‘Xi besting Trump in US-China struggle for supremacy’ (Sunday Guardian)
By M D Nalapat
‘Xi Jinping has shown a capacity to absorb short term reverses willingly and take a longer term view in his choice of options’. The Chinese leader ‘has met each US move with a countermove,’ say analysts.
NEW YORK: Donald J. Trump has the distinction of being the first US President to openly acknowledge that China and the US are locked in a global battle for supremacy in the 21st century. However, growing personal unpredictability and an intensification of the pacifist sentiment that kept Trump out of participation in the Vietnam War during his youth are causing him to act in a manner that may lead to a US defeat by China in the multi-arena competition of both superpowers for the global top slot. This is a warning given on condition of anonymity by analysts within the US governance system working whole time on how the US can prevail in this conflict. They say that retention into the 21st century of the Number One status among world economies that has been held by the US for almost a century is crucial to ensuring that the Washington-controlled global architecture dominating geopolitics since 1945 continues into the present century. Whether it be KFC or McDonalds; Hollywood movies or pop and jazz music; or the goods and services produced by US companies, the top rank enjoyed by Washington has been instrumental in US entities fending off competition that may otherwise have prevailed over their US counterparts. “The soft power of the US is substantially based on the perceptions created by its Number One status. The day China takes over that slot, US soft power will begin melting away like ice cream”, a senior analyst dealing with China-related issues since 1995 warned. Among the first casualties will be the US dollar, which will thereafter be on a fast track towards losing its status as the global reserve currency, a colleague of his said, adding that “trust in the stability of the dollar is based on the preponderant power of the US, and it is global confidence in the US as Country No. 1 that keeps the dollar strong and stable”. This situation, in their view, may get impacted by President Trump going the way in kinetic (i.e. military) matters of Mikhail S. Gorbachev, who had an allergy to the use of the armed forces under any circumstances. It was General Secretary (of the Communist Party of the Soviet Union) Gorbachev who refused to attack Mujahideen bases in Pakistan, thereby handing over a victory in Afghanistan to the latter. In much the same way, President Trump recently has in substance “ordered the armed forces to retreat in a pell-mell fashion in Syria and Afghanistan”, an analyst focused on the military pointed out. In Afghanistan, “Trump has had no hesitation in following Bill Clinton, who handed over Kabul to the Taliban in 1996”. A colleague added that “given recent events, it would require a suspension of belief for Asian allies such as South Korea, Japan and Saudi Arabia to believe that the Commander-in-Chief (President Trump) would place thousands of US lives at risk by defending such countries kinetically against any possible attack by their foes. They are going to be on their own in such a situation, because of the Trump Doctrine of Zero Military Involvement”, he concluded. This would be to the benefit of China, which has been explicit about its desire to drive the US armed forces out of Asia and to prevent any country in the continent from becoming (or remaining) a US ally.
CHINA, RUSSIA INSEPARABLE ALLIES
An expert pointed out that “China and Russia under Xi and Putin are closer than Moscow and Beijing ever were in the past, even during the Korean War”. The coming together of two countries that together comprise much of the population and land area of Eurasia has resulted in “a massive upgrade of weapons systems and offensive capabilities by the China-Russia alliance”. They claim that while in theatres such as in Syria, Russia appears to be acting independently of China, “the reality is that Beijing gives under the radar but decisive support to each such Russian initiative, so as to ensure that the Russian moves succeed over US countermoves”. A “Net Assessment” expert involved since the 1990s in analysis of rival capabilities of the “struggle for supremacy in the international order between China and the US” enumerated five principal arenas of conflict. These are (a) banking and currency, (b) trade, (c) technology, (d) psychological operations and soft power challenges, as well as (e) physical challenges involving the use of kinetic assets, such as those taking place on the Taiwan Strait or in the South China Sea. Unlike the Chinese side, whose leadership is fully aware that the two countries are locked in a comprehensive battle, “many in USG (US Government) still believe that the dispute is only about trade and not about the future of the US-led global architecture that has been dominant since 1945”.
