Reordering the World and the People’s Initiative

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Reordering the World and the People’s Initiative

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ASEM Finance Ministers' Meeting

US-China-EU: An exercise in asymmetry

Under the banners of globalisation and sorting out the economic, political and humanitarian crises of the world, the world’s powers, big and small, are making their plans to re-order the world. At the same time, the people’s role in determining their own fate is largely left out of account by these powers. The big powers calculate geo-politically and in terms of what serves the interests of a ruling elite. The G8 even style themselves the eight most powerful industrial states, in stark contradiction with the balance of the world’s forces, and by this means, in alliance with the international institutions of finance capital, they plan and plot to enslave the rest of the world. They are driven to act this way as the world is going through a historic turning point at the end of the 20th and beginning of the 21st century. While they are engaged in reordering the world, in Tony Blair’s phrase among others, the people are not only marginalised, together with the underdeveloped world as a whole, but are made to pay the price in blood internationally and political enslavement in the capitalist heartlands.

In this historic turning point, the people’s forces also are continually organising and regrouping to seize the initiative. They are opposing the arrangements being put in place nationally and internationally which enslave and marginalise the working class and people. The people’s initiative is directed towards ensuring that new arrangements are put in place which can take society out of the crisis in favour of the working class and people.

The programme of the working class for a new society seeks to fight against the anti-social offensive along the line of march which will bring about the revolutionary transformation of society to socialism. In such a society, it is the people who will be sovereign, who will consolidate the victory of their initiative, who will have the decision-making power and guard against the attempts of the financial elite to seize back that power. It is a society in which their rights as human beings and by virtue of their objective conditions will be provided with legal guarantees, backed by the state power of the working class. Internationally, all blocs which serve the interests of the financial and political elites must be ended, and the rule of law based on peace and justice and the people’s interests must prevail. This different and new world will not be ordered by dictates of globalisation of the neo-liberal variety but by the full liberation of the initiative of the world’s peoples.

The 4th ASEM Finance Ministers' Meeting took place in Copenhagen on July 5-6, 2002. The Finance Ministers' meeting was be part of the preparations for the 4th ASEM Summit for heads of state and government in Copenhagen on September 23-24.

The meeting was attended by the Finance Ministers from ten Asian nations, the fifteen European Union member states and the Commissioner for Economic and Monetary Affairs, under the chairmanship of the Danish Presidency of the European Union. The host was the Danish Minister for Finance, Mr Thor Pedersen.

ASEM (Asia-Europe Meeting) brings together the fifteen EU Member States and the European Commission, with ten Asian countries (Brunei, China, Indonesia, Japan, South Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam).

The President of the Asian Development Bank (ADB), the Vice President of the European Central Bank and the IMF attended as guests at the meetings in the Danish capital. The ministers exchanged views on an agenda which included combating the financing of terrorism, money laundering and abuses of the global financial system, as well as on how to strengthen the international financial system, according to the Danish Presidency.

In discussing the economic development in Asia, Europe and the rest of the world, the ministers and heads of delegations particularly emphasised "structural reforms" in Asia and the EU.

Prior to the meeting the Danish Presidency wrote: "Spurred by the financial crisis during 1997 and 1998 in Asia in particular, a number of initiatives aiming at establishing co-operation on financial matters have been initiated among Asian ASEM members and other Asian countries. Thus the political experiences of the European ASEM members on regional co-operation, in particular in economical-political, monetary and financial areas are of some interest for the Asian members. The meeting provides an opportunity for sharing these experiences. Furthermore, since the last ASEM Finance Ministers' Meeting, the euro has been introduced as the physical currency in 12 EU member states and the European experience in this respect as well as consequences for the ASEM member economies will be discussed.

"Real integration and trade is an interesting issue for both the European and Asian members of ASEM. Strengthened international and national policies will enhance trade and international mobilisation of private and public resources for investment, which are all essential elements in promoting global sustainable development, the aim of the World Summit on Sustainable Development in Johannesburg later this year.

"Lastly, reports and follow-ups regarding a number of specific initiatives within the framework of the ASEM Finance Ministers' Meeting will be on the agenda. Among these are a report from the ASEM Customs Co-operation, a follow-up to the ASEM Trust Fund, a summary of the Kobe Research Project concerning regional co-operation and a discussion of the Public Debt Management Forum concerning sharing experiences on debt management among ASEM members."

