These days, it’s hard not to notice the United States’s confrontation with China, which appears to be on the way to surpassing America’s economic might. Whether it was President Obama’s Pivot to Asia alongside the Trans-Pacific Partnership, President Trump’s rank anti-Chinese racism, or now the Biden administration’s bizarre and pointless schoolyard jousting in March at an Alaskan diplomatic summit, the Middle Kingdom is obviously spooking Uncle Sam and quite a few read this as the bellwether of an impending implosion of American hegemony.
Not the great journalist and radio host Doug Henwood. He admits that China is rising but believes we’re nowhere near the dawn of its world domination. Indeed, America’s decline might be on a timetable of decades rather than a few short years, based on what he told me in a recent interview that has been edited for length and clarity.
AS: A lot of people think that we are on the verge of China overtaking the U.S. But unless I am mistaken, the key is the world reserve currency. How far away are we from the Chinese yuan replacing the dollar?
DH: Very far. China is formidable and growing but it doesn’t have the deep, open financial markets required for a reserve currency. You can easily park billions in US Treasury Bonds in seconds with barely a ripple. The Chinese markets remain relatively closed and illiquid. Politically, despite all the erosion, the US remains the ultimate guarantor of global capitalism, with a state (specifically the Fed and Treasury) that takes its role in governance seriously. And backing up the financial managers there’s the Pentagon. China has no such military capability. Also, the US’s willingness to run large trade deficits has for the last few decades been a cornerstone of the global system, providing demand for exports and sending lots of dollars abroad. It could, and may well, happen someday that China will surpass the US, but we’re nowhere near that yet. And there’s cultural hegemony: US popular culture vs. Chinese? Still no contest.
AS: What do you think about the attempt at a petro-yuan that was being floated a few years ago? As you know, the American dollar’s status as world reserve currency relies in part on the fact it is pegged to the value of the Saudi oil barrel on the open exchange.
DH: Not immune to my critique. It could happen. It’s just a long way. The Communist Party of China doesn’t want to open financial markets quickly because it would risk loss of political and economic control. It’s doing it very cautiously. A reserve currency can’t work that way. The US was so powerful at the end of World War II that we could do all that. Not China.
American radicalism is at its core prone to a quasi-messianic/apocalyptic frame of thinking. There are a lot of reasons for this, too multitude to explain, but it has always relied on the notion that “revolutions” or “imperial collapse” or some other kind of epic battle will lead the proles to the Promised Land next Thursday. Yes, American foreign power and domination are clearly in decline and have been since the Afghanistan/Iraq invasions turned into quagmires. Yes, China has some significant projects, such as the expansion of its intercontinental trade routes and market networks, which could end up outpacing Wall Street.
But that might not be for another 50 years. Furthermore, it might be helpful to recall that this is not exactly America’s first rodeo with a supposedly impending Communist ascendancy. Fifty years ago, as the American engagement in Vietnam was reaching its ignoble demise and governments across the Global South embraced either Communist (Cuba, Angola) or Social Democratic (Chile, Nicaragua) governance, there was a significant impression that the Third World project of decolonization and national liberation would cause the collapse of the capitalist world system.
In response, America gave us Jimmy Carter and then Ronald Reagan. Both exchanged Richard Nixon and Henry Kissinger’s détente for the Afghani mujahideen and Latin American death squads, not to mention policies that culminated with the collapse of the Soviet Union. As Henwood notes, there are plenty of ways that the imperial system can thwart Chinese geopolitical aspirations.