China versus the United States in the Pacific – what does it mean for humanity?

While a lot of attention is being dedicated to the war in Ukraine, an equally important conflict is developing in the Pacific, and it is about who is to dominate this key region: the United States or China? In fact, the main pivot of US foreign policy is against the growing influence of China.

In 1989, when the world economy was growing and there was room for several major players, the Asia-Pacific Economic Cooperation group was launched with 21 member states – among them the USA, Japan, Canada and Australia, and later Russia and China, and practically all the countries with a coastline on the Pacific Ocean.

Back then, the Soviet Union was on the brink of a major crisis, as all the East European countries under its sphere of influence went through regime change, with the collapse of the old system and the return to capitalism, followed two years later by the collapse of the USSR itself. China was developing, but was still very far from being the major power it has become today. At that time, China offered very cheap labour costs and a field for profitable investment, and many multinational corporations poured in to take advantage of the situation.

Relative decline of the US and the rise of China

The world scenario now is very different. The US remains by far the most powerful imperialist country on the planet. However, it has undergone an important long-term relative decline. Its weight in the world economy has been reduced since the Second World War. In 1945 it represented over 50% of world GDP. In 1960 it was 40%, but by 1980 this had been reduced to around 25%, rising to around 30% in 2000 before falling back to 24% since then. China, on the other hand, has seen its share of world GDP rise from 1.28% in 1980, to 10% in 2013, and over 15% today.

With a much stronger economy, China has become a major capitalist player on a world scale, and it is now flexing its muscles and pushing back against US influence in different parts of the world, in particular in South East Asia and the Pacific. This is evident, for example, from China’s attempts to reach security and trade deals with a number of island nations in the Pacific – one with the Solomon Islands making news headlines recently.

Having become the second economy in the world, it is now also investing huge sums in over 150 countries around the world. According to the China Global Investment Tracker: “The value of China’s overseas investment and construction combined since 2005 is $2.2 trillion.” This is about one third of the US’s total of $6.15 trillion at the end of 2020.

According to statista.com, however: “In 2020, the United States had the largest outward Foreign Direct Investment (FDI) stock worldwide, amounting to approximately 8.1 trillion U.S. dollars. China was second by a wide margin with around 2.4 trillion U.S. dollars.”

These figures show that China’s total outward foreign investment comes to between one quarter and one third that of the US, and is the equivalent of Italy’s total annual GDP. Italy is the eighth largest economy in the world and part of the G7.

However, the above figures do not give the full picture. Hong Kong is the seventh-largest global investor at close to $2 trillion, and it has now been fully taken over by China. $1.2 trillion of these investments are in China, but the remaining $0.8 trillion are in other countries, which takes China’s overall total easily over the $3 trillion mark. Whichever way we look at it, while the US remains the most powerful imperialist country in the world, China, in line with the growth of its own GDP, has become the second biggest foreign investor.

China is also involved heavily in lending. According to the Harvard Business Review, “Over the past two decades, China has become a major global lender, with outstanding claims now exceeding more than 5% of global GDP.” It continues, “In total, the Chinese state and its subsidiaries have lent about $1.5 trillion in direct loans and trade credits to more than 150 countries around the globe. This has turned China into the world’s largest official creditor — surpassing traditional, official lenders such as the World Bank, the IMF, or all OECD creditor governments combined.”

No wonder then that the China Global Investment Tracker adds the comment, “The US and some other countries continue to be suspicious of Chinese activity.” With this level of global reach, comes the desire on the part of the Chinese government to strengthen China’s control of trade routes, sources of raw materials and security in a typically imperialist manner.

China in the Pacific

This is very clear in many parts of the globe. China’s investments, apart from the advanced capitalist countries of North America and Europe, stretch from Latin America to Africa, to Asia and the Pacific. And it is to the Pacific that this article is mainly dedicated.

China has a dominant position in the resource extraction industries across the Pacific. In 2019, it received over half the seafood, wood and minerals exported out of the area – for a total value of $3.3 billion. In line with this, over one quarter of the merchant shipping fleet in the Pacific is Chinese. China has 290 such vessels, more than the combined total of all the countries in the Pacific.

More than 90% of Papua New Guinea’s and the Solomon Islands’ wood exports go to China, as do 90% of all of the extractive resources of the Solomon Islands. Papua New Guinea is also providing China with nickel from its Ramu nickel mine. Similar figures exist for Vanuatu, Tonga and Palau. Overall, in the past 20 years Chinese companies have invested over $2billion in mining in the Pacific region.

