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[The 800-pound gorilla confronting the U.S. geo-politically, economically, and in terms of hydrocarbon energy is China. As India increasingly takes the stage, that nation becomes strategic in agreements made with her by the neo-cons, China being the ultimate target of American diplomatic maneuvering. While the approach of neo-liberals has been more chaotic, the neo-cons insist on tighter control through domestic population control and the militarization of foreign policy—CB]


Stan Goff
FTW Military/Veterans Affairs Editor


© Copyright 2006, From The Wilderness Publications,  All Rights Reserved. This story may NOT be posted on any Internet web site without express written permission. Contact May be circulated, distributed or transmitted for non-profit purposes only.


The enemy advances, we retreat; the enemy camps, we harass; the enemy tires, we attack; the enemy retreats, we pursue.

September 15th 2006, 1:26PM [PST] - After 9-11, Vice Admiral Cebrowski told the Bush administration that  “the dangers against which US forces must be arrayed derive precisely from countries and regions that are ‘disconnected’ from the prevailing trends of globalization.”

Michael Hudson writes in Super Imperialism -- the Origins and Fundamentals of U.S. World Dominance (Pluto Press, 2003) that…

The sense of shock at the United States’ rising trade and payments deficit has been lost as the deficit has been built into the world economic system.  The upshot is that almost without anyone really recognizing what has been happening, America’s shift into debtor status turned the postwar into an exploitative double standard.  Since the nation went off gold in 1971, the Treasury bill standard has enabled the United States to draw on the resources of the rest of the world without reciprocation, governing financially through its debtor position, not through its creditor status.  As dollar debts have replaced gold as the backing for central bank reserves, and hence the world’s credit supply, the entire system would be threatened if questions into its intrinsic unfairness were reopened.

No nation before has ever been able to invert the classical rules of international finance.  Economies that have fallen into deficit have lost not only their world power, but usually also their autonomy to manage their own domestic politics and retain ownership of their public resources and their central bank’s financial policy.  This is still the financial and political principle that they must follow.  Yet U.S. diplomats have been able to convince Europe, Asia, and the Third World -- and since 1991 even the former Soviet Union -- to reorient their economies to facilitate America’s evolution from payments-surplus to payments-deficit status.

How has America been able to achieve this quid without the quo, something for nothing, a free subsidy from the world’s payments-surplus nations?  For one thing, the rationale for acquiescence has shifted from an early postwar faith in American moral leadership and the rhetoric of free markets to the fear that the United States will plunge the world into crisis if it does not get its way.

With the Bush administration’s employment of pre-emptive war doctrine, it has gotten the opposite result of its original plan in Southwest Asia.  Instead of compliant nations happily hosting US military “lily pad” bases, the US has sunk into a terrific military stalemate in Iraq, and Iran has emerged as the new regional power broker.  The war itself is thoroughly financed by the system of “free lunch” loans (the Treasury bill standard) described by Hudson, and the plunge into crisis appears a result of reckless miscalculation as a form of cynical calculation.  The neo-con global strategy has been one not of stabilization, but of destabilization, carried by the notion that the US was in a unique position to pick up the pieces afterward and reorder them to suit its own purposes.

Members of the administration have displayed more than a little of the logic associated with macho adolescent boys.  In that way, they have taken a baton to a hornets’ nest as part of their destabilization strategy, convincing themselves that somehow they themselves would be immune to the wrath of its residents.

This has not increased, as many believe, interstate rivalry between the developed nations of North America, Western Europe, and Japan.  For them, the acceleration of the shift from manufactured consent to naked force as the instruments of empire -- all of them implicated in neo-liberalism as a collaborative system of parasitism upon the global South -- was not a moral disturbance, but a crisis of legitimacy.  They are all too closely-identified with the United States, and too densely networked within the US-directed world system, to actually challenge the system.  Their crises are domestic and political, because they themselves, following the lead of past US administrations (especially the Clinton administration), had so mystified their own constituents with regard to both economic and foreign policy with “multilateralism” and “human rights” as the cover for their own complicity in accumulation by dispossession, that the macho belligerence of the Bush administration threatens to give the game away by raising embarrassing questions.

