The Mirror Effect: U.S. and China

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The White House USA
The White House, USA. Photo: Bernt Rostad/Flickr

Ever since the Cold war ended, there has been a tentative and indecisive power structure reigning over the world. With the U.S. learning to walk without a substantive nation-state enemy, it was establishing itself as the new unipolar world power capable of taking control of entire political, social and economic spheres of the world.

This was not the first time in recent history for this to occur, as a political power vacuum existed after the Second World War. But with the demise of Germany and Japan as economic and military superpowers at the end of WWII, the U.S. was able to fill the gap left and fight its communist counterpart. The difference back then was that U.S. was fighting against Soviet arrogance.

The USSR had always been under the impression that it could stand against the American threat, and through the 60’s, the Iron Curtain provided the guise that it needed to sustain that construct. In the end, its own inflexibility and rigidity led to its eventual downfall.

The situation after the Cold War was much different in China, as that nation-state was at a centurial crossroads. Either it could cling on to its communist history, staying the course — or it could democratize the system completely. While the U.S. was busy trying to take over the state of affairs of the world, China was able to take advantage of its history and its newly adapted capitalistic values. People had always made sacrifices for the greater common good. Now they were willing to continue living in dilapidated conditions while making a living for themselves.

The Mutual Assured Destruction of the Cold War evolved into something new. This time, the U.S. could not use the excuse of the communist threat against China it had used against the Soviets throughout the late 20th century. They had to deal with the rising political and economic threat represented by a rising capitalist China, with their own ‘Made in the U.S.A.’ capitalistic values. Now the situation seems that the two superpowers stand at a precipice where not only China is able to dictate the international state of affairs, they are also able to carve out an economic policy as well.

The Great Hall of People, China
The Great Hall of People, China. Photo-May Wong/Flickr

With the economic muscle that China now holds with its financial and infrastructure assets around the world, it is clear that China has been able to not only take over as the largest world producer, but is now also becoming the largest consumer in raw materials as well.

All of which brings new meaning to the events that have taken place in the financial world.

First, many of the American regulators have been claiming that Chinese auditors are cooking the books. The companies listed in the American stock exchanges have been notified about these claims, and many of the stocks were blocked from trading altogether, based on these fears.

Second, is the claim that repeated hacking activities that have taken place in the U.S. throughout the late 90’s and 2000’s. With fears that these are government backed hacks, it seems that the U.S. is being forced on the defensive and has been left with no choice on how to react to the situation that has been enforced on them.

Third, are the continuing claims that China has been manipulating its currency in order to gain an unfair advantage in the world economy. This shows that China is able to carry out operations without any limitations and that it is able to impose a structure on the world that plays to its own advantage. Thursday saw a new claim by the U.S. company AMSC, that Sinovel Wind Group Co. (the Chinese wind turbine company) has been stealing trade secrets, and has been taking design, engineering secrets and other patented properties through two ex-employees of AMSC now working in Sinovel. The theft is valued at USD 1.2 billion, but the more important aspect is the attack of one private company upon another. Intellectual property has always been a hot topic when it comes to China and the products it produces, but this is the first time that the U.S. is actually taking substantive action through its legal system to counter the situation. There are even calls for President Obama to take action which could see political ramifications.

The situation that we are seeing now is not much different than what it was during the Cold War. Except for the fact — that it totally is. What I mean by that, is that confrontation in that period of time did take place. This was seen in various forms of political espionage, backhanded tricks with cross border incursions, and proxy wars that took place in different parts of the world. The difference this time is that the tools being used are more advanced and they tend to be economic, rather than military, levers of power.

China is taking advantage of the situation, however it can. Espionage has now been employed by private companies spying on each other. Cross border incursions have taken place, by virtue of hacking attempts by both sides in order to gain cyberspace supremacy. Proxy wars are also being fought by private companies in order to gain financial advantage by hook or by crook. Even though the U.S. can say that the tools being used are not fair, still they are within the rules of capitalism that it itself outlined prior to the present era of competition.

The end of the Cold War stretched out over five decades, and in the end, we saw the fall of one of the greatest powers in the world. It has to be seen how this war plays out and who is the winner at the end. Maybe the bleak, zero-sum game that was played out during the Cold War is not the endgame.

One hopes that some sort of positive gains can be made by both sides on the whole. Still, some skirmishes are being fought from time to time and it is yet to be seen whether they prove to be the catalyst which triggers the downfall of one side or the other.

© Zain Naeem

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