The US has again sailed a Naval destroyer, this time the USS Chafee, through Chinese waters in the South China Sea, in direct violation of Beijing’s sovereign maritime claims over the sea. The US repeatedly provokes China by sailing its vessels through the South China Sea, in a deceptively named strategy called ‘freedom of navigation’, which seeks to undermine Chinese claims to its neighbouring south sea. While other countries with regional maritime claims, including Philippines have begun cooperating with China, the United States continues unilateral provocations against China.
In response to the USS Chafee’s presence in the South China Sea, Beijing scrambled a missile-guided frigate, helicopter and two fighter jets to intercept the US vessel.
China also issued a stern warning to the United States against further provocations. Chinese Foreign Ministry Spokeswoman Hua Chunying has said,
“The US destroyer’s behaviour violated Chinese law and relevant international law, severely harmed China’s sovereignty and security interests, and threatened the lives of both sides”.
Hua further warned that any further such provocations could result in “unwanted incidents”.
“In the face of repeated provocation by the US forces, the Chinese military will further strengthen preparation for combat at sea and in the air and improve the defences to resolutely defend national sovereignty and security interests”.
As the US continues to feel threatened by Chinese economic dominance in the global marketplace, Washington’s military provocations in the South and East China Seas, its militarisation of the Korean peninsula and proxy wars along China’s One Belt–One Road trade and infrastructure routes, are likely to increase.
While the US has long felt threatened by Chinese trade and industrial dominance, now the US Dollar is being actively challenged by the growing power of the Chinese Yuan. The Yuan is now positioned to threaten the hegemony of the Dollar as a major trading and reserve currency.
This has expressed itself in the following ways:
–China offering the sale of oil futures contracts in gold backed Yuan
–Countries as wide ranging as Venezuela, Turkey and Russia conducting major bilateral trade in national currencies (as opposed to the US Dollar)
–The possibility of a new BRICS trading standard based on the Yuan, gold or other ‘eastern’ currencies
–The possibility of a BRICS regulated crypto-currency
Additionally, other nations which have been hit by unilateral sanctions, including Iran, have also showed a willingness to embrace a new Dollar free trading regime with its existing and new partners.
Most worryingly for the US, its longtime Middle Eastern ally Saudi Arabia, may find itself trading oil in Chinese Yuan in the coming years. Chief economist and managing director at High Frequency Economics, Carl Weinberg has spoken with the US based finance outlet CNBC and stated the following,
“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them”.
Saudi’s infrequently discussed but good economic relations with Beijing, as well as its warming relations with Russia, indicate that Riyadh is looking towards the wider global ‘east’ and in so doing, may find it self moving towards an energy trade that is independent of Dollar hegemony. This may be accelerated as the US becomes a net energy exporter while China’s demand for oil increases, leaving Saudi and fellow OPEC members in a position where it would become not only necessary but inevitable to trade in Yuan. OPEC member and Sino-Russian partner, Venezuela has already ceased trading its oil in US Dollars.
In this sense, while the US has often criticised China for pegging the Yuan to the Dollar, the combination of China being willing and able to convert Yuan to gold in respect of oil futures contracts, as well as the increasing global confidence in the Yuan as a reliable trading and reserve currency, may eventually lead to China floating the Yuan or pegging it to another standard.
As China holds billions in US sovereign debut, China holds the fate of the Dollar in its hands more than ever, as now China has many other options at its disposal when it comes to diversifying its monetary policies.
In this sense, it is important to see US military provocations against China as symptoms of the wider economic and now monetary pressure the US is feeling as China moves to take its place as the undisputed leading economic power of the world.
In spite of many figures in the US ranging from neo-cons to Steve Bannon, being united around an anti-Chinese campaign, many members of the US armed forces are apparently growing demoralised with their country’s increasingly frequent, yet unfruitful missions to Asia.
In a recent report form the US based Navy Times, journalists interviewed sailors aboard the USS Shiloh cruiser. The ship which is based in Japan, has been running missions throughout East Asia in an attempt to allegedly deter North Korea.
But far form deterring North Korea, the American seamen have stated that their conditions have left them demoralised and even suicidal.
According to the report,
“Each survey (of US sailors) runs hundreds of pages, with crew members writing anonymously of dysfunction from the top, suicidal thoughts, exhaustion, despair and concern that the Shiloh was being pushed underway while vital repairs remained incomplete.
It feels like a race to see which will break down first, the ship or it’s […] crew”.
The report was commissioned after many members of the USS Shiloh’s crew anonymously contacted the Navy Times to complain of dire conditions.
One American sailor stated,
“I just pray we never have to shoot down a missile from North Korea, because then our ineffectiveness will really show”.
Others described the conditions aboard the USS Shiloh as “prison like” while others warned that “it’s only a matter of time before something horrible happens”.
The incidents aboard the USS Shiloh are not unique. Multiple incidentals, including deadly collisions have recently plagued US Navy ships in Asia over the last year.
In this sense, one sees US sailors used and abused by their chiefs, preparing for battles which many believe cannot be won, all the while, provoking the Chinese superpower in its own maritime territory.
At the same time, it is crucial to understand that the military endeavours of the US have nothing to do with security the territory or people of the US, but instead follow on from the perceived financial and monetary benefits that the US intends to achieve by disrupting the peace and stability of regions vital for Chinese trade. At the same time, the US is surprised and reacting unreasonably to the reality that as China’s trading, logistical, fiscal and monetary might grows, so too will its geo-political influence necessarily grow. The US being so keen to protect its hegemony, a hegemony built increasingly on excessive military spending and the power of the Federal Reserve’s monetary manipulation, seems unwilling to gracefully accept China’s rise to global prominence as a leading power of the 21st century. China is consequently faced with the perfect storm of the US fighting for its monetary hegemony using its military, all the while attempting to restrain China’s growing political clout.
In short, the US is not fighting for the security of its realm, but for the security of the Wall Street based financial industry and that of the Federal Reserve, in addition to the overarching geo-political hegemony that both have allowed the US to exercise with impunity. It is not a transparent war, but it may become a deeply ugly war, nevertheless.