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Is there a ‘new cold war’ between the US and China?

This article is over 2 years, 11 months old
As US president Joe Biden goes on a mission to turn the West against China, Nick Clark investigates the competition between the capitalist states
Issue 2759
Joe Biden is trying to build a superior economy and military to China
Joe Biden is trying to build a superior economy and military to China (Pic: Wikicommons/ Gage Skidmore)

“We are in a competition to win the 21st century, and the ­starting gun has gone off.”

That’s how Joe Biden describes the US’s rivalry with China—a high stakes battle to dominate the globe for the next 80 years.

With that warning last week, the senate passed a £176 billion package of subsidies and sanctions to boost US industry against China’s.

The New York Times newspaper called it “the most significant ­government intervention in industrial policy in decades”.

Biden then toured meetings of the G7, the Nato military alliance and the European Council to get his Western allies singing from his hymn sheet.

Writing in the Washington Post newspaper ahead of his visits, Biden repeated two themes.

These were “security” against “threats” from China, and “ensuring that market democracies, not China or anyone else, write the 21st-century rules around trade and technology”.

Now pundits speculate whether this makes for the beginning of a “new cold war.” They’re referring to the second half of the 20th century, when two competing superpowers, the US and Russia, divided the world into rival blocs.

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China is the first rival ­imperialist power to challenge the US since Russia’s collapse in the 1990s. But this isn’t the Cold War on repeat.

The Cold War is often cast as a great clash between two ideologies—Western “freedom” and Russian “communism”. In reality, this clash was between two competing ways of making capitalism work—the West’s free market capitalism and the ­state-dominated capitalism of Russia.

This time there is no such great ideological battle. Biden’s ­obligatory yet cursory nods to “democratic values” are a much thinner veneer for the economic competition that’s going on behind.

The £176 billion “China ­competitiveness bill” includes a £35 billion subsidy to US makers of semiconductor chips.

These are essential to almost any electronic device—and they’re at the sharp end of the competition between the US and China.

The US has been one of the world’s biggest semiconductor manufacturers for decades, while China mostly has to import them. Now China wants to make its own, and break its tech industry’s reliance on the US.

The same bill also paves the way for sanctions and bans on Chinese companies that the US government says are violating US firms’ ­intellectual property rights.

Behind this is a fear that China’s growth as an economic and military power means that it will replace the US’s global dominance.

China’s share of global GDP—the market value of all goods and services produced in the world—is already higher than the US’s.

International politics is still ­dominated by US trade deals and ­military alliances. But China’s growth has led it to start forming its own deals and alliances that challenge the US.

Now, they are both building their military and naval forces in one of the world’s biggest shipping lanes—the South China Sea.

That’s where economic ­competition becomes military competition or, where a “cold” war could start real wars.

Locked together in cooperation and competition

Joe Biden is planning a raft of sanctions and tariffs against China, all justified by what he says are China’s “unfair trade practices.”

He links this to the Chinese state’s control of trade and industry, which he says unfairly supports Chinese businesses and restricts the US’s.

In fact, the relationship between the state and private businesses in China—and their dealings with the US—are not so straightforward.

The Chinese state owns some of China’s largest, most important businesses and industries, and has many close ties with private companies too.

But these private companies are growing, and have business, trade and investment links with other states through the global market.

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This is all part of China’s growth as an economic power. And it’s at least partly thanks to the fact that since the 1970s, the US has helped to make China part of the global free market economy.

The US wanted to make China part of its world order, rather than a challenge to it as Russia was. Now China has become a rival to the US within that system.

But even as they compete, the US and China still depend on each other for trade and investment. China is the largest holder of US treasury bill bonds—a source of government debt.

China’s vice president and the US’s treasury secretary discussed “pragmatic” trade cooperation last week.

They both agreed their economic relationship is “very important.” This is how capitalism often works. In search of immediate profits, states and their businesses can cooperate with trade deals and alliances.

But the backdrop is the competition fundamental to capitalism, with each side trying to get the upper hand.

When one becomes a challenge to the power of another it ends in confrontation—even as they seek to make money from one another.

Biden’s war threat no different to Trump’s

Joe Biden is planning a raft of sanctions and tariffs against China, all justified by what he says are China’s “unfair trade practices.”

But both Biden and Trump agree that China is the US’s greatest threat—and that it has to be confronted aggressively.

In an article before he was elected as US president last year, Biden wrote that the US needs “to get tough with China.”

He said that meant the US had to “build a united front of US allies and partners” against China. Now Biden is putting those words into action.

The other part of this is building up the US’s military against China.

US defence secretary Lloyd Austin last week issued a directive declaring China to be the “number one” focus of the US military.

And Biden’s plan for military spending earlier this year—which he proposed raising to £546 billion—called China the US’s “top challenge.”

Pundits focus on Biden’s use of “diplomacy” to contain China. But it’s all backed up with military might and the threat of devastating war.

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