The pandemic induced bilateral spat between the two most powerful countries in the world comes amid the unfinished business of the trade war.

Monish Tourangbam and Hamsini Hariharan, Author

COVID-19 Will Make the US-China Great Power Dynamics More Confrontational

As the Trump administration’s first term comes to a close and the United States hurtles toward its next presidential election, the coronavirus outbreak has gripped national and international attention, spawning debates and discussions on what a post-COVID-19 world order will look like. While the virus’ impact on a host of bilateral and multilateral engagements is being assessed, one relationship that is gaining even more attention is that between the two most powerful countries in the world: the United States and China. A war of words and a blame game between the two countries has occupied the headlines. The epicenter of the coronavirus outbreak has shifted to the U.S. while China projects the image of a country that has successfully combated the virus and is ready to help the world. For example, China has sent doctors and medical supplies to countries around the world even as the European Union and the United States are trying to consolidate their own domestic responses to the global outbreak. This comes at a time when the Trump administration has been facing a lot of criticism for its inefficient handling of the pandemic.

The political leadership in the United States has, for one, accused the Chinese government of bringing about the global pandemic, with its questionable handling of the public health crisis in China. Beijing’s dogged determination to take advantage of the crisis, to bolster its claim to global leadership and Trump’s insistence on calling it the “Chinese Virus” for weeks opened new faultlines in a great power dynamic that was already confrontational. The Chinese government initially signaled its displeasure at U.S. apathy over the initial stages of the virus – criticizing Washington for evacuating its citizens without offering any help (although the U.S. CDC reportedly offered to send a team to help as early as January 6). On social media, Chinese diplomats strongly signaled their anger and some even went as far as to back the conspiracy theory that the coronavirus was a bioweapon manufactured in American laboratories.

The bilateral spat between the two most powerful countries in the world comes amid the unfinished business of the trade war. The Trump administration started its term by accusing the Obama administration for failing to put China in its place and accommodating its rise to the detriment of U.S. global leadership.  Throughout Trump’s election campaign back in 2016, he stressed what he saw as the threat from Chinese manufacturing stealing American jobs. Trump’s election rhetoric translated into policy when he became president. June 2018 saw the first round of tariffs from both sides and since then, the United States has imposed tariffs on Chinese goods worth more than $360 billion and China has imposed tariffs on American goods to the tune of $110 billion. A “Phase One” deal between China and the United States was settled in mid-January, but the pandemic has overtaken what gain that represented and upset its terms.

Recent reports point to a China that seems equally focused on ramping up its power projection in the Western Pacific, while the world is grappling with containing the COVID-19 outbreak. America’s call for a “free and open Indo-Pacific” in operational terms has meant more unfettered access to the waters of the Western Pacific, the geopolitical hotspot of the U.S. Indo-Pacific strategy. China’s territorial claims in the South China Sea and its militarization of the space has been a matter of concern for a number of Southeast Asian countries, some with close ties to the United States. China’s ambitions for sea control and sea denial in the region are perceived by the United States as an affront to its freedom of navigation, which it asserts with FONOPS across the area and has been a matter of contestation and confrontation between the Chinese and the U.S. Navy.

Chinese military drills in the South China Sea, in response to U.S. FONOPS missions, including a joint military exercise with Cambodia, a Southeast Asian country hugely depended on Chinese aid, have been reported. The busy waterways of the South China Sea have been viewed as one of the most probable sites of a major military confrontation. While the U.S. military and its force posturing, aiming to sustain its primacy in the Western Pacific, has been unchallenged for a long time, the consequences of China’s rise have fundamentally altered the dynamics. What further complicates the great power dynamics between the two, and what would probably determine the complex dynamics of a Cold War 2.0 is the fact that China is the most consequential development and economic partner of a number of countries that prefer the U.S. as their security partner.

The U.S. and its Indo-Pacific partners are wary of China’s ambitious Belt and Road Initiative (BRI) and have scrambled for a credible response. More recently, the Blue Dot Network has been proposed among American partners, to perhaps offer an alternative through “a multi-stakeholder initiative that will bring governments, the private sector, and civil society together to promote high-quality trusted standards for global infrastructure development.” A number of U.S. government documents including the U.S. National Defense strategy, the National Security Strategy and the National Military Strategy have reflected a growing sense of threat perceived from a rising China. China has been called out for engaging in predatory economic practices and along with Russia has been clubbed as near peer competitors challenging American primacy globally and China more particularly in the Indo-Pacific.