XI READY TO ACCEPT SHORT-TERM REVERSES
Unlike what was expected of him by President Trump, which was an early surrender by China to US pressure, “General Secretary Xi Jinping has shown a capacity to willingly absorb short term reverses and take a longer term view in his choice of options”. The Chinese leader “has met each US move with a countermove, despite a hand made weaker by the substantial imbalance (in China’s favour) of trade figures”. President Xi has also, in their view, factored in battle strategy influencers such as the nervousness of President Trump at any sign that US stock prices may move in a downward direction. It is therefore “not accidental that many of Beijing’s moves are designed to depress the stock market, a situation that quickly gets followed by a mellowing of the stance of Trump towards China” in the ongoing trade war between the two sides. Practically all the costs of the Trump tariffs on Chinese products are being borne by consumers in the US rather than producers in China, and while the Chinese political system can ignore public sentiment for considerable periods of time, now that he is just a year away from Presidential elections that may mean the difference between prison and comfort, this is a luxury President Trump cannot afford. As a consequence, Trump has been making substantial concessions to China ( such as holding back on tariff increases) just on a “vague promise of greater purchases of US farm products”, promises “not confirmed in any manner by the Chinese side”. Companies affected by the rising level of geopolitical rivalry between Beijing and Washington are finding it difficult to substitute smoothly functioning Chinese supply chains with new linkages in Vietnam,Thailand or Indonesia, countries that have emerged as options for re-location from China. In the field of technology, China is nudging ahead of the US in Artificial Intelligence (AI) and supercomputing, increasingly working in tandem with Russia. Vast amounts of meta data are being accessed and absorbed by Chinese-controlled entities in order to enhance the country’s AI capabilities. In contrast, India has watched its own meta data flow in an unrestricted manner to other countries, notably the US but also increasingly China as well. The backend operations for even such sensitive operations involving hundreds of millions of citizens as Aadhaar were handed over to US entities by those placed in charge of the operation.
HUWAEI NEEDS INDIA
Should India open itself to 5G from Huawei, the offerings of which are undoubtedly of better quality and more cost effective than those of any of its competitors, such a move would give an immediate advantage to the Chinese company in its bid to remain the world leader in a technology that can revolutionize the future. The meta data available from India once 5G begins to operate in the only other billion-plus population country in the world would give Huawei enough resilience to ride out the temporary storms it is facing as a result of the already leaky embargo sought to be imposed on it by President Trump. So far as India (the future Third Superpower) is concerned, the “silo structure” of decision making in government, where needs are looked at through a sectoral rather than a comprehensive lens, means that decisions get taken (especially in the matter of defence equipment) that may be optimum from the viewpoint of a single department or service, but which preclude the selection of available alternatives that yield far greater overall strategic returns to the country. In the US, “the propensity of Donald J. Trump to take decisions based on what he perceives to be his immediate (mostly political) exigencies is causing the overall US national interest to be short-changed”, according to the analysts spoken to. In contrast, Xi Jinping “takes the long view, which is often the harder option in the short run, but which guarantees success later on”. According to an expert, the Chinese side is optimistic that Joe Biden will emerge as the 46th President of the US, “as Biden is in the same mould as Bill Clinton, under whom China was given major concessions, such as a painless accession to the WTO”.
THE S-400 EFFECT ON TIES WITH U.S.
