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When China’s richest man, Wang Jianlin, warned last december that a US trade war against China would result in disaster for the United States it was no idle threat. Trump scores political points with his social base each time he rails at Beijing yet the United States and the global economy would grind to a halt if it were not for China’s preponderant role in shoring up global capitalism at this moment of acute crisis. The simplistic notion that Trumpism represents a return to protectionism and national trade rivalries conceals the real inner contradictions of global capitalism that are bringing the twenty-first century world order to the breaking point. The system faces a structural crisis of extreme inequality and overaccumulation, as well as a political crisis of legitimacy and an ecological crisis of sustainability. But there is another dimension to crisis that is escalating international tensions and, depending on the turn of events, could well spark world conflagration. The disjuncture between a globalizing economy and a nation-state system of political authority threatens to undermine the system’s ability to manage the crisis and helps explain Trump’s reckless anti-China posturing.

The Disappearing Hegemonic Center There has historically been a succession of hegemonic powers, from Spain in the sixteenth century, to the Netherlands in the seventeenth, England in the eighteenth and nineteenth, and finally the United States in the twentieth. As each “hegemon” rose to dominance it organized the political institutions and economic rules of the world capitalist system. While academics now debate the decline of US hegemony and the possible rise of the Chinese, what is certain is that the global economy is increasingly Sino-centered and the existing political scaffolding of world capitalism is hopelessly outdated. Simply put, China’s international political clout does not match its expanding economic role in the global economy. The current world political order dates to the creation in 1944 of the Bretton Woods institutions by the Western victors in World War II, and includes the World Bank, the International Monetary Fund, and the United Nations system. The rich Western states also established their NATO military alliance and numerous political forums for their collective rule, among them, the Bilderberg Club and the Trilateral Commission. The United States, along with Western Europe, dominates decision-making in these institutions, while the status of the dollar as the international currency makes the US Treasury the world’s central bank. However, as globalization has brought into being a transnational capitalist class (TCC) and a global production and financial system into which all nations have been integrated, the BRICS (Brazil, Russia, India, China, South Africa) and other countries in the Global South have emerged as major players in the global economy. The leading capitalist groups from these countries have joined the ranks of the emerging TCC and have acquired a stake in the stability and well-being of global capitalism. But all this has occurred within the framework of an increasingly arcane international political order. Global capitalism is particularly dependent on China, given vast worldwide chains of subcontracting and outsourcing and the central role China plays in those chains. China provides a market for transnational corporations and until recently a sink for surplus accumulated capital, along with a vast supply of cheap labor controlled by a repressive state. China became in the past three decades the new “workshop of the world.” Moreover, China leads the way in what is a surge in outward foreign direct investment from countries in the Global South to other parts of the South and to the North. Between 1991 and 2003, China’s foreign direct investment increased tenfold, and then increased 13.7 times from 2004 to 2013, from $45 billion to $613 billion. The more enlightened among transnational elites have been clamoring for more effective transnational state apparatuses to resolve this disjuncture between a globalizing economy and a nation-state based system of political authority. They have been seeking transnational mechanisms of governance — such as the creation of the World Trade Organization in 1995 and the establishment of the G20 in 1999 — that would allow the global ruling class to stabilize the system in the interests of saving global capitalism from itself and from radical challenges from below. The World Economic Forum (WEF), which holds its famed annual meeting in Davos, Switzerland, has called for new forms of global corporate rule, including a proposal to remake the United Nations system into a hybrid corporate-government entity run by TCC executives in “partnership” with governments. “The weakening of multiple systems has eroded confidence at the national, regional, and global levels,” warned the call to the 2017 Davos meeting, held this past January 17-20. “In the absence of innovative and credible steps towards their renewal, the likelihood increases of a downward spiral to the global economy.”

Trump Versus Xi Jinping While Trump was spouting his right-wing populism and protectionist threats in the runup to his January 20 inauguration, Chinese president Xi Jinping took center stage at the January WEF conclave, delivering an inaugural speech that called for an open global economy and a new international political order. The TCC welcomed the Chinese president’s Davos debut on the world political stage and is pleased to see China take the reins of global leadership. The irony should be lost on no one that the two richest men in China, Wang Jianlin and Jack Ma, the latter the founder of Alibaba, China’s largest e-commerce company, accompanied Xi. The US and Chinese economies are inextricably interwoven. They are less autonomous national economies than two key constituent parts of an integrated global economy. Trump has accused China of manipulating its currency, threatened to levy a 45 percent tariff on certain Chinese goods, and suggested he would use the “one China” policy as a bargaining tool in trade negotiations. Yet the simple fact is the TCC in both China and the United States are dependent on their expanding economic ties. Foreign direct investment (FDI) between the United States and China has surged over the past two decades, according to a 2016 report by two industry groups, Rhodium and the National Committee on US-China Relations. In 2015, more than 1,300 US-based companies had investments of $228 billion in China, while Chinese companies invested $64 billion in the United States, up from close to zero just ten years earlier, and held $153 billion in assets. Notwithstanding Trump’s ranting about a US trade deficit with China, Chinese exports to the United States are transnational capitalist exports. And for that matter, an over-valued Chinese currency actually benefits transnational corporations that export from China to the United States and the global markets. Indeed, as Trump himself has insinuated, his anti-China rhetoric and threats are aimed at creating an environment in which he can twist the Chinese state into making greater concessions to global capital (the same can be said for his anti-Mexico discourse). Moreover, according to the Treasury, the largest foreign holder of US debt is China, which owns more than $1.24 trillion in bills, notes, and bonds or about 30 percent of the over $4 trillion in Treasury bills, notes, and bonds held by foreign countries. In total, China owns about 10 percent of publicly held US debt. In turn, deficit spending and debt-driven consumption has made the United States in recent decades the “market of last resort,” helping to stave off greater stagnation and even collapse of the global economy by absorbing Chinese and world economic output. It was not, hence, a mere idle threat when China’s lead multibillionaire, Wang Jianlin, whose Dalian Wanda Group recently acquired the AMC cinema chain, warned the Trump regime that he would withdraw $10 billion in investments in the film and real estate industries in United States. “More than 20,000 employees wouldn’t have anything to eat should things be handled poorly,” he said. “The growth of English films depends on the Chinese market.”