The neoliberal imperialists who have returned to office in Washington with Joe Biden are finding the world has become more complicated since they left with Barack Obama four years ago.
Most importantly, China plays hardball these days. Three days after Biden was inaugurated Chinese H-6 bombers were overheard simulating missile attacks. They were heard on the USS Theodore Roosevelt aircraft carrier as it sailed past Taiwan and into the South China Sea—an area that Beijing claims but Washington disputes.
When Obama became president he tried a “reset” in relations with Russia. But there has been no talk by the Biden administration about a reset with China. The new secretary of state Anthony Blinken had his first call with Yang Jiechi, China’s top foreign policy official.
He told Yang that Biden would hold China “accountable for its efforts to threaten stability in the Indo-Pacific … and its undermining of the rules-based international system”. Biden himself says China will face “extreme competition” with the US.
Blinken also said that Beijing should condemn the coup in Myanmar. So far it has avoided any criticism of the army takeover. The news agency Xinhua rather absurdly referred to it as a “major cabinet reshuffle”.
But Myanmar is a complicated issue for both the US and China. Under the last military regime, the West backed Aung San Suu Kyi and the National League for Democracy (NLD). And China provided the army with crucial economic support.
But now Aung San Suu Kyi, once a global liberal hero, is tarnished by her defence of the military’s brutal expulsion of the Rohingya Muslim minority. Meanwhile the Myanmar army leadership have never been comfortable with their dependence on China.
According to the New York Times newspaper, “many of the generals spent their formative years battling communist rebels, who received generous, if covert, funding from Beijing. While ethnic insurgents are no longer part of the socialist brotherhood of that era, they still receive weapons and tactical support from China, according to senior members of ethnic armed groups.”
One reason why the military decided to make a deal with the NLD was to pursue economic liberalisation that would make them less beholden to Beijing. The New York Times reports that, “while China remains Myanmar’s largest trading partner, its biggest foreign investor last year was Singapore. Japan, South Korea and Thailand have also poured money into the country, making it much less isolated than it was during the decades of military rule.”
Beijing made big efforts to cultivate Aung San Suu Kyi. “China has been pretty happy with the NLD government, and its friendly and positive stance toward Beijing,” Richard Horsey, an independent political analyst, told the Financial Times newspaper. “They know the military is much more suspicious of China and less inclined to a warm relationship, so this can’t have thrilled them.”
Myanmar’s strategic geographical position means that China will nevertheless stick with the new junta. Chinese president Xi Jinping visited the country in January 2020 and signed several deals. This included road and rail projects that are part of the Belt and Road Initiative designed to increase China’s access to the Indian Ocean.
Japan, a key US ally, has condemned the coup but doesn’t support the sanctions that the Biden administration is pushing for. A further complication for Biden is that his predecessor Donald Trump’s drive for “a complete decoupling from China” seems to have been a complete failure. “Despite a concerted effort by the Trump administration to reduce investment in China, holdings of Chinese securities by US investors have skyrocketed over the past several years,” investment advisor Nicholas Borst told the Financial Times.
Meanwhile, despite the pandemic, China attracted $163 billion in foreign direct investment (FDI) last year. More than the $134 billion that went to the US, becoming for the first time the world’s largest recipient of FDI. Washington is threatening “extreme competition” with its most important economic partner.