Marco D’Eramo, New Left Review:
It is not frequently noted that, for over two years, Covid-19 was used to justify the complete closure of China to the outside world: a sealing off which hadn’t occurred since the Qing dynasty attempted to block the importation of opium in the 1830s. The complete disappearance of Chinese tourists from other countries was only its most visible expression. From a certain perspective, Covid was the vehicle for the (at least partial) reorientation of China’s economy towards internal consumption; though here too, it merely highlighted a tendency that had begun before Trump’s election.
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Globalization, the Chinese trade surplus and the American deficit are often folded together in a semi-mythic narrative. The story goes that China uses part of its surplus to buy US Treasury bonds in order to finance directly the US’s trade deficit – that is to say, American shopping in China. The graph below shows that this was substantially true until 2011 (indeed, we see an exponential increase in the Chinese Central Bank’s acquisition of US treasuries in the early 2000s). Yet the tale is interrupted in 2012. From then on, the amount of federal bonds held by Beijing has not increased – if anything, it has slowly diminished. Even as it continues to accrue an enormous yearly trade surplus, China has stopped buying new American bonds, only partially renewing those it already possesses.
Almost a quarter ($7.6 billion) of US public debt is held by other countries, but contrary to popular belief, the largest holder of American debt isn’t China ($1.095 billion in January 2022), but Japan ($1.3 billion). Nor are oil-producing states such as Saudi Arabia and the UAE great acquirers of federal bonds; quite the opposite. Even more significant are the disproportionate amounts held by Luxembourg ($311 billion), Switzerland ($299 billion) and the Cayman Islands ($271 billion).
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The problem nobody seems capable of resolving is the superimposition of different temporal horizons: months of fighting in Ukraine; years of fallout from sanctions; and decades of a new world order (in which the eventual role of Russia remains a mystery, with or without Putin). What is certain is that the Chinese government is taking every precaution to avoid being hit by the unravelling of globalization, knowing full well that they – far more than Russia – are the real target of the US. After the phone call between Biden and Xi on 18 March, an anchor on Chinese state television mockingly paraphrased the former’s request to China: ‘Can you help me fight your friend so that I can concentrate on fighting you later?’