Those who were most alerted, and less surprised, by this display of military machismo were the very states which were neither as networked financially, nor as integrated politically, nor as conformed culturally to the US as the overdeveloped metropoles.  What has been a surprise, and has altered political calculations around the world, is the depth and breadth of the apparent military defeat of the US in Iraq.  This graphic demonstration of the falsehood of the American military-invincibility mystique has created a loss of confidence in American power, and even engendered open opposition among latent rivals, especially Russia and China.

Both of these nations are perfectly cognizant of the fact that they themselves are the ultimate targets of US machinations.  And both nations have a rich history of conflict in which weak forces overcame strong ones by guile and patience.

In Mao’s articulation of guerrilla strategy he summarized: “The enemy advances, we retreat; the enemy camps, we harass; the enemy tires, we attack; the enemy retreats, we pursue.”

This is, in many respects, the opposite of the “bring ‘em on” machismo of Bush’s coterie of Ivy League generalissimos and business-class gangsters wielding their power like a kid who just found his dad’s gun.

China has not been engaged in the project of modernization for 200 years.  Modernization began only after the overthrow of feudalism by the Chinese Revolution in 1949… less than 60 years ago.  And modernization is the framework through which to understand the actions of the ruling Chinese Communist Party.  Chinese realism about relative strength and weakness in the world system has, so far, served China very well, once the empirical evidence is examined.  Since the Revolutions, Chinese life expectancy has gone from 35 to 70.  The under-5 mortality rate has dropped from 209 to 45.  Adult literacy had jumped from under 20% to 99%.  But there have been tremendous setbacks and challenges as well.

The shift to “market socialism,” the euphemism employed by Deng Xiaoping for selective integration of China into the emerging neo-liberal world system, has brought with a phenomenal growth rate, an unhealthy dependence on export, increasing social stratification, social service collapses, local bureaucratic corruption, and serious environmental problems.  The details of that process, as well as any interpretation of events in China today, are poorly understood, if at all, in the West, that embraces instead a monumentally silly caricature of China as a pure and obedient autocracy run by a tightly disciplined, robot-like Communist Party.  It is only plain Western racism that supports such a simplistic account of a nation of 1.3 billion people that manages to maintain a viable, unitary state.

The Communist Party of China is the single largest political organization in the world, with 70 million members, nearly matching the number of men, women, and children in California, Texas, and New York.  It is also the most complex political organization in the world.  It is rife with factions, and during the 60s, in a period called the Great Cultural Revolution, the struggle within the Party (and that is what it was, contrary to the impressions predominating in the West) over its direction between Mao Zedong, Liu Shaoqi, and Deng Xiaoping led to devastating organizational wreckage and social chaos.  The party was subsequently reorganized, with Deng’s faction in control.

Henry C.K. Liu notes (“The lame duck and the greenhorn,” Asia Times, June 23, 2006):

Learning lessons from the damaging experience of the Cultural Revolution, in which the winner-takes-all struggle for the correct ideological line ended with unimaginable chaos and violence that threatened the very future of the party, the CCP has since adopted ways and means to smooth out the leadership transition process and to reach orderly resolutions of inevitable ideological and material conflicts in a complex socio-economic-political system that leave room for constructive disagreement and operational compromise.

It is in this milieu of complex political struggle that Chinese leadership is formed, as well as in the administration of a nation four times the size of the United States.  The single most important point of unification within the Party leadership is the preservation and strengthening of Chinese independence.  The shared understanding of the Party leadership is that -- while alliances of convenience have existed and do exist -- their vast natural and human wealth is coveted, and the capacity inhering in those assets is feared… by the United States.  Development is seen by many as a way to become part of the modern world, but more importantly, and probably more accurately, it is seen as a prerequisite to their survival.