An example of the way in which the China-Russia alliance (CRA) is undercutting US interests relates to the Russian Federation’s export of its immensely capable S-400 missile defence system. Once this system gets installed in any particular country, the door to cutting edge technological defence cooperation with the US will get shut. Not merely that, but advanced aerial and other platforms (such as the F-35) will need to be kept away from those countries that have installed the S-400. President “Trump’s reluctance to impose CAATSA sanctions on Turkey now that Ankara has begun operationalising the S-400 system has opened the way for Russia to export S-400 to India and thereby wreck any future high-tech collaboration in the production and use of weapons platforms between India and the US”, a top policymaker warned. He added that such a stepping back from collaboration as a consequence of India buying the S-400 would take place in a context where involving India in the supply chain of such products is crucial to US producers being able to compete on price with high-quality substitutes offered by Russia and these days, even by China. External Affairs Minister S. Jaishankar has worked hard to get a CAATSA waiver for India in the S-400 matter. He may have succeeded in a way, because the fact that Turkey seems to have escaped even the lighter CAATSA sanctions despite having installed the S-400 system implies that India will get away as well. However, even without US sanctions, the entry of S-400 systems into India will remove the presently bright prospects for a shift in production lines to India of high-performance defence platforms by companies such as Boeing, Lockheed, Grumman and General Dynamics. The sources are emphatic that “only the passage by a veto-proof majority of the (Graham-Van Hollen) bill can rescue the basic interests of the US from the ditch into which Trump’s recent policy zigzags have led it”. Passage would also “ensure the defeat of Erdogan in subsequent elections”. Should the Graham-Van Hollen bill become law, India would need to reconsider its purchase of S-400 systems, in view of the impact of CAATSA sanctions on an economy that since the 2016 DeMo has been showing signs of strain. However, should President Trump and Senate Majority Leader Mitch McConnell do a favour to China and Russia by derailing the Graham-Van Hollen sanctions legislation, the way would be clear for India to buy the S-400 system. Of course, this would be on the assumption that sensitive operational data and secrets relating to the S-400 missile defence system will not get secretly revealed by Moscow to Beijing and thereafter get transferred from the People’s Liberation Army to Rawalpindi GHQ. It is clear that the Modi government believes that such a transfer of sensitive data on the inner workings of the S-400 system and its backend liabilities will not take place between Moscow and Beijing, and thence to Islamabad. Once India installs the S-400 system, both Qatar as well as Saudi Arabia are likely to follow suit, thereby severely diluting the US military alliance system in Asia to the benefit of China and Russia, which have substantially increased their clout in the Middle East since the 2011 Arab Spring. The President of the Russian Federation, Vladimir V. Putin, is a canny leader who has managed to overcome severe disadvantages to make the China-Russia Alliance a much more effective challenger to the global interests of the US and its allies than the Union of Soviet Socialist Republics (USSR) and its allies ever were during the Cold War period.
RENMINBI vs DOLLAR
Aware that a major component of US supremacy is the fact of the US dollar being the world’s reserve currency, Chinese Communist Party (CCP) General Secretary Xi Jinping is working at speed to displace the “Almighty Dollar” in this role with a combination in the first instance of either the Gold Standard or the Euro and the Ren Min Bi (RMB), the Chinese currency. Given the scale of protest in Hong Kong, it seems inevitable that such manifestations will be put down by the authorities so as to ensure that any separatist tendency does not spread to the Chinese mainland. At present, the central authorities are holding their fire, in the view of the analysts, because “Hong Kong serves as a door through which Chinese exports to the US can pass without attracting punitive tariffs”. It is known that several items produced within the Chinese mainland are being re-labelled in Hong Kong and exported to the US because of the trade preference given to the HK Special Administrative Region under US law. A crackdown would speed up the passage of legislation involving Hong Kong opposed by President Trump but promoted by the US Congress. Enactment would end Hong Kong’s special status, including vis-a-vis the dollar, the currency to which the Hong Kong dollar is pegged. Such a move would result in the collapse of the US dollar-HK dollar peg, and to its replacement with the RMB. Such a move would be the precursor to ongoing efforts at establishing the Chinese currency as the reserve currency of choice for a growing group of countries, so that over a period of time as short as feasible the role of the US dollar as the global reserve currency would end. This may result in a return to the Gold Standard, the system that was abandoned in 1971 with the US Dollar Standard by President Richard Nixon. Since then, the US dollar and not gold has dominated the reserves of central banks, but should a US dollar made weak by cleverly crafted measures become too volatile and weak to remain the global reserve currency, the most likely replacement would be gold. This seems to have been the calculation of President Xi, for over the past six years, immense quantities of gold amounting to 30-50 tonnes every month have been bought by China from the