The following are a series of dialectical sketches on the current US trade war. They incorporate “Socialism with Chinese Characteristics”, in relation to the Chinese-led Belt and Road Initiative (BRI), and are theoretical in nature.
“When you drink the water, remember the stream” — Chinese proverb
The 5 Chinese Elements
There are five elements—Wood, Fire, Earth, Metal and Water—which denote the interactions between All Things.
Their planetary correspondences are Jupiter, Mars, Saturn, Venus, and Mercury, respectively.
The elements interact in two manners: generative and overcoming. The former occurs when one element begets (mothers) another, and the latter when one element restrains (fathers) another.
In generative interactions, Wood fuels Fire, Fire creates Earth (ash), Earth yields Metal, Metal collects Water, and Water nourishes Wood.
In their overcoming interactions, Fire melts Metal, Metal chops and penetrates Wood, Wood breaks apart the Earth, Earth blocks/ absorbs Water, and Water puts out Fire.
These five elements and their substances form the template for all developmental processes.
They pervade all human relationships, whether social, economic, political, military, or cultural.
The Futility of Protectionism
US trade protectionism is a four-fold strategy aiming to limit imports, restrict access to its consumerist market, encourage domestic production and narrow trade deficits.
In Marxist terms, Friedrich Engels defined protectionism as,
[…] an endless screw […] By protecting one industry, you directly or indirectly hurt all others, and have therefore to protect them too. By so doing you again damage the industry that you first protected, and have to compensate it; but this compensation reacts, as before, on all other trades, and entitles them to redress, and so on ad infinitum.
Referencing America’s Reconstruction era, he continued that,
America, in this respect, offers us a striking example of the best way to kill an important industry by protectionism.
Engels explains that, under capitalism, when,
[…] a branch of national industry has completely conquered the home market, that moment exportation becomes a necessity to it. […] A trade cannot remain stationary; stoppage of expansion is incipient ruin [which] creates in every stagnant industry a glut both of workers and of capital [which] finds no vent everywhere, because the same process is taking place in all other industries.
The US is the world’s 2nd-largest exporter and largest importer. It simply consumes more than it produces. Regarding steel, the OEC notes that US exports centre on the core industries of aviation ($59.2 bln), refined petroleum ($57.3 bln) and cars ($55.1 bln).
However, it only produced 81.6 mln. metric tonnes (mt) in 2017. Comparably, China’s produced 831.7 mln, and only exported less than 2% of the US’s foreign steel quota.
Conversely, it is the world’s largest steel importer, with Canada (16%), Brazil (13%), South Korea (10%), Mexico (9%), and Russia (9%) making the biggest contributions. Additionally, Canada (36.3%), China (15.1%), Russia (7%), and the UAE (6.5%) provide the largest aluminium imports.
Sardonically, MarketWatch hinted that, “[when] Americans are more prosperous, they tend to buy more imported goods,” insinuating that a booming US economy demands more imports, not less.
In retaliation, former allies will impose counter-sanctions (Earth) and integrate via the BRI (Wood) to narrow their own trade deficits. Meanwhile, Americans are alienated from the products of their labour via high costs and lower wages—wood breaking up the earth.
An excellent test of global market resilience is the Joint Comprehensive Plan of Action (JCPoA), or “Iran Deal”, which has already spiked global oil prices, raising fears of oil shortages and backlash from European bureaucrats desperate to diversify their energy sources.
Contradictions will unfold. As the Trump administration becomes more protectionist, it becomes more vulnerable. As it “fights” to protect jobs, US companies will move their manufacturing base overseas. As it imposes tariffs, it loses access to capital, resources and emboldens foreign competitors. As it seeks to control global markets, it becomes further isolated.
This is water overcoming fire (and fury), where capitalist contradictions (Water/ Mercury) overcome the Trump administration’s antagonisms (Fire/ Mars) by snuffing them out.
The Art of (Trade) War
The following are a list of permutations based on elemental interactions that BRI nations can use to counteract the Trump administration’s global trade war. They are merely prescriptive in nature.
Wood—Fire = Grow AIIB alliances to sustainable levels via Board of Governors and Directors. Increase trade via non-USD foreign reserve currencies. Redirect exports to AIIB projects. Decrease US imports. Purge US securities, bonds, and USD to increase Yuan holdings.
Fire—Earth = Build new global order. Circumvent tariffs by reshuffling production centres overseas (sowing). Rapidly develop productive forces under approved AIIB initiatives. Ink memorandums of understanding (MoU) as needed. Lay framework for global infrastructure. Isolate US capital.
Earth—Metal = Equalise means of production throughout major AIIB members. Use Shanghai Cooperation Organisation (SCO) to secure global infrastructure. Initialise BRI trade per needs of individual members. Develop nexus of AIIB interdependency. Continue dedollarisation.
Metal—Water = Communicate successes via summits, conferences, and media. Assess progress of AIIB initiatives via annual reports. Expand AIIB partnerships as capital capacities increase. Consistently and openly denounce US protectionism. Continue dialogue with US counterparts.
Water—Wood: Introduce new open-source/ proprietary technologies. Innovate existing infrastructure. Remap individual member competencies as material conditions change. Expand regional banking, trade, investment, and political alliances in accordance to material conditions.
Fire—Metal = Cull tariffs, sanctions, and military threats with rapid, spontaneous US divestment. Sell US bonds and USD holding for Yuan and precious metals. Replace proprietary US technologies with domestically produced ones (aviation, manufacturing, electronics, etc.).
Metal—Wood = Use SCO to cull global US influence. Cut US participation off from BRI development projects. Isolate USD and American capital. Cooperate via regional security alliances. Repatriate gold. Isolate US in UNGA and UNSC meetings.
Wood—Earth = Target US exports with counter-sanctions. Facilitate US production to move overseas. Increase Yuan, Euro, Ruble, and gold currencies in circulation. Internationalise Yuan. Introduce CIPS payment system. Resolve Russian SPFS problems. Court US allies into BRI.
Earth—Water = Use US withdrawal from Paris agreement and JCPoA to recreate global trade alliances. Denounce US protectionism in all available channels (UN/ G20/ WTO). Counteract US demands and highlight contradictions in US policy (foreign and domestic).
Water—Fire = Synchronise global economies via multipolar order. Collaborate with global banking institutions (IMF/ IsDB/ WB/ ADB). Build consensus on new global trade rules. Publish joint statements on Trump administration policies. Promote AIIB Forums as platform for global dialogue.