Pentagon no longer views China threat as top priority : politics

[–] Awoo@hexbear.net 28 points 4 days ago* (last edited 4 days ago) (2 children)

This is the starting point of the real second Cold War. The moment the US admits it can not fight China. Just as it admitted it could not fight the Soviet Union and began the first cold war. The world settling into protection of their spheres of influence while cold war operations and proxy wars are undertaken instead.

Difference is that the roles are reversed this time, China is ascendant and US is in decline. The outcome is historically predictable, just need the US to be drawn into a long war it can not win nor withdraw from.

AI bubble will burst sending the US into economic catastrophe from which it will jump into wars to save itself then be unable to get out of them and eventually collapse.

[–] Evilsandwichman@hexbear.net 16 points 4 days ago (2 children)

Right but the difference is the USSR was too principled to use their nukes; I am putting zero faith in a government that refuses to rule it out (which by the way doesn't just mean America, but the UK; British PMs are usually asked if they'd use such weapons and the answer is always yes)

[–] Omegamint@hexbear.net 20 points 4 days ago

It’s really the only thing that really worries me for the world. The psychos here really are willing to burn it all down

[–] theturtlemoves@hexbear.net 6 points 4 days ago* (last edited 4 days ago)

British PMs are usually asked if they'd use such weapons and the answer is always yes

Corbyn publicly said no. This refusal to potentially kill thousands of civilians was seen as a sign of weakness.

the USSR was too principled to use their nuke

China also has a 'no first use' policy.

[–] MarmiteLover123@hexbear.net 2 points 4 days ago* (last edited 4 days ago) (1 children)

If the AI bubble bursts, the US won't be the most effected country. AI LLMs have global market penetration, they're everywhere. If the US economy is being propped up by AI, so is almost every other economy in countries with decent Internet access. Sure the AI companies aren't based in these nations and are based in the US. But the workforce in almost every country with good Internet is using AI. If economic growth over the last few years is tied to AI, these nations are in a vulnerable position as a lot of GDP growth has been almost stagnant. Remove AI, and that's now negative GDP growth... The US has had decent annualised GDP growth over the past few years, it wouldn't be great if it became stagnant, but it would be better than going into the negatives. What I'm saying is that the US economy has a bigger safety net than most here, even if greater risk is involved as almost all the AI companies are from the US.

[–] Awoo@hexbear.net 5 points 4 days ago* (last edited 4 days ago)

The US GDP growth being higher is a factor of the AI infrastructure and power supply for it being constructed there. The rest of the world's GDP growth is not driven by AI except China's direct AI competition with the US but to a far lesser extent because their focus isn't AGI. Only the US' is. The rest of the world neither has had the data center construction nor the power construction to drive it, and AI itself is not a significant improvement to productivity so far as proven by multiple studies, so AI is not improving their growth, AI is driving growth solely in the country that its infrastructure is constructed in. The US will bear an absolutely enormous and catastrophic economic hit when all of the growth of the last several years driven by AI is wiped out in the crash and none of this infrastructure is useful for anything else other than AI. Other countries will take a hit but it will not be the same, it will be the knock-on effect of secondary industry related to AI.

Normal companies that happen to have workers using AI will be largely unaffected, workers will just go back to not using AI if they have to, and that won't affect productivity because AI does not improve it.

[–] Omegamint@hexbear.net 32 points 4 days ago (2 children)

Maybe a decision that they can’t have a real hot conflict with China at this point. Good news for china but bad for everyone else

[–] heartheartbreak@hexbear.net 22 points 4 days ago

They know theyll lose like theyve lost everywhere else in asia so theyre playing the long game. Most successful victories are countries like the Philippines and Syria and against the ussr where the competition of the productive forces and geopolitics led to strategic victories.

[–] GnomeGodsGnomeMasters@hexbear.net 19 points 4 days ago

We’ll just engage in like 50 years of proxy wars with them just like we do with everyone else… except Muslims. Amerikkka likes killing Muslims.

[–] BobDole@hexbear.net 25 points 4 days ago (1 children)

They’ve gotta be so mad. They really wanted that war. They’d been psyching themselves up about it since like 2013

[–] Orcocracy@hexbear.net 8 points 4 days ago (1 children)

Since the 1990s really. For example, when the US bombed the Chinese embassy in Belgrade in ‘99, and then a US spy plane was captured after it went down over China in April 2001. Then 9-11 happened a few months later and the US got distracted for a decade and a half or so.