UK and the US. Should the Gold Standard return, Chinese policymakers will be hoping that India will once again shoot itself in the foot by its control-obsessed bureaucracy seeking to follow the disastrous example of Morarji Desai, whose 1962 and 1968 Gold Control Acts came as a boon to smugglers of the metal and devastated an entire industry on which more than two million families depended. High level officials in Beijing have a high level of confidence in the way policymakers in India regularly stunt the economy through inadequately thought out measures, such as the demonetisation at four hours’ notice of 86% of the country’s currency in 2016. The loss of liquidity caused by bungling by North Block and the Reserve Bank of India resulted in the loss of tens of millions of jobs within the economy. To date, those responsible for the way in which DeMo was implemented have not suffered any damage to their careers, but have almost all gone on to occupy even higher positions than they had in 2016. In particular, the war that North Block has been waging on the “informal” sector is ill considered, as this sector is crucial to the overall health of the economy and needs to be nurtured rather than weakened through ill-considered regulatory and other moves. The small sector in particular (which is largely informal) has yet to recover from the 8 November 2016 DeMo shock. The Chinese leadership is delighted at the manner in which President Trump has lately been scoring self-goals that are reducing the influence of Washington at the expense of the CRA, the Beijing-Moscow pairing that in many ways resembles in its depth what the US-UK partnership during its heyday. Trump’s policy missteps are leading several within the US Government (USG) to lose confidence in the 45th President of the US, and to join the expanding list of officials who almost daily plant damaging leaks about the Trump administration and about the Commander-in-Chief himself to a receptive media.
‘CHINA EFFECT’ ON DEMOCRACIES
That the “China Effect” on democracies is already substantial can be gleaned from the fact that voters across the democratic world are choosing as their leaders those whom they believe to be “tough”, even if they very often follow their own rules rather than those accepted by convention. Looking at the speed with which the People’s Republic of China has developed, several voters in democratic countries ascribe such success to the strong leadership provided by successive General Secretaries of the CCP, and by powerful leaders such as Deng Xiaoping, who was the Paramount Leader of China during the final stage of his life. Whether it be India’s Narendra Modi (who was recently chosen in an election involving 600 million voters to once again lead his country), Jair Bolsonaro of Brazil, Vladimir Putin in Russia or R.T. Erdogan in Turkey, “strong” leaders have an electoral advantage over those seen as soft. The analysts spoken to pointed to a “soft power” sphere in which China is the dominant player, and this is the Metasphere. They point out that the e-sports industry is bigger than the total music and movie industry combined, and that Chinese companies largely control this huge field of public activity and interest, where more than two billion gamers individually spend a little more than an hour each day on average in the world of online gaming. Fortnite and League of Legends are just two of the entities that dominate the Metasphere. In the field of game development, the Matrix is way above the competition. Millennials in particular are daily absorbing narratives that are Made in China, with Chinese heroes and themes, including the display of maps that reflect Beijing’s perception of boundaries and the shutting off of narratives that conflict with core principles such as the One China policy. Any mention of Taiwan or Hong Kong independence, for example, gets quickly scrubbed out of the conversations taking place, leaving only those parts that are congruent with the view of the world from Beijing. Since Xi Jinping took over as the CCP General Secretary in 2012, there has been a systematic effort to gain control of entities that are involved in designing systems for the Metasphere, whether these be located in North America, Asia or Europe. The PRC state television channel CGTN is on the cusp of overtaking Al Jazeera as the most watched in the First World from a country outside the Atlantic Alliance, and a special effort is being made to attract viewers in segments such as the African-American population in the US or those in the European Union and in the US who have done badly out of the economy. All this is taking place at a time when much of US media is obsessed with domestic issues and is focussing its vitriol on President Trump. Whether it be the impeachment imbroglio in the US or the spectacle of Brexit in the UK, not only in China but across the world such issues have been projected so as to create a perception of instability that could soon degenerate into chaos. Both the Chinese as well as the Russians are working together not only in the matter of Hard Power (such as an increasingly common military outlook) but to jointly promote Soft Power as well, including by showing up perceived deficiencies in the main rival of both Beijing as well as Moscow, which is Washington. During the Cold War, it was the US that bombarded the Soviet bloc with information and perception-altering messaging. These days, it is the US itself that is being bombarded in a manner that may be described as a psychological offensive. At the same time, selected countries in Europe are being incentivised to ally with China, such as Greece and Italy, such that it is very unlikely that the EU will ever get the unanimous vote that will be needed, were the bloc to impose sanctions on China the way the EU has on Russia.
