Is “Trade War” or “Power Struggle” between China and US?

BEIJING—“The Sacred Yuan and Gunboat Diplomacy: In March and early April [2010], there was much sound and fury at the White House about China’s currency, the yuan, being undervalued, and so giving Chinese exporters an unfair advantage over their American rivals.” This short excerpt is from a renowned critical scholar Dilip Hiro in one of his most recent articles, America Is Suffering a Power Outage: And the Rest of the World Knows It” (

America’s tit-for-tat type of ongoing conflict with China on the issue of the latter’s currency (yuan) policy has become lately one of the most-talked about topics in today’s world. Since the collapse of American financial system late 2008, the so-called, as many characterize, “trade war” between China and US has lately become one of the most contentious issues between the two nations. As the US, the West and the like have argued, it could be simply seen as an economic, trade, or currency issue between two major powers. However, seemingly, it may not be necessarily the case.

The real issue seems the so-far unstoppable and rapid rise of Chinese power almost in all aspects of the world in this new 21st Century, while the once “only global superpower” seems to have been unstoppably declined, troubled or sunken with rapid speed, as many in the globe confirm. As a result, as the whole world witnesses, the US government has continued to blame the Chinese currency policy the single most fundamental cause of America’s continued economic trouble. However, even, former American Secretary of Labor Robert Reich who is a respected economist and now teaches at UC Berkeley does not agree with his own government’s position on the above-mentioned issue.

He challenged his own government’s argument in the following way:

“Neither trade nor immigration has been responsible for the huge job losses of the Great Recession [today in America]. These losses have been due to the bursting housing bubble and collapse of domestic demand. But dig deeper and you’ll find a longer-term truth about trade. While all of us have benefited from access to lower-cost products made abroad, the burdens of free trade have fallen disproportionately on what we used to call the working class. … The result has been to undermine unions and destroy many good-paying routine jobs in America. … Meanwhile, the biggest benefits have gone to the top – to executives of U.S. global corporations, Wall Street financiers, big-name entertainers, and the most successful digital entrepreneurs. … The consequence has been a degree of inequality not seen in this country since the late 1920s. The winners from globalization have gained so much that they could have fully compensated the losers and still come out ahead.” (From “The Emerging Anti-Trade Coalition, And Its Dangers,” Robert Reich’s Blog, October 6)

Reich seems correct and his objective argument being taken more seriously and much more persuasive than Obama administration to a broader set of global audience. Those many instead consider the China-US “trade war” as a power-struggle between the old sinking power (if it may be called that way) and the new rising one on global scale. What President Obama recently did to Premier Wen Jiabao in regard to the Chinese government policy on its currency at their globally-publicized tense meeting during the UN General Assembly in September was seen an arbitrary, arrogant and hegemonic pressure by the old-falling power against the newly-emerging economic power. A critical writer Dilip Hiro in London put it this way:

“Hard facts belie that [Treasury Dept] statement, highlighting the former sole superpower’s impotency in its dealings with fast-rising Beijing. Globalization is part of reason the median wage of male workers hasn’t risen in three decades, adjusted for inflation.” (From the above-quoted article of his: “America Is Suffering a Power Outage: And the Rest of the World Knows It!”)

As Hiro continues to argue, America is much more concerned about “the way Beijing is translating its economic muscle into military and diplomatic power” than their pronounced “trade and currency issues.” This real concern and issue were further flamed and sharpened during “the [heated] controversy surrounding the sinking of the South Korean patrol ship Cheonan in March is a case in point,” since March 26, 2010.

The present power struggle between two giant powers, knowing its nature, seems somewhat unavoidable for a while until the former (the “sole global superpower”) voluntarily changes its old and bad habit of unilateral arbitrariness of global dictatorship against sovereign others’ national dignity, rights to self-determination, and well-being of their peoples. The global community still hasn’t given up its sincere hope that someday the former, now much weaker, superpower could voluntarily correct its “wrong” attitudes towards others by honoring those universally-recognized values and principles such as mutual-respect, symbiotic (“win-win”) cooperation, and co-prosperity.

However, so far, the US has not shown any sign of intentions to do so. Reich is still very much concerned of his nation’s continuation of those old bad habits:

“They [government] could have financed better schools and free higher education for most Americans, along with wage subsidies that brought almost everyone up to a higher standard of living. But they didn’t. Instead, they fought to keep their tax shelters, loopholes, and lower marginal rates, and they fought against more outlays for public investments and social safety nets. Wall Street got bailed out but Main Street got zilch. So we’re on the cusp of new isolationism that’s likely to hurt all of us – a backlash against free trade, immigration, and maybe even international bodies such as the World Trade Organization, the World Bank, and IMF. Isolationism and nationalism are the handmaidens of an economically anxious and frustrated middle class. That was the lesson we learned 80 years ago, but forgo” (Ibid).


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