Imperialist encirclement and the South China Sea dispute

On 21 November, US President Barack Obama said at an ASEAN (Association of Southeast Asian Nations) conference that countries in the region should cease the ‘reclamation, construction and militarisation of disputed areas’ in the South China Sea for the sake of ‘regional stability’. The dispute, which relates to the ownership of several island archipelagos in the area, has its roots in the aftermath of the Second World War but has intensified in recent years as a result oil exploration in the area and the crucial shipping lanes that run through the sea. Obama’s words were primarily directed at China’s building of military and civilian facilities in the Spratly Archipelago, a development which was challenged only the week before his speech by the over-flight of two armed B-52 bomber planes. China has laid claim to a large portion of the area as far south as the Malaysian coast, denoted by the ‘nine-dash line’ and based on its historical claims to many of the islands. However, these claims overlap with those made by other countries in the region, including Malaysia, the Philippines, Indonesia, Vietnam and Brunei.

This must be seen in a wider context as part of an ongoing attempt by US imperialism to encircle China, which it sees as a threat both economically and militarily. The US has not chosen to engage in the same sabre-rattling towards Indonesia’s moves to militarise the Natuna archipelago, which includes the deployment of warships and fighter jets. Similarly the US has grown closer to China’s southern neighbour, Vietnam, which only a couple of decades ago was subject to an extensive US economic embargo, rivalling the one that still exists against Cuba. Now it is a member-state of the new Trans-Pacific Partnership (TPP), a ‘free trade’ agreement the US Secretary of Defence Ashton Carter described as ‘as important to me as another aircraft carrier’. This agreement represents a huge step forward in achieving the US ‘pivot to Asia’ strategy, in which it is re-orienting its military towards a future conflict with China. It also represents a victory for US investors in further opening up the land, labour and markets of Asia to imperialist exploitation.

Meanwhile in Japan, another US ally, there is continuing controversy over the attempted repeal of Article 9 of the Japanese post-war constitution which severely restricts the size and scope of the military, but in reality Japan has already gone much of the way down the road to remilitarisation. Article 9 has now been reinterpreted in such a way that it now allows Japan to act in ‘collective self-defence’ if one of its allies is attacked. The Japanese government’s dispute with China over the Diaoyu islands has been used as an excuse for the expansion of the Japanese army. Combined with this have been increasingly provocative rhetoric and actions from the Abe government, including visits by Abe himself to the Yasukini Shrine that commemorates soldiers killed in Japanese imperialism’s wars – a commemoration which includes over 1,000 convicted war criminals from the Second World War. Japan has additionally continued to deny the sexual enslavement of thousands of Chinese and Korean ‘comfort women’, and many public officials have also denied the Nanjing massacre of 1937, which killed up to 300,000 Chinese civilians during the Sino-Japanese war. All of these have inflamed relations between China and Japan.

Although China has opened its economy up to investment from the West to an increasing degree in the last 40 years, many of the largest industries remain controlled by the Chinese state and the government retains tight control over foreign investment. This, combined with China’s increasing investment in Africa and the growth of its economic power (including the recent addition of the yuan to the IMF’s reserve currency basket and the creation of the Asian Infrastructure Investment Bank, which has been joined even by close US allies like Britain and Australia) have made China an obstacle to US ambitions at achieving world hegemony and explain why US imperialism and its allies are so determined to contain and control China. The redeployment of US military power to East Asia, the growth of Japanese nationalism and militarism, and the increased tensions between the US-allied government in South Korea and China’s ally in the North are all steps towards isolating China, and they go hand in hand with similar efforts to contain Russia in Europe and the Middle East.

The escalation of the South China Sea territorial disputes represents the latest front in the conflict between imperialism and any nation that attempts to protect its economic independence..

China stumbles

By the end of the first week of September 2015 the Shanghai stock market had fallen 40% since June, wiping $5 trillion off share prices. This is a sum greater than the entire German economy; what happens in China reverberates around the world. There is hardly a multinational corporation that is not tied up with China. On 24 August, named as Black Monday, as Shanghai’s shares dropped, $44bn was lost in two hours of London’s FTSE100 trading and New York’s Dow suffered its largest ever fall in a single day. Imperialism is seeking to deepen its penetration of China and the City of London is keen to embrace China into imperialist financial circles. Sections of the US ruling class are more wary and fear its weight as a potential rival. However, the integration of China into international capitalism is subjecting it to capitalism’s tendency towards crisis. Will the Chinese government enforce political controls to defend the state and try to stabilise the economy or will it yield to market liberalisation and imperialism? The Financial Times remarked: ‘The next stage for China’s economy is a conundrum. Its resolution will shape the world’ (2 September 2015). Trevor Rayne reports.

In November 2013 the Chinese Communist Party (CCP) pledged to ‘let the market play the decisive role in allocating resources’ while also saying that it would maintain ‘the leading role of the state-owned sector’. These are contradictory commitments. China’s four biggest banks are state-owned, and state-owned enterprises (SOEs) constitute 40% of China’s gross domestic product. Foreign capital wants more access to China’s financial markets and privatisation of the SOEs. The Chinese government is seeking World Trade Organisation market economy status; such status would make it more difficult for other countries to impose protectionist import restrictions on Chinese-made goods. The Chinese government’s interventions to stop the Shanghai stock market falling and reservations about privatising SOEs are presented by those who fear it as evidence that China should not be given market economy status.

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China rides the tiger

China stocks

US$3 trillion was wiped off the Shanghai and Shenzhen stock exchanges in June and first week of July 2015. The Shanghai exchange had risen 135% in a year and fell 30%. The Shenzhen exchange rose 150% and fell 37%. 11% of China’s 443 million households are reckoned to hold shares. The Chinese government encouraged people to gamble their savings on the stock markets: ‘4,000 [points on the Shanghai Corporate index] was just the beginning’, said the Chinese Communist Party newspaper People’s Daily in April. Dreams of quick and effortless money crashed into bitter recriminations: ‘I have lost two-thirds of my money…I really want it back and when I get it, I will never invest in the stock market again.’ A pensions expert at the Shanghai Institute of Finance and Law explained, ‘Old people often don’t understand economics. They are easily duped.’ The stock market crash demonstrates that China is not immune from the crisis of international capitalism and the credibility of the Communist Party and the Chinese state is now threatened.  

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Anniversary of Tiananmen Square

4 June 2014 marked the 25th anniversary of the ending of the Tiananmen Square protests in Beijing, China. Fight Racism! Fight Imperialism! located the events in the context of China’s trajectory along the capitalist road and away from socialism. They signalled a crisis for the working class and the construction of socialism in China. We warned then that, ‘There is a very great danger that counter-revolution will flourish both within and without the CPC [Communist party of China] if past policies are continued.’ The reversal towards capitalism has continued in China.

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China and the credit crunch/FRFI 235 Oct/Nov 2013

Fight Racism! Fight Imperialism! 235 October/November 2013

On 28 July China’s National Audit Office announced that it had been instructed by the government to count how much money was owed by all levels of government from the village up to the central authorities. A senior Chinese auditor told the Financial Times that local government debt was 'out of control and could spark a bigger financial crisis than the US housing market crash’ (29 July 2013). China’s economic growth is more dependent on the expansion of credit than at any time since the 1949 revolution. Debt has increased dramatically since the 2008 global financial crisis, it is growing faster than national income (Gross Domestic Product – GDP) and a day of reckoning draws close.

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