Two years after Mao’s death in 1976, Deng Xiaoping implemented a reform agenda that cautiously opened China’s economy to what was then a very nascent neo-liberalism.  Internationally, this meant limited access by outsiders to China’s market (mostly limited to Guangdong); domestically, it began a very real devolution of political and economic power from Beijing toward the localities. Among the main goals of market liberalization were technology transfers.  This required a strategy of state-mediated investment from abroad.  While capitalist incursions into the Chinese market have been substantial, the Chinese state has maintained tight control over central banking, as a way of both insulating itself from speculative depredations and, as Harvey puts it, “preventing the formation of any coherent capitalist power bloc within China itself…”

The barriers erected by foreign portfolio investment effectively limit the powers of international finance capital over the Chinese state.  The reluctance to permit forms of financial intermediation other than the state-owned banks -- such as stock markets and capital markets -- deprives capital of one of its key weapons vis-à-vis state power.  (A Brief History of Neo-liberalism, Oxford University Press, 2005, p. 123)

As part of that survival strategy, China has cynically used its most abundant asset to attract foreign investment: a sea of dirt-cheap human labor.  This has attracted more than 20,000 American joint ventures.  More than 100 US-based multinational corporations have invested $48 billion in China.  China has used this strategy to hollow out huge sectors of US manufacturing, and the cheap commodities produced there are now the lifeblood of giant US-based box-store retailers like Wal-Mart, Home Depot, and Target.  By locking sections of the US ruling class into an economic Gordian knot, China has placed a protective shield around itself vis-à-vis the political-military establishment.  The other way that China has established defensive leverage against the US is by buying US debt, and now holds almost $324 billion in US Treasury securities.

This is not an advantage or disadvantage for China, but a case, in the Cold War nuclear vocabulary, of a standoff of “mutually assured destruction.”

Along with Japan, that now owns $639 billion in US debt, these two Asian giants are effectively financing the war in Iraq.  At this point, though they would be loath to admit it aloud, the US entrapment in the Iraq debacle must be seen, from a Realpolitik perspective, as a net positive, and not from an economic standpoint.  China knows as well as everyone else that the US will never pay off its T-bill debts; it can’t.  The US entrapment in Iraq is creating the conditions for what China has most wanted since the collapse of the Soviet Union:  an Asian bloc, with China piloting, that will create what the Chinese call global multi-polarity.

While the trend, for now, is a decline in American power and the rise of China as a regional power, the economic and military disparity is still so great that China sees itself playing for time for several decades more.  China’s so-called arsenal of nuclear weapons -- one of the only assurances in Bush World that prevents pre-emption in the eyes of many -- is a meager 24 nuclear missiles deliverable to the US, compared to the 10,330 in US possession with the combined destructive power of 125,000 Hiroshima bombs.  China’s conventional military is suitable strictly for home defense, and its Navy is pitiable.  The US has the capacity right now to conduct a devastating blockade of China, and its string of new bases in Southwest Asia have actually tightened US encirclement.  China has good reason to fear recent developments.

Before 9-11, after having been briefed by the outgoing Clinton administration on the growing threat of political Islam, the Bush administration ignored those warnings, stating their belief that the real challenge to US power in the world was China, and began the build-up of a US-Japan-Taiwan theater missile defense system.  This program was implicit before the Bush administration, but on April 24, 2001 -- a mere three months after having taken office by judicial fiat -- Bush announced it would do “whatever it takes” to defend Taiwan from Chinese attack.  While many have the impression that post-Hiroshima/Nagasaki Japan is nuclear-phobic, the fact is, Japan has prepared a nuclear arsenal -- with China as its only possible target -- that is one final step from assembly… a task that could be accomplished in mere weeks.

This goes a long way toward explaining China’s hesitancy to provoke the US, even as China moves cautiously forward with its own development agenda.  When the US was attacked on September 11th, China made an instant and visible show of solidarity.  The left sects of the West castigated China and Russia for this support, demanding they step directly before the raging bull of a post-9-11 US.  A friend of mine, himself a leftist, said recently:  “A weakness on the left is that we often despise complexity.”

