Behind the anti-China hysteria

By Dave Holmes

February 5, 2021 — Links International Journal of Socialist Renewal — China’s influence in Australia, real or alleged, is a major issue in politics today.

Numerous Chinese investments in Australia have been blocked. The Chinese company Huawei has been banned from participating in the 5G rollout.

In June NSW Labor MP Shaoquett Moselmane had his ALP membership suspended after an Australian Federal Police raid on his office over allegations that he was being cultivated by Chinese government agents. He was never charged and his ALP membership was reinstated in November. Former staffer John Zhang remains under investigation.

Academic Clive Hamilton has been a leading anti-China voice. He says Australia is “the global leader pushing back against the Chinese Communist Party’s interference”.

Sydney Morning Herald journalist Peter Hartcher is a prominent China-basher. In a recent column he described China as a "rising fascist power".

The Chinese regime is indeed very authoritarian and anti-democratic, carries out an active intervention into the Chinese overseas student and diaspora communities in Australia, and attempts to cultivate various people in positions of authority and influence.

A cold-war campaign against China

But Australia has amicable relations with plenty of authoritarian and anti-democratic regimes (e.g., Turkey and Saudi Arabia). And the US government has long cultivated people in positions of authority and influence — both Coalition and Labor politicians, trade union leaders, academics and so on. It has military and spy bases here that make us a nuclear war target.

It has immeasurably more influence on Australian politics than China but does the “political class” and its media enablers get worked up about that? No. They are in favour of it. Many are probably already on the US gravy train, whether directly or indirectly.

The Chinese regime may not be very nice but that is not the reason for the anti-China push. This is a cold-war campaign being waged by US imperialism and its allies aimed at isolating and weakening China. This campaign goes back to the victory of the revolution in 1949 but has been driven to a new level by the obvious growing economic, technological and military power of China — especially relative to the United States, which is no less clearly in decline.

Capitalism with special characteristics

The China question continues to bedevil the left.

In my opinion the Chinese state is capitalist, albeit with some special characteristics. It promotes capitalism and a new class of Chinese capitalists has emerged. According to Forbes business magazine, in 2020 China had 389 billionaires (the US had 614).

The key features of Chinese capitalism are a very strong state control and, related to that, a still important sector of strong state-owned enterprises. All this was very much displayed in China’s extremely effective response to the COVID-19 pandemic, especially in comparison with the catastrophic and shambolic way the US administration dealt with it — some 4500 deaths compared to 500,000 with a population over four times as large.

The recent drama around Alibaba and Ant group illustrates these features. Alibaba is a gigantic Amazon-like Chinese corporation founded by Jack Ma. Associated with it is the one-third owned Ant Group. Ant hosts a payments platform which in June last year had one billion users and 80 million merchants. Its IPO set for August last year would have raised $US30 billion, valuing the company at $US313 billion.

But the public float never happened. The central government cancelled it, probably because Jack Ma had made some ill-advised criticisms of the government’s financial leadership or maybe they were also concerned with the enormous economic power that group would wield. The speculation today is that the government intends to nationalise both Alibaba and Ant.

According to a December 26 International Business Times report:

Xi Jinping, Chinese President and CCP general secretary, had said in October that the plan was to make China a more state-controlled economy based on domestic demand. Observers think China's political economy is poised to see major changes. Many believe that Xi will change the pattern of property ownership in the country.

Some historical background

It is worth remembering that China has long been an object for the predatory lusts of Western colonialism and imperialism.

In the 1800s the Western powers smashed their way into China (the so-called Opium Wars) to secure lucrative trade deals and territorial concessions. In the 1930s Japan invaded China. The US backed Chiang Kai-shek’s Nationalist regime against both Japan and the rising Communist insurgency.

China was meant to be the big prize of the US victory in the Asia-Pacific war, a huge market and source of labour and raw materials. The 1949 revolution took that from them — Who lost China? as the McCarthyite witch-hunters ranted in the 1950s.