The confrontational streak is reflected in non-military dimensions as well. Over the last few years, the United States has raised concerns over Chinese tech companies which remain private but have deep links to the Communist Party. With 5G technology for example, the U.S. government has blocked companies like Huawei and ZTE because of apprehensions over national security threats and has pressured its allies to do the same. On the other hand, the numbers of Chinese students in the United States is falling dramatically. The United States recently suspended its Peace Corps program to China, which had been active since June 1993. There have also been minor diplomatic incidents as the United States last year expelled two Chinese diplomats and in retaliation, the Chinese government amended the rules by which American diplomats could meet with local officials.

The U.S. is fighting a war against COVID-19 unlike any it has seen in its history and China leaves no stones unturned as it creates counternarratives to its image as a country that irresponsibly handled the COVID-19 outbreak in its own soil leading to the global pandemic. At a time when calls for global cooperation and coordination are being heard louder than ever before, U.S.-China great power dynamics are taking a new shape, and unfortunately does not demonstrate signs of a real thaw in the relationship. All signs point to a road that will create new faultlines of confrontation in a relationship that is consequential for global order and governance.

Post-Neoliberal Order

The hollowed-out regulatory state is no match for the virus, either. In northeast Asia, where social bonds remain stronger and states still take more direct responsibility for economic and social outcomes, Covid-19 has been effectively contained – for now, at least. By contrast, Europe’s post-sovereign states have been ravaged. The virus is wreaking havoc on societies already devastated by a decade of EU-enforced austerity. From 2011-18, the EU told member-states to cut healthcare spending or outsource services 63 times. The humanitarian disaster unfolding in northern Italy – where incomes have stagnated for 20 years, and coronavirus deaths already exceed China’s – testifies to the political elite’s abandonment of their historic responsibility of providing security to the citizenry. Spain is not far behind. Greece, whose healthcare system has crumbled amid the social crisis caused by Euro-austerity, will surely follow.

The response in the world’s neoliberal heartlands – Britain and the United States – shows most acutely how the neoliberal order is crumbling in response to this public health emergency. In the space of a month, both governments have jettisoned policies considered unchangeable for decades, instead pursuing courses they would have denounced as ‘socialist’ or ‘communist’ just days earlier.

In Britain, this began even more the Covid-19 crisis escalated, thanks to the Conservative Party’s emerging post-Thatcherite transformation under Boris Johnson. Randian deficit hawk Sajid Javid was ousted as Chancellor to enable a quasi-Keynesian budget, including increased public spending, investment in infrastructure and a £30bn stimulus.

Unsurprisingly, the wealthy and propertied received the most immediate help, with £350bn in loan guarantees and grants for business and mortgage holidays. But this was swiftly followed by a rent holiday and an extraordinary pledge to pay 80 percent of wages up to £2,500, initially for three months but ultimately for as long as necessary, plus an extra £7bn in welfare spending. The new chancellor, Rishi Sunak, pledged ‘unlimited sums’ of interest-free loans. The Bank of England similarly promised limitless quantities of new money. The total sum pledged already is equivalent to 15 percent of Britain’s gross domestic product. An even more staggering $2tr stimulus is being planned States-side.

As neoliberal orthodoxy is abandoned at breath-taking speed, left-wing ideas, previous considered beyond the pale, are effectively been adopted by right-wing governments. Few may have heard of Modern Monetary Theory (MMT): the claim that sovereign, currency-issuing states are never fiscally constrained but can issue money at will, only causing inflation if society’s productive capacities are exceeded. But MMT is now effectively the new orthodoxy.

Neoliberals have been trying to avoid this conclusion ever since the global financial crisis, when vast sums of currency were issued – euphemistically termed ‘quantitative easing’ (QE) – for the banks’ benefit. $4.5tr in the US, over £400bn in Britain, and €1.1tr in the Eurozone – yet inflation remained negligible. Ordinary people noticed this ‘magic money tree’ (as UK former prime minister Theresa May put it) and started to demand that it be shaken for them – ‘people’s QE’.