NEW GREAT GAME
India is regarded as an essential ally for the US to have in order to succeed in the mission of preventing China from overtaking the US in the global leadership race. A combination of Indian manpower with US technologies and platforms would be “unbeatable” in any future conflict, the analysts say. A US-India defense and security partnership would be as effective as the US-Soviet Union combination was during the 1939-45 in defeating Germany, despite the differences in the chemistry of the two countries. However, many if not most policymakers in the US are yet to learn to deal with a country that is much bigger than other allies such as Germany, the UK or Japan and which reserves the right to itself of substantial degrees of freedom, such as over policy towards Iran. As a consequence, some key elements within the Trump administration deal with India in a manner not helpful to the development of a geopolitically essential comprehensive partnership between Washington and Delhi. Crude pressure tactics (such as those adopted by the US Trade Representative) and sometimes clumsy diplomacy by elements still wedded to the hyphenation of India and Pakistan weaken those in India who seek a close relationship between the two largest democracies. Lack of action by the Trump administration on issues such as the imposition of CAATSA on Turkey embolden those within the Lutyens Zone still loyal to Nehruvian foreign and security policy nostrums. Such sanctions would soon lead to the exit via the ballot box of Erdogan, who has clearly chosen the China-Russia alliance over the US, friendly gestures to President Trump notwithstanding. “Getting Erdogan out through the ballot box is the way to go, not live in hope that the man will change his spots”, a key policymaker stated, adding that “President Trump is the only man in his administration who still believes Erdogan is a friend of the US, but his is also the only vote that counts in many decisions”. Thus far, President Trump has not come forward with a comprehensive “what’s in it for India” pathway that would nudge the world’s likely Third Superpower to join hands with what is still the First Superpower. This is despite the fact that the Indian component in technology is significant, while the prospects for defence and security cooperation are multiplying. Economic growth would be assisted by the tailwind created by a close India-US relationship, while tensions would generate headwinds. The US is now engaged in a battle with China to retain its supremacy, a battle that “could go kinetic at any time”, according to the analysts spoken to. However, unless the US President “cleans up his game, adjusts his sights and aligns his objectives with US global geopolitical needs”, it is “Xi Jinping and not Donald J. Trump that is winning the battle”, despite the numerous potential and actual advantages of the US over China. The new Great Game is not between Russia and the British Empire as it was in the 19th century, but between a future 21st century US-India alliance network and the rising power of a China-Russia alliance that includes Iran, Turkey and Pakistan in its fold. India cannot join the China-Russia side, given the presence within it of Pakistan. But should it remain “non-aligned” as the Lutyens Zone favours, the economic and security advantages that would come with a robust security relationship with Washington would remain unexploited and indeed largely unexplored. Apart with walking around a stadium to cheers from the audience, President Trump and Prime Minister Modi will need to meet in private to explore and actualise a pathway towards jointly facing a new Comprehensive Struggle between two governance systems that are antithetical to each other, and where only one side can prevail, the way it happened in the case of the competition between the USSR and the US. While Win-Win is indeed a wonderful option, in the world of geopolitics, Zero Sum outcomes are far more likely, and India needs to choose its side rather than remain on the sidelines.