Paulo Martin Alvarez

Handelskrieg; A New Era of Warfare: China and the USSR, an Echo of Collapse?

Trade as a weapon is more terrifying than a nuke. The latter destroys cities, the former destroys peace. The People’s Republic of China is in the crosshairs of the United States, and should very well remember what happened when the Soviet Union was in the same position. 

By: Paulo Martin Alvarez

Trade as a weapon is more terrifying than a nuke. The latter destroys cities, the former destroys peace. The People’s Republic of China is in the crosshairs of the United States, and should very well remember what happened when the Soviet Union was in the same position. 

One cannot help but feel a sense of poetic irony that a Handelskrieg is being waged against China a decade after the 2008 Financial Crisis. The crisis, for all intents and purposes, bolstered China’s economy and saw its rise as a prominent global power, which was expected to rival and supplant the European Union and the United States. Indeed, China’s meteoric ascent into the global stage, coupled with ambitious projects around the world has signalled to some the beginning of a century led by the People’s Republic. Yet, would the leadership of China be able to retain this momentum in the face of mounting economic pressure from its rival to the West? An evaluation of a similar incident in history can assist in this initial analysis.

The Union of Soviet Socialist Republics (USSR) is a great enigma of last century. How did the largest nation in human history, with the power to rival the USA, collapse in just the span of two decades? The most likely cause is none other than economic failure. From the beginning of the USSR’s ascent to power, Stalin understood the power of economic stability in, not only defending his country against his Western neighbors, but holding on to power. The engine of state terror and control functions only when the machine has blood in the system. That blood was found in the revitalized workforce, the economic growth that was unprecedented in Russian history, and overall, the reforms in agriculture that transferred food production from the peasant to the State. In short, the economy, when controlled by the state, is the bulwark against resistance. If people are fed well, employed, and above all, comfortable, how are they willing to bite the hand that feeds them?

With the fall of the USSR at the end of the first Cold War, the United States mastered, among other methods, how to indirectly fight against its major rivals without having to resort to conventional or covert warfare. Under President Reagan, his policy of ‘rollback’ saw a more aggressive stance in curtailing the USSR’s influence, and targeting its oil exports in coordination with Saudi Arabia and OPEC. It resulted in a “drastic fall in the price of oil in the 1980s… which [denied] the Soviet Union large inflows of hard currency…by competing with these lower prices” (Stanford). Though diverse in its economy the USSR was, by the 1970’s, it became “heavily dependent on vast natural resources–oil and gas in particular”(Yervin). Combined this economic attack with existing deficiencies in the Soviet economic system, and increased military spending amidst failing revenues, shortages occurred and the population grew more weary of the Soviet government. Yet what sealed the nail of the red coffin was the policy of Glasnost under Gorbachev, which lessened the grip of the government on the dissemination of information, allowing the malcontent population to organize opposition and mass demonstrations against the government.

And that in essence, is what makes the collapse of the USSR an important lesson for China’s Communist Party. China may have left the first Cold War as a burgeoning power on the rise, but it owes this, among other reasons, for not being in the crosshairs of America. With the Soviets out of action, America once more looks to the East as the rising power of China threatens America’s global hegemony. The underlying ambition of today’s Handelskrieg, from America’s perspective, is to punish China for perceived transgressions in its current trade relationship with the U.S. China, though certainly not in the sorry state of conditions the USSR was when President Reagan initiated his rollback doctrine, may approach that level in the years to come, if the US doesn’t let up.

Unlike its Soviet counterpart which reformed politically but not economically, China, under the leadership of Chairman Deng Xiaoping, reformed economically yet maintained its strict control of the people. The liberalization of China’s economy, which opened up the country to businesses abroad, spurred an unprecedented growth in their economy led to increased standard of living, and greater access to commercial goods. Additionally, it introduced a hybrid form of state capitalism to replace the strict central planning outlined by Mao and other old guard communists. This decision to reform China’s economy is an example of the shrewd pragmaticism that accompanies China’s leaders after Deng Xiaoping, who recognize that power can be maintained if the people are relatively content with their economic system. This is what their Soviet rivals couldn’t achieve, and this reasoning, along with a tight surveillance state, would ensure that the Chinese Communist Party will probably see the People’s Republic’s 100th year anniversary in 2049.

However, it must be said that the political stability of China, though may appear strong on the surface, as stated above, and its leaders may convince both the world and themselves that they are strong, is actually, in theory, fragile. It is unlikely that China’s communist government would collapse in the foreseeable future, but when the government’s power is strongly tied to its economy, an attack on the later will result in an inevitable damage on the former. The most effective way the United States can hurt China, specifically its governing party, is to attack the most valuable asset of the party– its successful economy.

The U.S. imposing tariffs on China’s solar panels production and other sectors of its economy harken back to Reagan’s policy of weakening the USSR by targeting oil prices. If the economy starts to slow down, the party will face a potential situation that the Soviets had faced in the late 80’s and early 90’s– the anger of people. Mass protests, industrial strikes, and small military mutinies, spelled out the demise of the USSR, is what may happen in China– with people’s memory of June 1989 still being fresh.

The Reagan administration’s actions towards the Soviet economy is a realization of a new era of warfare; gone are the days of the grand armies and battles, and what emerges today is the war of merchants, where the battle is done behind a desk, on shipping lanes, on the shores of ports and the uneasy roads of the endless horizon. Among the lessons learned from 2008, is the extent to which the world economy has linked the nations of the world together in a web of trade that resembles the web of alliances that brought the European empires to war almost a century ago. The decade after 2008, governments are reminded again that they, who hold greater sway on the world economy, can weaken rival governments without spilling blood or sending armies. The function of the weapon is to put oneself at an advantage over their opponent; the aim of war is to ensure that the opponent– has no weapons.

Sources:

S. (n.d.). The Collapse of the Soviet Union and Ronald Reagan. Retrieved from https://wais.stanford.edu/History/history_ussrandreagan.htm

Yergin, D. (2012). The quest: Energy, security and the remaking of the modern world. London: Penguin.

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