Now it is been shaken – but by the Right, not the Left. Indeed, right-wing columnists quixotically urge Boris Johnson’s government to ‘embrace socialism immediately to save the liberal free market’. Cheered on my centrists, a Tory minister admits they will end up implementing ‘most of Jeremy Corbyn’s programme’.

And where is all the money coming from? Taxes? Obviously not, as tax income is sharply contracting. The deficit hawks have all flown off.  Borrowing, then – but, MMT adherents argue, this is merely an accounting convention. As former Federal Reserve Chairman Ben Bernanke admitted in 2009, ‘we simply use a computer to mark up the size of the account’.

Epochal Moment

Another fringe idea, Universal Basic Income (UBI) – where governments simply give free cash to individuals – is also having its day. A few months ago, UBI was a leftfield notion, limited to small-scale trials in peripheral countries like Finland. Now, centrist economists are demanding ‘unlimited compensation’ for lost wages, worldwide. Over 170 British parliamentarians backed UBI before Sunak’s support for incomes which, far from being ‘basic’, exceeds the median wage. Even the Trump administration seems set to ‘write cheques’ to hundreds of millions of Americans, following the advice of such notorious communists as Mitt Romney. ‘Not our UBI,’ the Left protests – but why would it be? It’s being implemented by the Right.

Meanwhile, command-and-control models of governance are being rapidly improvised as the regulatory state proves inadequate for crisis response. China and South Korea’s surveillance and control systems have become models for western states struggling to get ahead of COVID-19. Borders are being sealed, police and armies deployed, workforces mobilised, lockdowns implemented. A British state ill-accustomed to meaningful industrial policy, let alone planning, is now instructing businesses to manufacture 20,000 respirators in a fortnight, using local designs and components. Spain has nationalised private hospitals overnight.

To be clear, none of this is to suggest that these measures will be sufficient or effective – much is coming far too late, and inevitably our hollowed-out health services will be overwhelmed. Nor does it mean that many people, especially the poor, will not suffer – millions have already been laid off while others are forced to work in unsafe conditions. Still less does it mean that right-wing governments have suddenly found socialism – unless ‘disaster socialism’ counts.

Nor is this transformation happening at the same rate everywhere. The deathly rot of European integration is hard to shake off. The European Central Bank, bulwark of the EU’s constitutionalised neoliberalism, was sluggish in announcing QE measures, with its governor even deepening Italy’s agony by implying she would not shore up Rome’s bond yields. EU governments have also been quicker to impose authoritarian social controls than to realise that fiscal, not monetary, stimulus is urgently required. Nonetheless, even the über-austere German government is set to announce a €500bn rescue package, tearing up its ‘fiscal rules’.

We are clearly living through an epochal moment, with parallels to World War II – though not the ‘Blitz spirit’ nonsense being peddled elsewhere. It was WWII that finally ended the Great Depression, thanks to state-led mobilisation and coordination of the economy. Ravaged populations clearly saw through the laissez-faire lies of the 1930s: there was an alternative to the market; the state clearly did have extraordinary powers to meet collective needs and goals. There could be no return to ‘business as usual’. The post-war welfare state was born of this recognition, in the shadow of Stalin’s Soviet regime, which had already proven the power of the state in its own bloody fashion.

Today, the People’s Republic of China casts that shadow. China’s communist regime is authoritarian, brutal and ugly. Contrary to western imaginaries, its governance regime is also highly dysfunctional, riven by internal competition and bureaucratic dislocation – which impeded full recognition of the COVID-19 outbreak and its management. Nonetheless, the regime eventually managed to contain the virus, and many western liberals and leftists now demand Chinese-style lockdowns. Beijing now has sufficient bandwidth to troll western governments and magnanimously dispense assistance to stricken states like Iran and Italy – with tech oligarch Jack Ma even dispatching aid to the United States – while the EU rejects Italian pleas for assistance and even fines Rome for overspending.

Right now, there is widespread hostility to China – boiling over into xenophobia and even appalling racist attacks on ethnic Asians. But this hostility may not last. The US’s utterly shambolic response to Covid-19 will increasingly stand in stark contrast in China’s apparent authoritarian efficiency. And while China dispenses aid, the US is flying testing gear out of Italy and allegedly trying to take over foreign companies researching vaccines, in order to serve ‘America first’. The era of American hegemony is clearly dead and buried. Other Western governments presumably realise that if they cannot successfully manage the pandemic, they will be judged against a despotic regime and found wanting. This is yet another spur to abandon liberal shibboleths wherever necessary.