In the early 1950s the US fought the Korean War in defence of its right-wing puppet regime in the south. When US-led forces drove north to the Yalu River border with China, Chinese forces launched a massive counterattack, forcing a headlong retreat. When MacArthur wanted to use atomic weapons against bases in China, Truman sacked him.

Today, John Pilger reports, some 400 US bases encircle China — “rather like a noose” as a former Pentagon planner told him.

China’s rise

A recent Tricontinental dossier highlights China’s rise:

The United States is approaching a position where it will no longer be the largest economy in the world by any measurement in the foreseeable future. In purchasing power parity (the real physical flow of goods and services), China’s economy is already 16% bigger than that of the US; by 2025, the IMF projects it will be 39% bigger. As with almost all developing countries, the size of China’s economy is understated when calculated at current exchange rates, but it is already 73% of the size of the US economy at current exchange rates and, based on IMF projections, will be 90% of the size of the US economy in 2025.
By the end of the decade, China’s GDP will be bigger than that of the US no matter how it is measured.

Most worrying to the US leadership is China’s growing challenge to US technological supremacy. In fact, in a number of areas China is ahead of the US.

Strikingly illustrating this advance is the growth of China’s high-speed (200kph plus) rail network. According to Wikipedia, at the end of 2020 this network had a length of almost 38,000km! It is projected to total 70,000km by 2035. It has “transformed Chinese society and economy” says the report. The US has next to no high-speed rail track.

An August 20 2020 article by Dilip Hiro outlined the growth of China’s tech giants and their challenge to US corporations. It is well worth reading. Let’s look at Huawei, which is at the centre of the anti-China campaign.

Huawei (in Chinese, it means “splendid achievement”) makes phones and the routers that facilitate communications around the world. Established in 1987, its current workforce of 194,000 operates in 170 countries. In 2019, its annual turnover was $122.5 billion. In 2012, it outstripped its nearest rival, the 136-year-old Ericsson Telephone Corporation of Sweden, to become the world’s largest supplier of telecommunications equipment with 28% of market share globally. In 2019, it forged ahead of Apple to become the second largest phone maker after Samsung …

Ren [Zhengfei, Huawei’s founder,] has given top priority to the customer and, in the absence of the usual near-term pressure to raise income and profits, his management team has invested $15 to $20 billion annually in research and development work. That helps explain how Huawei became one of the globe’s five companies in the fifth generation (5G) smartphone business, topping the list by shipping out 6.9 million phones in 2019 and capturing 36.9% of the market. On the eve of the release of 5G phones, Ren revealed that Huawei had a staggering 2570 5G patents.

So it was unsurprising that in the global race for 5G, Huawei was the first to roll out commercial products in February 2019. One hundred times faster than its 4G predecessors, 5G tops out at 10 gigabits per second and future 5G networks are expected to link a huge array of devices from cars to washing machines to door bells.

As Dilip Hiro goes on to explain:

In May 2019, the US Commerce Department banned American firms from supplying components and software to Huawei on national security grounds. A year later, it imposed a ban on Huawei buying microchips from American companies or using US-designed software. The White House also launched a global campaign against the installation of the company’s 5G systems in allied nations, with mixed success.

Because Huawei’s technology is more advanced and cheaper than its competitors, we will all pay a price for the West’s anti-Huawei campaign.

US trade war against China

Trump’s presidency was marked by the imposition of numerous sanctions against China. Tariffs were imposed on many categories of goods. But judged by its stated aims — to reduce the US trade deficit with China and bring jobs back home — it has been a failure. According to a Brookings Institute study:

The trade war caused economic pain on both sides and led to diversion of trade flows away from both China and the United States. As described by Heather Long at the Washington Post, “U.S. economic growth slowed, business investment froze, and companies didn’t hire as many people. Across the nation, a lot of farmers went bankrupt, and the manufacturing and freight transportation sectors have hit lows not seen since the last recession. Trump’s actions amounted to one of the largest tax increases in years.”