The Chinese provided intelligence support to the US, and Russia green-lighted bases in the former Soviet states.  Both offered support for an occupation of Afghanistan; and both had real concerns in their own fields of operations about political Islam.  But when Bush attended the Asia Pacific Economic Cooperation (APEC) Conference in October 2001, where Bush was face to face with both Jiang Zemin and Vladimir Putin, both continued to offer support, but qualified that support by saying that the United Nations was the appropriate occupation force; wondering then no doubt whether the US would install a compliant force… which it eventually did: NATO.  Bush, at the same conference, between the usual platitudes, threw red meat to his own right wing at home by again committing to the “defense” of Taiwan. It was at the same conference that Bush convinced Japanese Prime Minister Junichiro Koizumi to abrogate his own Constitution by sending troops abroad for the first time since World War II -- yet another indication to the Chinese and the world of the resurgence of militarism in Japan.

Both the Russians and the Chinese were alerted early to US intentions when Iraq emerged as a military target, made blazingly clear in 2002.  Political Islam was to be a foil for Cheney’s energy team to make a bold play to put the imperial hand directly on the Southwest Asian oil tap.  China was also aware that it was the principle long-range target of such a strategy.

Maintaining the Chinese growth locomotive would require what all growth does since the emergence of hydrocarbon capitalism:  fossil energy.  Oil.  It was the same year, 2002, that China became the world’s second-largest oil importer.

In 1997, China National Petroleum Corporation, the state oil company, had signed a deal to develop the Rumailah oil field in Iraq, and Russia’s Lukoil had signed on for Iraq’s West Qurna field.  Now both were faced with the apparent attempt by the United States to seize the country as a future lever against all comers.

With steep demand-increase trend-lines from both industrializing China and profligate America, there is an inevitable point that will be reached where the material antagonisms between the two nations will reach a breaking point.  China wants to postpone this conflict as long as possible and has been aggressively diversifying its oil import sources.  As it expands its domestic refining capacity and establishes a strategic petroleum reserve, China is investing overseas, pursuing interests in pipelines, and developing its own natural gas industry.  As it stands now, however, China has one great Achilles heel.  The sea-lanes that ensure its oil imports are still controlled and protected by the United States Navy.

There has been no more powerful recognition of China’s success within neo-liberalism, including its ability to employ a strong, even authoritarian, state to avoid the lethal “shock treatment” afforded Russia, or the ability of a culture steeped in Confucian respect for hierarchy and order, to exercise control over the anarchic and most self-destructive tendencies of the so-called free market… than the people some have come to call the neo-conservatives.  Their anxiety about China as a potential competitor is matched only by their envy of the Chinese state apparatus to exercise control over its vast domestic population.

There are many who emphasize the Straussian roots of neo-conservatism, its elitist conviction that societies must be welded together by some shared mytho-heroic narrative of conquest and destiny.  But that is only one face of the neo-cons.    The objectives that unite them are held in common with a singular conviction that liberal society, though capitalist, has gone too far in the direction of chaos, and that more autocratic social control is required to ensure domestic population control, as foreign policy is militarized.  This explains the neo-con affinity for hyper-patriarchal evangelists and their need for an amorphous external enemy.  This same tendency for the exertion of greater social control through obscurantist narratives and the “othering” of some generalized enemy is reflected in the Hindutva politics of India.

In more particular terms, and going to the actual -- yet unstated -- goals behind all their blather about democracy, the neo-cons have a manifold plan:  gain control of Southwest Asia; restore US global hegemony, by force if necessary, and prevent the rise of an Asian bloc.

The key to the latter item in this strategy, in the view of the US, is India.  And when, on July 8, 2005, India and the US signed the India-US Joint Statement (IUSJS), the final nail in the coffin of the Non-Proliferation Treaty (NPT) was situated under the hammer.  The true target of this policy is China.

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