From 1842 until its invasion by Japan during the Second World War, the city of Shanghai had lived through 100 years of foreign domination by British, French, and Americans occupying Chinese "concessions."

In 1949, when Shanghai was taken over by the People's Liberation Army of Mao Zedong following its civil war with the American-backed Nationalists, the event was labelled the "Communist takeover" by U.S. Cold War warriors.

In the next years, American political life would feature Senator Joe McCarthy and his hunt for "the enemy within," or Americans soft on communism.

A big question was: who "lost" China? As Noam Chomsky has since underlined, the only way the U.S. could have lost China was if it had owned it.

In 1948 the U.S. diplomat George Kennan had set out an over-arching vision of American foreign policy that remains eerily pertinent.

In his PPS 23 memo to the U.S. Secretary of State, Kennan considered Canada firmly in the American orbit, while Britain had to decide if it wanted to join a European currency and customs union, or move closer to the U.S. and Canada.

Addressing the Far East, Kennan observed that while the U.S. had 6.3 per cent of the world's population, it controlled 50 per cent of the world's wealth.

In dealing with the Far East, the U.S. objective should only be to maintain that wealth gap, since, argued Kennan, Asia would not become Western in its outlook or its politics.

The idea that the U.S. could continue to generate enough income to maintain control over 50 per cent of the world's wealth turned out to be far-fetched. For Chomsky, U.S. decline began when China affirmed its independence in 1949.

European nations recovered rapidly postwar, in part because U.S. Cold War policy was to provide Marshall Plan aid to prevent Communist party incursions into France, Italy, Greece, and other nations.

Certainly, the United States has watched its share of world GDP decline. Today the U.S. has 4.4 per cent of the world population, and the U.S. share of world GDP is 22 per cent. In 1960, the U.S. share of world GDP was 40 per cent.

Meanwhile China has undergone a spectacular economic transformation. As recently as 1981 fully 88 per cent of the population lived below the poverty line of $2 a day; by 2012, only 6.5 per cent were classified as officially poor (World Bank figures measured in constant 2011 dollars).

The U.S. remains the world's dominant power in every respect, with no serious rival. However, that does not stop U.S. intelligence agencies, academics, journalists, and politicians from mounting campaigns of fear and paranoia about potential threats to U.S. pre-eminence, whether it be Russia, China or a supposed "axis of evil."

Harvard political scientist Graham Allison has identified 16 occasions in world history when an emerging power has threatened to displace a dominant power, beginning with Athens challenging Sparta, and the resulting Peloponnesian War chronicled by the historian Thucydides.

Allison calls the menace of war that results from dominant and rising power conflict the Thucydides trap, and points to the fear and paranoia exhibited by the dominant power as a driving force contributing to the 12 wars that have resulted.

Allison has analyzed the rise of China and the fear inherent in the American reaction. While the existence of an "enemy" may drive American military spending and mobilize intelligence gathering, an obvious concern for the world is that competition remain peaceful.

In 1995, U.S. president Bill Clinton championed China for membership in the World Trade Organization, announcing that this would help democratize (or Westernize, as Kennan warned not to expect) China.

In essence, the U.S. planned that China adopt the familiar neoliberal capitalist practices of privatization of public companies, and protection of foreign intellectual and investor property rights.

China, on the other hand, preferred adopting its own industrial strategy: China 2025; and in the wake of the Wall Street financial collapse of 2007-2008, its own international trade and finance initiatives known as the Belt and Road Initiative.

The response of the Obama administration was to announce a "pivot to China" -- a foreign policy effort to contain Chinese influence in Asia.

In addition to declaring a U.S. military leadership role in Asia, the U.S. excluded China from its Trans-Pacific Partnership (TPP). Leaving China out was supposed to ensure that China would have no choice but to adhere to the TPP trade and investment rules, which would govern trade among all the other countries of the region.

Donald Trump withdrew the U.S. from the TPP. Under Japanese leadership, the TPP has gone ahead without U.S. membership. Trump has initiated a trade war with China by imposing tariffs and demanding the Chinese abandon its industrial strategy before he will remove them.

The Chinese intend to determine themselves the terms under which foreign corporations operate in China. Their strategy is to encourage research and innovation so as to assure technological independence from foreign multinational corporations by 2025.

The foreign domination of China exemplified by the British, French, and American 100-year occupation of Shanghai is still fresh in the minds of the Chinese. The leadership of the Communist Party State have no intention of allowing U.S. or other foreign domination of Chinese industry.

Duncan Cameron is president emeritus of rabble.ca and writes a weekly column on politics and current affairs.

Photo: PAS China/Wikimedia Commons

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