[–] theturtlemoves@hexbear.net 4 points 4 days ago (1 children)

the US got distracted for a decade and a half or so.

Invading Afghanistan was a choice. If anyone 'distracted' the US, it was the US itself.

[–] Orcocracy@hexbear.net 5 points 4 days ago

Yes, please feel free to read “got distracted” in that manner, apologies for my somewhat vague and passive language. The US is a bloodthirsty country and found itself a more tempting set of victims for a few years, to put it a bit more dramatically.

[–] xiaohongshu@hexbear.net 22 points 4 days ago* (last edited 4 days ago) (4 children)

How many times do I have to say on Hexbear that we are going to see a renewed status quo between the US and China as the final outcome?

The reason is that Trump’s main goal is to reduce the US trade deficit, and despite the vast bilateral trade imbalance between US and China, post-Covid China is simply struggling to bring up its domestic consumer market to allow China to import more from the others. Arguably, China is having its own very difficult issue to deal with, which is deflation, and I remind everyone that deflation is much more dangerous than inflation and a worse situation to be in.

Like, what is the US going to do? Force China to buy American goods at such cheap price that the US companies might as well be making losses? China simply does not have the capacity to import from the rest of the world now. The most the US can do is force China to appreciate the RMB exchange rate but it is still not going to work - Japan after Plaza Accord still did not yield re-industrialization of the US, and the average Japanese household of the 1980s was much more wealthy (adjusted to real terms and prices of the era) compared to the average Chinese household today.

The real target has always been Europe, because this is the region where the households are actually wealthy enough to absorb American exports. This is why the Ukraine war fits perfectly into the US imperial project.

To understand how we come to this, we really need to grasp the principal contradiction of American capitalism. This is really the most important lesson from reading Mao. If you cannot see this from the perspective of class analysis, geopolitics is not going to make sense beyond “big powers vying for global domination”.

Why does Trump care so much about the US trade deficit? To answer this question, we need to understand the nature of dollar hegemony first.

The principal contradiction that the US capitalism is facing is this - how can it maintain its global financial hegemony while years of de-industrialization have caused growing domestic dissent and rising populist sentiment from its own working class that has become disillusioned and disenfranchised by the neoliberal capitalist system?

The 2008 crash has permanently shut the upward social mobility for most American “middle class” households. The dream of a “temporarily embarrassed billionaire” has evaporated before most of them. The vast majority of wealth generated during the economic recovery under Obama went to the top 1%. The massive wealth inequality and entrenchment of social classes resulted since the neoliberal era of the 1970s have finally manifested in the explosive popularity of the Bernie Sanders movement on the left, and Donald Trump’s MAGA movement on the right, during the 2015 primary elections.

There is a faction within the US imperial regime that believes that the US long-term de-industrialization is caused by the global reserve currency status of the dollar (see Stephen Miran’s arguments on depreciating the dollar) and wants the US to give up its dollar hegemonic status. This reasoning is not correct, of course, because the US government can always run the fiscal policy to re-industrialize itself and raise the living standards of its own working class irrespective of its dollar status as the global reserve currency, but that would directly oppose the neoliberal project itself (you can even call it socialism lol):

The re-industrialization of the US is going to reinvigorate the domestic labor movements and trade unions and their bargaining power against the bourgeois class - the very reason the US de-industrialized itself in the first place back in the 1970s
The resurgence of industrial capital will eat into the rentier profit of the Wall Street financial capitalist class - simply put, as households become wealthier, they will have less need to take out loans from the financial institutions

Hence, the US capitalism is now caught in a spiraling contradiction: how to maintain the hegemony of its financial capital while also suppressing the growing dissent from its own population who are becoming disillusioned by the system?

Well, a strategy here is for the US to start shifting its dollar export mechanism: from exporting the dollar by running persistent trade deficit to exporting dollar through foreign investment. This will allow the US to retain its dollar hegemony while reducing its trade deficit at the same time.

How to get there? First, you need to control the European market, where is actually wealthy enough to absorb American exports. This is being achieved through the Ukraine war, by cutting off their cheap energy sources from Russia, by manipulating the global energy prices through geopolitical maneuvers.

Second, make the rest of the world dependent on US foreign investment money. This is being achieved through Biden’s hiking the interest rates (which caused a global dollar liquidity shortage) in response to rising inflation, and now Trump’s global tariffs (which leveraged China’s vast export industrial capacity to redirect its export flows to the other exporter countries e.g. dumping its surplus export goods to the EU and Southeast Asia). As these countries can no longer absorb the surplus goods from China, with failing domestic industries that cannot compete against Chinese competitors, they will become vulnerable to foreign financial bailouts (e.g. IMF bailouts).

