UNDERLYING CAUSES OF THE ESCALATION OF SINO-US TENSIONS

Abstract

The present article intends to highlight some of the underlying causes of the growing tensions between the US and China over recent years. The restoration of capitalism in China was essential for the overcoming of the international capitalist crisis of the 1970s, an overcoming which was made possible by the transfer of most of the manufacturing activities previously located in core countries to Asia. Until 2008, the world economic growth was driven by Asian manufacturing exports, mostly from China, to the US, and by the sustainment of US trade deficits enabled by the demand for US Treasury bonds stemming from trade surpluses accumulated elsewhere. The severe contraction of global trade that followed the burst of the US housing bubble sped up China’s transition to a new pattern of accumulation, under which household consumption and indigenous innovation are to play a greater dynamic role than exports and investment, and a drastically expansion of China’s capital exports also followed. The upsurge in the internationalization of Chinese capital, and in China’s technological capabilities, contrasts with the low productivity of the Chinese economy and other vulnerabilities China still possesses in the financial, military and even cultural and ideological realm. China thus cannot yet challenge US hegemony, even though, in a number of partial aspects, China has already matched the US and other world powers.