A September 2019 study by Moody’s Analytics found that the trade war had already cost the US economy nearly 300,000 jobs and an estimated 0.3% of real GDP …

Numerous studies have found that US companies primarily paid for US tariffs, with the cost estimated at nearly $46 billion. The tariffs forced American companies to accept lower profit margins, cut wages and jobs for US workers, defer potential wage hikes or expansions, and raise prices for American consumers or companies. A spokesperson for the American Farm Bureau stated that “farmers have lost the vast majority of what was once a $24 billion market in China” as a result of Chinese retaliatory actions.

Meanwhile, the US goods trade deficit with China continued to grow, reaching a record $419.2 billion in 2018. By 2019, the trade deficit had shrunk to $345 billion, roughly the same level as 2016, largely as a result of reduced trade flows …8

China’s recent deal with the EU

Furthermore, China has managed to divide the US from its traditional allies in the so-called “Free World”. A January 28 article by Alfred McCoy highlighted two recent mammoth trade deals engineered by China.

In November 2020, Beijing would lead 15 Asia-Pacific nations in signing a Regional Comprehensive Economic Partnership that promised to create the world’s largest free-trade zone, encompassing 2.2 billion people and nearly a third of the global economy.

Just a month later, China’s President Xi Jinping scored what one expert called “a geopolitical coup” by signing a landmark agreement with European Union leaders for the closer integration of their financial services. In effect, the accord gives European banks easier access to the Chinese market, while drawing the continent more closely into Beijing’s orbit …

… this treaty is arguably the biggest breach in the NATO alliance since that mutual defense pact was formed more than 70 years ago.

Salman Rafi Sheikh assessed the China-EU deal in similar terms:

The recently announced EU-China principally agreed investment deal is a watershed moment, marking a first EU-China investment deal of its kind that would open the doors for the EU to make direct investment in China. China will also have opportunities to expand its reach in the European market.

Regime’s repression & surveillance

Proponents of the anti-China campaign cite the regime’s heavy surveillance of disaspora Chinese and overseas students in Australia. The use of Chinese nationalism features heavily in regime efforts to rally support in these communities. Given the terrible historical record of the West in relation to China, Chinese nationalism certainly has a lot of material to work with.

But obviously there is a dark side to this as it is used to prejudice Chinese against the Hong Kong people struggling for democracy or against the non-Han Chinese Tibetans and Uighurs fighting for democracy and their very existence as distinct peoples.

But Western countries would be in a stronger position to criticise China if they didn’t support repressive regimes around the world, if they didn’t try to overthrow governments they didn’t like and if they were honestly trying to “close the gap” with their own non-white and indigenous minorities.

A key Western intelligence and surveillance alliance is the Five Eyes which brings together Australia, Canada, New Zealand, the United States and the UK — four Anglophone settler-colonial states plus the great mother of such settler-colonial states. And, of course, Five Eyes is very concerned about Chinese influence. It is almost comical.

China-bashers claim that through Chinese companies such as Huawei and Tiktok the Chinese Communist Party has access to all your data. There is no actual evidence whatsoever for these specific claims. But I have no doubt that China does carry out cyber surveillance, hacking and espionage.

But I don’t think their efforts abroad would remotely measure up to what the US and allied agencies get up to. A June 6, 2014 Mashable article details “The 10 Biggest Revelations from Edward Snowden's Leaks”. Here are a few tidbits:

The very first story revealed that Verizon had been providing the NSA with virtually all of its customers' phone records. It soon was revealed that it wasn't just Verizon, but virtually every other telephone company in America …

… the NSA … can request user data from the [US tech giants like Google, Facebook, Microsoft and Apple] which are compelled by law to comply …

The British spy agency, the Government Communications Headquarters (GCHQ), taps fibre optic cables all over the world to intercept data flowing through the global Internet, we learned. The GCHQ works closely with the NSA, sharing data and intelligence in a program that's codenamed Tempora.