The Left Blindsided

All of this is highly disorienting for a Left that has become increasingly obsessed with ‘#resistance,’ instinctively opposing whatever the Right does while lacking any truly systematic alternative.

The problem is exemplified by acclaimed critical theorist Giorgio Agamben’s Foucauldian ranting against the ‘frantic, irrational, and absolutely unwarranted emergency measures adopted for a supposed epidemic’, while his countrymen die in droves.

Even mainstream leftist commentators are blindsided. The ink is barely dry on their op-eds – ‘well, okay, the government helped x, but what about y?’ – before yet another, larger aid package is announced. The anti-austerity Left has been exclusively focused on demanding higher government spending for so long, it hardly knows how to respond when it gets it. In Britain’s general election last December, the Labour Party ran on a platform promising adherence to fiscal rules which the Conservative government has torn up. As one Twitter wit put it so nicely, the far-left has been calling for ‘fully automated luxury communism,’ but Boris Johnson has provided ‘quarantine socialism in one country’.

This matters precisely because the old order is dead and the new is being forged piecemeal, day-by-day. Ruling elites do not know how this crisis ends. They are innovating on a daily basis, making it up as they go along. In this sense, everything is up in the air. The future is up for grabs – for good or bad.

In a society and state as dysfunctional as that of the United States, where the hollowing out of welfare and democracy has been deepest, it is easy to envisage an authoritarian trajectory. The rich are already panic-fleeing the cities. The frayed social bonds, deep poverty and widespread gun ownership of many American cities do not mix easily with food shortages and draconian containment measures. It is not fanciful to imagine severe social unrest, requiring the military to restore order. Nor is it clear how the US presidential election will be held on schedule in December, President Trump’s confidence that the virus will ‘go away’ by April notwithstanding.

The UK government’s proposed emergency measures also entail the biggest ever expansion of executive power in peacetime. Liberals are understandably (and rightly) concerned about civil liberties. But the Left should be even more concerned about democracy. In France, a ‘temporary’ state of emergency declared in 2015 was extended six times, then most of the measures were effectively made permanent through a new anti-terrorism bill. As the brutal repression of the gilets jaunes demonstrates, this has routinised despotic behaviour. The Left should not be calling for a national government to help steer an authoritarian state, but championing democratic control.

Indeed, perhaps the most terrible question posed by the pandemic is: how can democracy function when the citizenry cannot? A new order is being improvised primarily by right-wing politicians, while the citizens are stuck indoors, hoarding toilet paper and watching Netflix. Curbing the disease requires social distancing, but shaping the future requires collective action. World War Two birthed an order that favoured workers because they were well-organised through unions and parties. Today, the best our enfeebled unions and social-democratic parties seem to hope for is a new corporatism, which is in fact being created by the Right for its own purposes.

It is not even clear whether our already hollowed-out representative democracies can hold governments to account. Australia has suspended parliamentary sittings until August. The British parliament, already afflicted by the virus, has dispersed for a long recess after waving through a bill granting unprecedented peacetime powers to the executive.

These are urgent questions for the Left, for which there are no immediate or easy answers. But it is clear that democracy should be the focus. The argument should never have been about more or less state intervention in the economy, but in a moment when even that argument has been settled by the right, what now distinguishes the left? It can only be a demand for democratic, popular control over that intervention, to ensure that it serves the interests of workers, rather than simply lining the pockets of owners of capital and property. But for that to be meaningful, it requires the active involvement of the people – not their passive resignation to perpetual quarantine.

This is difficult precisely because the end of history has attenuated our civic and political life, leaving most of us atomised and fearful even before Covid-19 struck. The urgent priority is to ensure that basic democratic functions are maintained or restored as soon as possible – to demonstrate that democratic continuity is not incompatible with public health.

The longer-term task is to reconstitute a sense of collective subjectivity out of this crisis. One glimmer of hope is the thousands of mutual aid groups springing up in response to the crisis. Inspirational organising is happening spontaneously, largely independently of the state and political parties. Through these groups, many people are getting to know their neighbours for the first time and rediscovering the basic practices of solidarity. While their immediate task is just to help people survive the next few months, they could well be the basis of grassroots democratic renewal when the lockdowns are over.

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