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US Trade Talks with China Must Ultimately Fail

At some point that US hegemonic morphed to frequently and unfairly leverage its global influence to ensure a positive outcome for the US.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

Submitted by Steve Brown…

Regardless of public opinion about the impeachment trial and how it will go — whether for or against — once again Washington is all show and no go. Even though the impeachment gambit must fail, the current idea that the administration will simply romp home to victory in 2020 is not guaranteed. The US Democratic party lacks a true leader and is riven with division but just as Mr Trump was an unexpected victor in 2016, nothing in US internal politics is ever certain.

Where the American people are concerned, so long as the Dow Jones Industrial average creeps ever-higher, they see the US trade dispute with China to be more of a curiosity than a threat. That’s because the major media pushes Russia-mania plus the bizarre and Orwellian postulate that only Iran is a threat to America… and that provides plenty of political cover to obscure the fact that China could end the US hegemonic unipolar moment in an instant.

Historically the US has always done what’s best for its own business interest regardless of any other consideration. At some point that US hegemonic morphed to frequently and unfairly leverage its global influence to ensure a positive outcome for the US. Then, it hoped to damage its proclaimed adversaries by financial sanctions, as well as regime change and the creation of failed states . Now, the US damages it friends and allies and even itself to achieve a perceived favorable global economic outcome.

China could end the US unipolar moment in an instant with a myriad of financial tools at its disposal — and without firing a shot. By the gold carry trade or by currency; by implementing universal yuan currency convertibility; by dumping US debt assets and reserve assets and closing its direct line into the US Treasury; by currency markets, or with strategic new trade partnerships — as foreseen by the Belt and Road initiative  — China could end the US hegemonic in a moment.  China’s leaders are well aware of that.

But China does not see itself or its future as an interventionist state enforcing its will globally by force of arms to maintain its currency, regardless of what the Council on Foreign Relations talking heads say. China does not foresee itself usurping the United States as global hegemonic power by challenging the dollar US as global reserve currency with its own currency.  In other words, China does not wish to play an outright game of global domination by coercion to maintain its interests… nor does it need to. But when challenged, China will act.

By June of 2019 riots in Hong Kong paralyzed the province. In a rare accusatory statement China’s ambassador to the US implied that the west may be involved in stoking Hong Kong tensions. So, after months of diplomatic and trade frustrations with Washington, China made a statement by engaging Iraq in an agreement to rebuild Iraq’s destroyed infrastructure in exchange for oil, which greatly favored China over the US.  Then, just two weeks later, Rubio’s Hong Kong bill passed in response to the Hong Kong riots and was perhaps rushed through in response to Iraq’s new oil deal with China.

In the article Trump’s True Motives in Iraq: What You’re Not Being Told  author Whitney Webb details the complex geopolitics behind recent US moves in the Middle East and how they may interlock to oppose China, beyond the US commitment to oil, arms sales, and support for Israel.  How the foregoing recent US actions detailed in Webb’s article may benefit the continued primacy of the US dollar is beyond scope here, but Ms Webb concisely sums up the US-Iraq dilemma this way:

‘The distinction may lie in the fact that, while the U.S. may now be less dependent on oil imports from the Middle East, it still very much needs to continue to dominate how oil is traded and sold on international markets in order to maintain its status as both a global military and financial superpower. Indeed, even if the U.S. is importing less Middle Eastern oil, the petrodollar system .. requires that the U.S. maintains enough control over the global oil trade so that the world’s largest oil exporters, Iraq among them, continue to sell their oil in dollars.’

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Now with the US assassination of Iran’s key military leader Suleimani at a key moment (and political assassination it was) Washington hopes that not just Iraq but Iran too has learned a violent lesson… and hopes that China’s leadership has learned it, too.  That’s because Washington is threatening China, this time over its continued purchase of Iran’s oil in opposition to US sanctions.   As reported, Steve ‘IndyMAC’ Mnuchin stated:

“China is subject to sanctions just like everybody else. We actually sanctioned some of their shipping companies that were involved in the [Iran] oil, and we will continue to pursue sanctions activities against China and anybody else around the world that continues to do business with them.”

Mnuchin made the threat in January, because in December 2019 China actually increased its commitment to develop Iran’s oil.  As such Houston has only one problem. China is an independent sovereign nation acting to some degree beyond its previous orbit with Washington.  Should Senator Marco Rubio and the Neocon/Neoliberal crew driving their reckless DC bus continue their road rage versus China, the consequences are likely to be dire for all.  Of course, China wishes to avoid that crash. Even so, if the United States continues its dangerous wizard-behind-the-curtain game, US pursuit of a further trade deal with China will fail.

As we began this article, this is a game of time and time is on China’s side. For one thing, an October surprise is always possible in US politics. Meanwhile the ever-higher march of US market shares proves two other points: one being US dollar inflation, and the other is the gamed and rigged nature of US share markets.  So maybe, just maybe… there will be a real US black swan event this time in 2020? It seems most of the rest of the world hopes so.

China, like the United States, will continue to pursue its own best interest worldwide. By US actions on trade, indications are that China‘s change of focus from west to east is gradual, but progressing. The nature of the global banking system and structural changes needed to accommodate one trillion in China reserves is still a major stumbling block to the new hegemonic world order.  But if the west and particularly Washington continues with its provocative, careless, and even reckless policy toward China then China has more than enough ammunition to respond, beyond a simple failure of US trade talks.

Steve Brown is the author of “Iraq: the Road to War” (Sourcewatch) editor of “Bush Administration War Crimes in Iraq” (Sourcewatch) “Trump’s Limited Hangout” and “Federal Reserve: Out-sourcing the Monetary System to the Money Trust Oligarchs Since 1913”; Steve is an antiwar activist, a published scholar on the US monetary system, and has appeared as guest contributor to The Duran, Fort Russ News, Lew Rockwell Report, SOTT, and Strategika51. Twitter: @newsypaperz  


The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

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January 20, 2020

We ignore the real problem to the US (China) due to Iran… why? Israel and their parasitic grip in Washington. Disgusting.

January 20, 2020

At this point, the downside for China’s economy of collapsing the US dollars value still far outweighs the downside the US/China “trade war” is creating for the Chinese economy, and both sides are well aware of this. US policy will be to attempt to come as close as they can to that line, without crossing it. China’s position has been, and will continue to be to weaken the US’s financial position slowly (over years, if not decades) and in a controlled manner. A catastrophic collapse of the US dollar is the nuclear (mutually assured economic destruction) option, and something China… Read more »

January 21, 2020

The US is experiencing sustained large capital flow to its equity and other markets. The pension funds and insurance companies in the EU who can’t tolerate negative interest rates in the EU are bringing their liquidity to the US to earn a meager if positive return. Negative interest rates lead to sustained large capital flow to NA. This is a major factor in the rise to record highs in the NA equity markets in spite of poor economic conditions in the US (see for a myriad of stats). The US is the go to horse in the global glue… Read more »

January 21, 2020

On capital flows into the US: Listen to Gundlach @ 22:05 and @ 42:17 (12-11-19) when he speaks about negative interest rates leading to sustained large capital flow to NA.

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