And so on. The NSA had even bugged Angela Merkel’s mobile phone.

China’s island bases

The West is deeply troubled about China’s rapid construction in 2013-16 of the “great wall of sand” — seven bases built on reclaimed coral reefs in the remote Spratly Islands in the South China Sea. China also has bases in the closer Paracels Islands.

China’s “nine-dash line” claim to most of the islands in the South China Seas is hotly disputed by neighbouring countries (Vietnam, the Philippines, Brunei and Malaysia). Looking at the map we can see that the Spratlys are indeed a long, long way from China.

However, I think that their fundamental purpose is to increase China’s defences against the US encirclement. A recent War on the Rocks article argues that the bases present a formidable barrier to a non-nuclear attack by the US and its allies.

The hysteria about the South China Sea seems confected when we consider that the US has 800 bases and 160,000 troops in 130 countries; the UK has 145 bases in 42 countries. Are our rulers and the media worried about that? Not at all: They are fully in favour of it.

Australian exports to China sacrificed

Last year, in reaction to the Australian government’s obvious hostility to China, Beijing imposed punitive tarrifs on a range of Australian exports.

In wiping out a large part of the country’s exports to China, our biggest trade partner, the Morrison government achieved a truly striking own goal.

There seems to be a radical disjuncture between the needs of the big Australian corporations and the country’s political-security leadership and its total support for the US-Australia alliance.

A November 10 article by David Uren on the blog of the Australian Strategic Policy Institute explained the grim reality for Australia.

Australia has no realistic alternative market to China for a third of its exports and no viable source but China for almost a fifth of its imports.

By contrast, it is only as a supplier of minerals that Australia has any significance to the Chinese economy. As an export market for Chinese businesses, Australia is almost irrelevant, accounting for just 1.9% of their worldwide sales.

For instance, China takes 76% of Australia’s lobster exports. There is no realistic alternative market. If China doesn’t take our lobsters there is no point catching most of them. Perhaps the lobsters are celebrating.

The impracticability of diversification is most obvious in iron ore [says David Uren]. Australia will ship almost 800 million tonnes of iron ore to China this year. The total seaborne market in the rest of the world is only 460 million tonnes and Australia already captures around 100 million tonnes of that. If China didn’t buy our iron ore, there would literally be nowhere else to send it.

The big mining corporations are surely praying that China doesn’t develop a realistic alternative to Australian iron ore. If that market should disappear the pain will be widely felt here.

Break from US war alliance

Last November China's embassy here made public a document outlining 14 grievances against Australia. Chris Slee wrote a December 8 article dealing with this in Green Left. I don’t have time to go into this at length. Comrades should read the article.

Some of China’s complaints are valid. For instance, Australia does discriminate against Chinese companies, and not just where there are “security” concerns. And as Chris Slee points out:

Canberra also has a double standard on human rights issues: it rightly criticises China’s oppression of the Uighurs and its repression of pro-democracy protesters in Hong Kong, but there is no similar denunciation of the mass incarceration of Black people in the United States or the police murders that have prompted the Black Lives Matter movement.

Australia — that is, the mass of ordinary people, if not the big capitalist corporations — would be better served if Australia withdrew from the US war alliance and the Five Eyes group and declared our neutrality from such pacts. Criticisms of China’s repressive internal actions would still anger the regime but we would clearly not be part of the war drive against China.

The Biden administration will not automatically repeal Trump’s anti-China measures. In fact, it looks like most or all of Trump’s measures will continue until or unless the US cuts a deal with China.

The US empire is in decline but it retains a huge military capacity and China has not achieved parity yet, even though the gap is closing. The danger is that US will use its military superiority to offset its relative economic weakness. Australia should make sure it is not any part of such madness.