney Morning Herald International, November 15, 2011)

6In the decade or so following the Soviet Union’s collapse the US military’s power-projection capabilities in defense of the nation’s interests were effectively unchallenged. This state of affairs is almost certainly ending, with significant consequences for U.S. security. With the spread of advanced military technologies and their exploitation by other militaries, especially China’s PLA, the US military’s ability to operate in an area of vital interest, the Western Pacific, is being increasingly challenged. …Currently there is little indication that China intends to alter its efforts to create “no-go zones” out to the second island chain, which extends as far as Guam [which is a U.S: base} and New Guinea.” (Air Sea Battle: A Point of Departure, Operational Concept 2010, May 18, 2010, page 1, Center for Strategic and Budgetary Assessments)

“In response to the U.S. sale to Taiwan of a new $5.8 billion package of upgrades to its aging fleet of F–16 fighter jets, China indicated that it may suspend a series of military-to-military engagements. To the consternation of its neighbors, China asserts its expansive territorial claims in the South and East China Seas. China is increasingly capable of pursuing its own interests at the expense of regional, perhaps even global, stability.” (2011, Report to Congress, page 18)

7 “In his new book ‘Where China meets India: Burma and the New Crossroads of Asia’, President Thein Sein [of Myanmar] describes the strategic importance of his country for the powerful neighboring state. China fears that the U.S. or India might use this narrow passage to cut China off from its oil supplies. This is why it intends to secure itself a direct land bridge from the Indian Ocean via Myanmar to China with investments in the billions…The military regime in office until the November, 2010 election had even allowed the Chinese to build high-tech surveillance posts to the tune of $1.5 billion, by means of which China is able to monitor the entire air and sea traffic in the Gulf of Bengal from Myanmar.” (Spiegel-online, Germany, January 2012)

8 Things might be different this time, though. At any rate, preparations have been made like in the past for any scenario that American experts can conjure up: “The Air Force would incapacitate Chinese satellites so as to deprive them of their capability to target U.S. ships. … Long-range strikes would destroy China’s land-based maritime surveillance systems and launch pads for ballistic missiles; fighters would rise from U.S. aircraft carriers and attack the manned and unmanned reconnaissance aircraft of the PLA; fighter planes would combat Chinese submarines with mines and bombing raids.” (Spiegel, Germany, January 6, 2011, “Power Struggle in the Pacific”)

9 “Our Nation seeks a positive, cooperative, and comprehensive relationship with China that welcomes it to take on a responsible leadership role. To support this, the Joint Force seeks a deeper military-to-military relationship with China to expand areas of mutual interest and benefit, improve understanding, reduce misperception, and prevent miscalculation. We will promote common interests through China’s cooperation in countering piracy and proliferation of WMD, and using its influence with North Korea to preserve stability on the Korean peninsula. We will continue to monitor carefully China’s military developments and the implications those developments have on the military balance in the Taiwan Strait. We remain concerned about the extent and strategic intent of China’s military modernization, and its assertiveness in space, cyberspace, in the Yellow Sea, East China Sea, and South China Sea. To safeguard U.S. and partner nation interests, we will be prepared to demonstrate the will and commit the resources needed to oppose any nation’s actions that jeopardize access to and use of the global commons and cyberspace, or that threaten the security of our allies.” (The National Military Strategy of the United States of America, 2011. Redefining America’s Military Leadership)

10 “China’s military modernization, combined with the unclear nature of Beijing’s views of what constitutes an attack and the People’s Liberation Army’s military doctrine that emphasizes striking first in a conflict, increases the possibility for inadvertent conflict in the region. […] China’s military strategy emphasizes striking first and controlling the nation’s periphery in the event of a conflict. […] it is clear that China is acquiring specific means intended to counter U.S. military capabilities and exploit U.S. weaknesses.” (2011, Report to Congress, page 18)

11 “The Obama administration emphasizes that a war with China is not inevitable. But the ‘Air Force Magazine’ has just recently quoted a Pentagon paper that reads differently.” (Spiegel, Germany, January 6, 2011, “Power struggle in the Pacific”)