Clearly, the region is of key importance to China. This explains its recent moves to reach deals with a number of countries. This started with the five-year security agreement signed back in April between China and the Solomon Islands. The rationale behind this deal is China’s long-term aim of becoming the predominant power in the region.

For now, the deal would see China playing an important role in the internal security of the Solomon Islands. Already, Chinese police have been on the island to train the local police force in anti-riot methods. The government of the Solomon Islands has faced huge popular unrest and has had to quell mass protests, and may have to do so again in the near future. But China clearly aims to go beyond this.

The Solomon Islands are in effect in Australia’s backyard, and are therefore considered to be within the sphere of influence of the United States. Should China ever establish its own naval base on the islands – something it keeps publicly denying it intends to do – it would be a direct threat to shipping routes between the US and Australia. It would also be a very useful position to hold should there ever be a Chinese threat of invasion of Taiwan, which would clearly bring China and the US close to military conflict, either directly or indirectly. The fact that the present government of the Solomon Islands shifted its diplomatic recognition to China instead of Taiwan back in 2019 is an indication of how things are moving.

However, China’s interests in the Pacific did not stop at the Solomon Islands. It is now seeking to broker a deal that will involve around a dozen island nations in the Pacific, involving police, security and data communication. If China were to ever clinch this deal – involving trade and security issues – it would massively increase its influence in the whole region.

Wang Yi, China’s Foreign Minister, hosted a meeting in Fiji at the end of May as part of efforts to reach the deal. This has set alarm bells ringing in the region and beyond. David Panuelo, the President of the Federated States of Micronesia (FSM), has openly stated that the deal could set off a new “cold war”, with China pitted against the West, and Australia, Japan, the United States and New Zealand, in particular. It is not by chance that the FSM has a defence agreement with the United States, reflecting its position as one of their pawns in the region.

China is also seeking a separate deal with Kiribati – which also established diplomatic relations with China instead of Taiwan in 2019. The deal with Kiribati would be similar to that signed with the Solomon Islands. Meanwhile China has also signed a contract with Vanuatu to build a new runway to expand the capability of Pekoa airport on the Island of Santo. Samoa has also signed a bilateral agreement with China involving “peace and security” among other things, and China would provide the small nation with greater infrastructural development. A Chinese delegation has been doing a lot of island hopping, visiting Fiji, Tonga, Vanuatu, Papua New Guinea and East Timor among others.

While China is working to strengthen its economic and security position in the Pacific, its trade with Southeast Asian countries is already greater than that of the United States, and it is seeking to strengthen that position by increasing its foreign direct investment in the region.

In response to all this, the US recently sent a diplomatic delegation to the Solomon Islands, with Daniel Kritenbrink, US secretary of state for East Asian and Pacific Affairs even raising the threat of possible future US military intervention if there were any moves to establish a Chinese military presence on the islands. The new Australian foreign minister, Penny Wong, visited Fiji recently to express concerns about China’s moves in the region.

In the end, the meeting of the ten countries organised by China at the end of May decided to delay any decision, and Wang issued a statement saying that further negotiations were required to achieve the necessary consensus. It is clear that these small nations feel the pressure of two contending imperialist powers and are wary of stepping on the toes of one or the other. But as we have seen in some of these countries – such as the Solomon Islands – China has now become by far the main trading power, and with this comes an incentive to build closer diplomatic and security links.

Joe Biden tries to counterbalance

Alarmed at the progress that China has been making in the region, Joe Biden has launched an attempt to achieve an economic pact with a number of Indo-Pacific countries, which has in turn angered the Chinese government. Parallel to this are the US endeavours to strengthen its military position, as can be seen by last year’s signing of the AUKUS pact [Australia, UK and US] – a new security agreement with the UK and Australia, in which the United States will provide Australia with nuclear-powered submarines, clearly aimed at China.

On 23 May, an event was organised in Tokyo to launch the Indo-Pacific Economic Framework for Prosperity. It is an attempt on the part of Joe Biden to counter China’s growing influence by bringing together a dozen countries in the region. India, Vietnam, Indonesia, Thailand, Brunei and the Philippines have agreed to take part in the negotiations and join Japan, South Korea, Australia, New Zealand, Singapore and Malaysia. The deal being sought by the United States involves digital trade, and trade facilitation, clean energy and decarbonisation, supply chains, and (supposedly at least) anti-corruption and taxation.