So the end result is most likely this:

Europe de-industrializes itself (euro appreciation against the dollar) and being coerced to purchase American exports (driving partial re-industrialization in the US to suppress its domestic working class dissent - exporting unemployment to Europe)
The US retains its dollar hegemony by completing its shift from exporting dollar through running persistent trade deficit, into one through financial bailouts/investments into the exporter countries that cannot compete with China’s export industries, and from there, reshape the global supply chain to its imperial interests (the Global South continues to become dependent on the dollar, but no longer in the form of US trade deficit)
China is going to be fine (well, still have to solve the deflation problem, but it’s mostly going to be fine)

[–] Omegamint@hexbear.net 17 points 4 days ago

The rare XHS effort-post outside of the news mega, today we are blessed

[–] quarrk@hexbear.net 14 points 4 days ago* (last edited 4 days ago) (2 children)

This is an interesting analysis, thank you.

There are some wildcards that could throw off the (imo, rational) historical trajectory that you detailed:

General collapse of the American economy due to AI and the “everything bubble”. Though I could see this maybe accelerating an industrialization push if the timing is right.
Increased class consciousness among American working class that transcends momentary improvements or declines in the conditions of the working class.
Increased anti-US sentiment among Europeans and maybe even some class consciousness.
Increased collaboration among the Global South à la the Non-Aligned Movement which is able to set up alternative economic paradigms. Even if they are not globally dominant, it will affect the calculation of US and China.
Russia’s maneuvering to stay relevant and not vassalized in the US-China dynamic.
Climate change drastically shifting production geography.
Forgot an obvious one: incompetence of US leaders to manage the transition you laid out.

How likely any one of these factors is, probably not that likely. Any crystal ball is likely to be cloudy for a while though.

[–] xiaohongshu@hexbear.net 14 points 4 days ago* (last edited 4 days ago)

I don’t disagree. I am just laying out the dynamics of the inherent contradictions of American capitalism. Whether it will go down a certain path and whether it will succeed are entirely different questions, and the new contradictions that will emerge in doing so. It’s like trying to model the weather - we know a lot about how air movement and pressure systems cause precipitation, but we can only forecast it (with some level of accuracy) no more than a few days out. It is a non-linear complex system.

[–] FloridaBoi@hexbear.net 10 points 4 days ago (1 children)

General collapse of the American economy due to AI and the “everything bubble”. Though I could see this maybe accelerating an industrialization push if the timing is right.

From what I’ve read recently, they’re pushing data centers to many countries at the same time. So it goes along xhs thesis about expanding FDI making other markets captive to US interests.

I think the other points are a bit optimistic. But point 6 seems to always be underestimated whether catastrophic weather phenomena or pandemics.

Point 7 is interesting because the factions within the trump admin are often in opposition in methods and outcomes. So the incompetence and the hubris can lead to failures in their goals.

I do think that corporate sway over policy which may contradict admin, social breakdown due to pullback of welfare and basic services, and internal political fracturing and strife within the US are more wildcards that could radically change outcomes.

[–] quarrk@hexbear.net 6 points 4 days ago (1 children)

corporate sway over policy

This is a great point. Private corporations hold a lot of control over the US state proper, which could undermine the state’s functional purpose of managing the common bourgeois class interest, as individual capitals influence one-sided decisions at the state level which are self-destructive in the long term. But idk, corporations also got in line behind Trump real quick this second term, so even that feels like cope as I’m writing it. Guess only time can tell how competent these fascists are.

[–] FloridaBoi@hexbear.net 3 points 4 days ago

While corporations especially Silicon Valley ones did fall in line, trump still seems sensitive to markets which appear to have forced him to back off from certain positions. So maybe it would be better to say markets instead of corporations would sway the admin.

[–] unaware@hexbear.net 11 points 4 days ago

(you can even call it socialism lol)

Socialism with burger characteristics commercial-district

[–] aqwxcvbnji@hexbear.net 4 points 4 days ago* (last edited 4 days ago) (2 children)

There is a faction within the US imperial regime that believes that the US long-term de-industrialization is caused by the global reserve currency status of the dollar (see Stephen Miran’s arguments on depreciating the dollar) and wants the US to give up its dollar hegemonic status. This reasoning is not correct, of course, because the US government can always run the fiscal policy to re-industrialize itself and raise the living standards of its own working class irrespective of its dollar status as the global reserve currency

I don't completely agree with this assessment.

