For the US to zero-in on the threat of economic competition is incompatible to the concept of free enterprise, a long expounded ideological line of the Americans
The very idea of economically decoupling China is rather odd and ludicrous.
From a purely economic standpoint, although the US still maintains an edge over China in terms of gross domestic product (GDP) by 4 trillion US$ in 2023, that alone is deceiving.
The current woes suffered by the US are rather long and lingering economic problems that began after the Second World War.
Admittedly, the US emerged as the only unscathed country during the Second World War.
Its industries were able to escape the ravages of war, and its economy became much formidable.
As its economy became stronger, no sooner did it begin to assert its power and arrogance in 1944, or right after the Bretton-Woods Agreement was proclaimed, which allowed the US to fix its dollar to gold valued at $35 per ounce.
It was the first stepping stone that allowed the conversion of the dollar to becoming an international currency reserve.
The Bretton-Woods agreement led to the creation of the International Monetary Fund (IMF) which many underdeveloped countries suspect as the first institutionalized money-lending bank, owned and controlled by US bankers.
The IMF regularly lends out to other countries in the form of developmental loans which were usually undertaken, imposes interest rate to debtor countries; and if the loan is considered of high-risk, the IMF may demand the devaluation of its currency to meet its obligation which have severe economic implication to its own country.
Thus, for decades the IMF and other internationally-funded finance institutions like Asian Development Bank (ADB) have been allocating funds to its member-countries, yet many of them remained indebted for years with no progress in sight.
They remain in debt or chained in a debt trap.
As others observed, only those developed countries what have access to these financial institutions manage to take advantage of these loans to develop further their economic interests.
This resulted in an enormous disparity in the value of their exports with developing countries discriminately undervaluing their exports, resulting in perennial trade deficit, not to mention the surcharge imposed for the delay in payment.
Maybe the defeat of the US in the Vietnam War was a different circumstance that led to the downfall of the US dollar.
In 1973, US President Nixon announced that from then on, the US will forbid the convertibility of the gold to the US dollar, and the dollar no longer depended on the value of the gold as agreed on in the Bretton-Woods agreement.
The US dollar was then based on the vast industrial capacity of the US which then constituted more than 70 percent of the world’s total industrial and manufacturing output.
With the US as having the only recognizable international currency reserve, it was able to wipe out its huge trade deficit caused by the Vietnam War.
Sensing that the unmitigated conversion of the dollar as international currency reserve, US policy makers deemed it wise to increase the value of the dollar against other currencies.
They toyed the idea of just printing the US dollar to purchase US treasury bonds without let up until they realized the US government was already the biggest debtor in the world.
It borrowed from its former enemy, Japan, 1.2 trillion dollars in treasury bond and almost the same amount from China, while imposing many restrictions and sanctions on that county.
The relations between the US and China at times become perilous and nasty. Many have difficulty trying to understand what the US wants to achieve and why it now wants to decouple that country.
The most basic understanding of what the US seeks to achieve by decoupling China is to curtail that country’s export potential.
This means many Americans take China’s export as existential threat to its global dominance.
The US policy makers themselves know that pure economic jealousy alone would not allow her to reap the propaganda of gaining the support of the world.
For the US to zero-in on the threat of economic competition is incompatible to the concept of free enterprise, a long expounded ideological line of the Americans.
The US has lost in every aspect of the debate.
The US failed to rebut the tenability of President Trump’s protectionist policy.
The Americans always rely on what it sees as the rules-based principle in the application of international law which is more of a brusque unilateralism.
To this date, not one US policy maker has admitted the current economic woes their country suffers from is the result of its unilateralist policy done through the years by increasing the value of the US dollar, hoping it could gain additional profit by overvaluing its own currency.
When Russia tried to root out the Nazi elements in Eastern Ukraine, at the agitation of the US to expand NATO eastward, the US and its allies unilaterally confiscated the more than 600 billion worth of Russian assets in gold and foreign exchange reserves, and removed Russia from SWIFT financial institution.
But all these sanctions have backfired, with many countries wanting to join the BRICS, a powerful grouping of the world’s market economies, namely Brazil, Russia, India, China and South Africa, in disgust to Western arbitrariness.
This has now posed a serious challenge to the US.
(rpkapunan@gmail.com)