The irony here is that most of the countries Biden is trying to woo into a deal have also signed trade deals with China, as part of what is known as the Regional Comprehensive Economic Partnership. In effect, what we have here is a major fault line in world relations, involving a battle between the most powerful imperialist power on the planet, the United States, and the rising power of China.

China’s growing military muscle

Inevitably at some stage, with growing economic power also comes military power. The United States has $778 billion of annual military spending, more than the total combined spending of the next nine military powers. These are the figures: China $252 billion, India $72.9 billion, Russia $61.7 billion, United Kingdom $59.2 billion, Saudi Arabia $57.5 billion, Germany $52.8 billion, and France $52.7 billion.

What is worth noting here is that China is the second world spender on arms, and it spends more than the next four powers combined, including Russia. And although it still only spends a little under 2% of its GDP on arms (compared to the 3.7% of the US) it has been growing massively in absolute terms, from just over $20 billion in 2000, to more than ten times that figure, as we can see above.

China now has the largest navy in the world, according to Chinese government figures, and it has submarines that can launch nuclear-armed missiles. The Wall Street Journal has warned that, “First by stealth, then by degrees, and now by great leaps, China is building a blue water navy and a network of bases to extend its military and political influence. A new secret Chinese military base in Cambodia ought to wake up America’s political class—including the U.S. Navy brass—to what is fast becoming a global Chinese challenge.”

The same article explains that, “China wants a global network of bases that would make it easier to project power.” It adds, “The proliferation of PLA bases is being matched with an ever-growing Chinese navy. The U.S. is heading in the opposite direction, with 297 ships and plans to fall to 280 by 2027. China has 355 and is headed to 460 by 2030. Beijing relies on smaller vessels, but it will soon launch an advanced aircraft carrier that will let it project air power abroad.”

An Al Jazeera report points out the following on the Chinese army:

“[T]here are more than 915,000 active-duty troops in its ranks, dwarfing the US, which has about 486,000 active soldiers, according to the latest Pentagon China Military Power Report.

“The army has also been stocking its arsenal with increasingly high-tech weapons. In 2019, the DF-41 intercontinental ballistic missile, which experts say could hit any corner of the globe, was unveiled during the National Day military parade. But it was a DF-17 hypersonic missile that caught most people’s attention.

“This year, it was reported China had actually tested hypersonic weapons twice – once in July and once in August – with a top US general describing the breakthrough as almost a ‘Sputnik moment’, referring to the 1957 satellite launch by the Soviet Union that signalled its lead in the space race.”

China’s air force has also been massively expanded and has become the largest in the Asia-Pacific region and third largest in the world. It has more than 2,500 aircraft and about 2,000 combat aircraft. These are figures published in an annual report of the US’s Office of Secretary of Defense published in 2020.

New balance of forces

These are all very good reasons why the US ruling class is worried – very worried indeed – and it is attempting to manoeuvre to regain lost ground. The US is still by far the biggest and most heavily armed imperialist power on the planet, but China – at least in the Indo-Pacific region – has become a major threat to its interests.

Asia’s top security meeting is taking place this week (10-12 June) in Singapore – known as the Shangri-La Dialogue – and both the US and China will have their delegations there. With China’s aggressive stance towards Taiwan, its military operations in the South China Sea, and its recent moves to expand its influence in the Pacific region – as outlined above – together with Biden’s attempts to build an alliance to counter China’s growing weight in the region, the summit could see open conflict between the world’s first and second powers.

Taiwan will clearly be a major source of conflict, as well as China’s stance on the war in Ukraine. For years the US has held to a position of so-called “strategic ambiguity” on whether it would intervene militarily were Taiwan to be invaded by China. However, recent statements by Biden seemed to shift US policy towards the prospect of direct military intervention. Subsequently, US officials have tried to play this down, but the threat remains and it has angered Chinese officials.

On 21 May, APEC met in very different conditions from when it was first set up back in 1989. Now the world economy is in deep crisis, with all the major powers jostling to defend their spheres of influence and markets. The pandemic disrupted supply chains. The war in Ukraine has exacerbated this further. Globalisation is breaking down, with regional power blocs emerging.

At that meeting, while the Russian Economy Minister Maxim Reshetnikov was speaking, the representatives of Canada, New Zealand, Japan and Australia, together with the Americans, walked out in protest. Apparently, they wanted “stronger language on Russia's war”. This could potentially be repeated at the summit this weekend.