Yes, the US could also use fiscal policy to re-industrialize itself. But this would not change the dynamic which leads to a trade deficit for the US. The basic process regarding currency hegemony is, as Steve Keen puts it, as follows

No country has ever become an Empire by conquering other countries with imported weapons. A critical step in becoming an Empire, therefore, is creating weapons that defeat its rivals. This requires a strong manufacturing sector;

Once that country becomes an Empire, its currency becomes the basis of international trade within its Empire;

This pushes up the value of its currency relative to its vassals, which weakens the Empire’s manufacturing sector;

One (or more) of the Empire’s vassals (or rivals) develops a strong manufacturing sector, which enables it to construct weapons that enable it to overthrow the Empire;

That once vassal becomes the next Empire, its currency replaces the previous Empire as the currency for international trade, and the cycle repeats.

Thus, if the US would re-industrialise, that wouldn't change the structural position of the dollar with regards to other currencies: it would remain relatively too strong. As a result, it would only lead to a more prosperous population in both the US and the rest of the world (as there are simply much more products being produced), but it wouldn't change the fact that the US will remain an importing nation.

[–] xiaohongshu@hexbear.net 15 points 4 days ago* (last edited 4 days ago) (1 children)

Keen is very good as a heterodox economist (way better than the neoclassical economists) and his Debunking Economics book was foundational to my own understanding on economics many years ago.

However, he does not understand how international trade works - Keen believes that when a country earns trade surplus (say, China earns USD by selling stuff to the US), that foreign currency actually leaves the original currency zone (USD leaving the US banking system). This faulty understanding of the monetary system was fully exposed during his debate with Warren Mosler back in 2018. Bill Mitchell wrote an entire blog post debunking this misconception on trade. It still amazes me that even very smart people can have such fundamental misunderstanding about the topics within their own field of study.

Keen even admits that his Minsky software is based on the European central banking model, which does not reflect how fully monetary sovereign system actually works. In his model, the state (currency issuer) is merely one of the players rather than the principal actor that dictates how the financial system actually runs, as MMT has laid out very nicely.

His double-entry book keeping stuff is very good though when it comes to understanding how the financial flow operates in between the institutions.

[–] aqwxcvbnji@hexbear.net 1 points 3 days ago* (last edited 3 days ago) (2 children)

I have read the blog post you linked to, but I do not understand its relevance to my initial claim. The claim is:

(a) a country with currency hegemony will always be a net importer, as other countries need its currency (e.g. because fossil fuels can essentially only be purchased in that currency).

(b) as a result, the goods produced by that country with currency hegemony are relatively expensive and uncompetitive on the world market

(c) the industrial production apparatus of a country with currency hegemony will therefore disappear in the long term, and with it that country's capacity to enforce its general hegemony.

This is also clearly evident in the dynamics between the US and China: China is building an impressive production apparatus, while the US has developed a “rust belt”. This is a consequence of the currency hegemony in the US.

In my opinion, the blog post you link to does not even disagree with that claim, as it states:

The accumulation of these US-dollar denominated assets (bits of paper and electronic bank balances) is the ‘reward’ that the Chinese (or other foreigners) get for shipping real goods and services to the US (principally) in exchange for less real goods and services being shipped from the US.

Given real living standards are based on access to real goods and services, you can work out, from a macroeconomic perspective, who is on top. (...)

Note, I used the qualifier ‘from a macroeconomic perspective’. A US worker in Detroit who has endured unemployment as a result of cheaper imports coming from nations with lower labour standards (pay and conditions) than the US is unlikely to be among those who benefit.

That last sentence is crucial. After all, it is not just about that individual worker, but also about the factory where he used to work, which no longer exists.

In other words, maintaining a current account deficit has led to the closure of a factory in the US and the opening of a corresponding factory in China. So, in China, the infrastructure necessary for hegemony is being built up, while in the US it is being dismantled.

(Fiscal policy could potentially lead to the build-up of additional production capacity in the currency hegemon, but that would not change that country's position vis-à-vis other countries. This might work in the short term, but all other countries still have the same need for dollars. As a result, they will produce even more to sell to the US, so that the relative position of the countries remains the same, albeit at a higher level of prosperity now.)