All this underlines the new epoch we live in. In the period when the world was dominated by two superpowers, the USA and the USSR, a certain equilibrium had been established. Underlying the relative stability of that period was the powerful post-war boom, which saw an unprecedented economic growth over decades. That ended with the collapse of the Soviet Union and the emergence of the USA as the sole superpower.

The US ruling class were full of confidence, as was expressed by the then US President George H W Bush in 1991 when he stated, “A hundred generations have searched for this elusive path to peace, while a thousand wars raged across the span of human endeavor. Today that new world is struggling to be born, a world quite different from the one we've known.”

The new world that has come into being is not the one Bush was thinking of back then. The US has proved to be not as powerful as they had imagined and the promise of peace has evaporated. The world is pregnant with wars, with the present war in Ukraine clearly a proxy war between Russia and NATO – led by the US – while a bigger and potentially far more dangerous conflict is brewing in the Indo-Pacific region.

Just as the threat of a third world war was raised as war broke out in Ukraine, so too some are looking at the prospects of a world war emerging from a future conflict between China and the United States over Taiwan. Whether the US would actually intervene directly with its own military forces is another matter. We have seen how, even in Ukraine, NATO has systematically refused to impose a ‘no fly zone’ over Ukrainian territory, for this would have meant direct conflict with Russian forces.

In fact, after Biden’s slip up on US policy towards Taiwan, US General Lloyd Austin, who is now the US Defense Secretary, insisted that Biden’s comment “highlighted our commitment under the Taiwan Relations Act to help provide Taiwan the means to defend itself.” The Taiwan Relations Act states that the US is to provide “defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.”

Direct military confrontation between major nuclear powers raises the risk of both sides destroying each other, with neither side coming out as winners. That is not, of course, in the interest of the ruling class. For that reason, the US in any future conflict over Taiwan might seek to bend China through massive sanctions, rather than a direct military intervention, as it is attempting to do with Russia today.

Such a scenario, however, would lead to a trade war of unprecedented proportions and would be devastating for every economy on the planet. It would lead to immense suffering for millions of people on a scale never seen before in history. We already see what the sanctions against Russia are achieving: growing poverty in the advanced countries, while the poorer countries are looking at mass starvation.

This is the ‘new world’ that has been born. And it is a condemnation of all the ruling classes, of all the capitalists of the world, the North Americans, the Europeans, the Chinese and the Russians, and all the other secondary powers. All of them can see only their own selfish class interests, their own narrow national interests. It is an indication that capitalism ceased long ago to have any progressive role in taking society forward. It is now dragging us into the depths of barbarism.

The power of the working class

However, there is a force in the world that could bring this nightmare scenario to an end – that is: the world working class. There are over 3 billion workers globally. They and their families, together with the poor and downtrodden of the world, have the power to change all this. The workers of all countries must come together as a force and overthrow the ruling classes in their own countries. The American, the European, the Chinese workers, together with the workers on all continents, have no interest in fighting fratricidal wars of mass destruction and death.

In times of war and national chauvinism, Marxists must stand out as internationalists and bring out the common interests of workers of all countries against their national ruling classes. We need to explain that the workers of China and America have nothing to gain from any future war or conflict between the two countries, not to mention the fact that Taiwan would be destroyed in the process, as Ukraine is today being destroyed before our very eyes.

There is another side to this scenario, however, and that is that the deepening economic crisis, affecting all countries, is also producing a greater and greater questioning of each national ruling class in their respective countries. Workers and young people are being affected by the cost-of-living crisis, with inflation shooting up everywhere. This is preparing the ground for intensified class struggle – already reflected in strike activity in one country after another. This comes with drives to unionise unorganised workers, as well as shifts of the mood within the unions towards greater militancy.

We have seen huge protests in countries from Kazakhstan to Sri Lanka, Turkey to Iran, Lebanon to Sudan, and also in the heart of imperialism itself, the United States. In some of these countries, the movements have been of insurrectionary proportions. It is through these movements that we can begin to see the alternative to war between the nations: war between the classes.

We have hugely productive forces worldwide that have been created over decades and centuries. If these resources were used in a fraternal cooperation of all peoples, we could begin to solve all the major problems we face, from climate change, to war, from rampant inflation to food shortages.

This is the message we have to take to the workers of the world. In the concluding words of Karl Marx and Friedrich Engels in the Communist Manifesto, “The proletarians have nothing to lose but their chains. They have a world to win. Working Men of All Countries, Unite!”