[–] FuckyWucky@hexbear.net 2 points 2 days ago* (last edited 2 days ago)

It can also be said with more certainty that imports are a benefit if the country has a full employment policy, which the US does not.

It gets treats from China well in excess of what it gives to China and rest of the world, that the US de-industrialized itself in doing so is a political choice.

Without a full employment policy, loss of exports for the exporting country means

It will lose employment, capitalists may not invest with lower demand.
A balance of payments squeeze (basically the amount of resources a country can command abroad) will occur, since many exporting countries can't get more than they give.

With a full employment policy, (1) wouldn't occur, since the state will provide employment and invest as needed. (2) however would be a constraint which is part of the reason why many exporting countries, particularly smaller ones can't decouple from the US.

For the importing country, imports can displace local production within a market economy. However, it doesn't mean the state can't counter it. After all, imports basically mean China is giving the US stuff for free while taking its own electronic entries.

If US wants, it can continue to produce cars, if the quality is as good as Chinese it can set prices to match Chinese ones. If its worse, it can sell the cars at a discount over Chinese ones. The state can set prices this way to keep its industry, the industry may run losses in money terms, but it gives the country self-sufficiency and employment. The US by allowing imports without a full employment policy basically crushed worker bargaining.

[–] xiaohongshu@hexbear.net 2 points 3 days ago

There is no need for China to build up the trade surplus (accumulation of dollar-denominated assets) in order to build its industries. As Mosler said, the shipment of Chinese goods to the US could all sink at sea and it does not affect one bit for the monetary situation in China, because as a monetary sovereign state, the Chinese government can always create the RMB (its own currency) needed to drive investment.

The reason China accumulates dollar-denominated assets is because it is following the IMF export-led growth strategy, that in order to keep their government deficit down, they have to first accumulate foreign assets to offset the deficit spending by the government. So, Chinese labor and resources are converted into real goods and services that Westerners enjoy, before they are allowed to invest domestically after earning the foreign revenues.

Keen does not understand that the US dollars (or dollar-denominated assets) do not “leave” the US currency zone when China earns it, so in his model, China is accumulating those assets while the US has to lose them. This failure in understanding the monetary logic is behind his entire argument.

Put another way, MMT asserts that the Chinese government does not have to balance its budget per the IMF. It simply has to run up the deficit (like the Americans do) to keep its industries working and workers employed, but this time, instead of an export-oriented model, Chinese labor and resources will be used to fulfill the demands of its domestic economy. Similarly, the US does not have to de-industrialize itself to preserve the reserve currency status of the dollar, because the US government can always run the fiscal policy to ensure full employment, social welfare and free healthcare to all its citizens without losing the dollar hegemony.

[–] aqwxcvbnji@hexbear.net 1 points 3 days ago

Btw, which text of Jia Genliang are you referring to? I can't find anything from that person about Europe. Thanks!

[–] Coolkidbozzy@hexbear.net 22 points 4 days ago

The strategy also says the U.S. should “no longer cede access or influence over key terrain in the Western Hemisphere,” including the Gulf of Mexico. But it offers few details on how the Pentagon will accomplish that goal.

oh yeah we're gonna build artificial islands

[–] GoodGuyWithACat@hexbear.net 15 points 4 days ago

The think tanks have been saying for 5 years that they had to defeat China before 2027 or it would be too late. Guess they were a year off.

[–] LeninWalksTheEarth@hexbear.net 15 points 4 days ago

The Pentagon on Friday night released a long-awaited strategy that prioritizes the U.S. homeland and Western Hemisphere

ahhh yes the enemy within. very cool.

[–] MarmiteLover123@hexbear.net 10 points 4 days ago* (last edited 4 days ago)

Highly, highly doubt that. "Defending the homeland and western hemisphere" is just a pre requisite for the US engaging in "great power competition" with China. It's also plan B if "great power competition/containing China" fails.

[–] invo_rt@hexbear.net 15 points 4 days ago

mandate confirmed xi-god-emperor

[–] refolde@hexbear.net 12 points 4 days ago

Great, that means they still have enough self preservation not to shoot themselves in the foot. They're gonna shift to a strategy of picking off their weaker enemies one-by-one then.

[–] XxFemboy_Stalin_420_69xX@hexbear.net 7 points 4 days ago

the empire is scaling down its ambitions from global dominance to control of its own sphere of influence. no surprise here

don't you worry though, the cpc will find a way to continue to not support palestinians