The ASEM Trust Fund was established in June 1998 with a time frame of two years. The objective of the ASEM Trust Fund was to provide technical assistance and training in both the financial and social sectors of the Asian countries affected by the financial crisis. At ASEM 3, on the basis of widespread satisfaction with the initiative among Asian members in particular, it was agreed to let the Trust Fund continue into a phase 2.

The Kobe Research Project was initiated at the third ASEM Finance Ministers' Meeting and identifies a number of research projects dealing with regional economic integration.

The ASEM Public Debt Management Forum was also established at the Kobe meeting. The first meeting of the Forum was held in Thailand in November 2001.

The first ASEM Finance Ministers' Meeting was held in Bangkok in September 1997. The second Finance Ministers' Meeting was held in Frankfurt in January 1999. The third meeting took place in Kobe in January 2001.

Parallel to the official ASEM meetings, a broad network of national and international non-governmental organisations traditionally gathers. The Seoul 2000 People's Forum was held at ASEM 3. An NGO forum is also planned for ASEM 4.

The following article was written by Wang Jian, who is secretary general of the Economic Planning Commission, Beijing, and has been translated into English. We are reproducing it for the information of our readers as a view from China on the balance of the world’s forces and the place of the People’s Republic of China within that. It appeared in the on-line edition of "Asia Times" of July 5, 2002.

In February 1972, US president Richard Nixon's plane landed in Beijing, unveiling a new era in Sino-US relations and signalling the demarcation line in the changes of the world strategic structure after World War II. After that trip there was a relatively stable situation in international relations that lasted for 20 years until the end of the Cold War. Thereafter, a series of changes took place in relations among China, the United States and the Soviet Union as well as within the Western world. Now, 30 years have elapsed since Nixon's visit to China, 10 years have passed since the end of the Cold War, and there have been momentous transformations which ought to be the new starting points for China's long-term strategies and policies, as they influence not only China but also the world.

The collapse of the Soviet Union in 1991 was the first event that marked a qualitative change in world structure. The breakdown of the Soviet Union on August 19, 1991, marked the collapse of the Cold War structure that had lasted for some 50 years after World War II. Next came the establishment of the European Union. Thereafter in 1993, the United States, Canada and Mexico agreed to set up the North American Free Trade Area (NAFTA), which was officially launched in 1994. These two events, establishment of the EU and the NAFTA, took place immediately after the end of the Cold War because of the sudden end of the main conflict in the world: that between the USSR-headed Eastern camp and the US-headed Western camp. Both the United States and the Soviet Union possessed vast expanses of land and large populations, and both could achieve long-term economic development relying mainly on their domestic resources and markets, which completely differed from the capitalist countries that had formed military alliances during the two world wars to strive for overseas resources and markets. This separation between two economic spheres is the essential reason why the world structure before 1991 was called the "Cold War", together with the fact that there was no conflict for the same markets or resources that could lead to a world war.

During the years of the Cold War, however, there were still imbalances in the level of economic and political development in the main capitalist countries, and in the Western camp new problems had been building up. In particular, the rapid rise of Japan and Germany after the war brought them much closer to the United States in economic strength in a few decades. Nonetheless, during the Cold War, these countries had been threatened by the military might of the former Soviet Union, and they needed the military protection of the United States, which consequently became the leading country on the Western front.

With the end of the Cold War and the disappearance of the West's common enemy, the relationship between friends began to change at once. The contradictions in economic interests that had long been concealed by the political and ideological conflict with the Soviet sphere cropped up immediately and escalated to a critical level. Some say that the post-Cold War world structure is "one super and many great powers", which means that there is only one superpower – the United States. But the United States is super only in military affairs. As far as economic strength is concerned, the 12 countries in the European Union had overcome the United States as early as the mid-1980s, and the strength of Japan alone then was 40 percent of the United States'. Therefore the EU countries and Japan together have a larger economy than the US, but their military muscle is far weaker than their protector's.

Thus the strengths in economic and military affairs of the United States are not in balance, which made it possible for the European countries to stand up after the end of the Cold War to challenge the United States, so that the establishment of the European Union can be seen as the expression of the Europeans' will to shake off the long-term control of the United States and seek economic, political and perhaps even military independence. The Europeans constructed an exclusive common economic area because the boundaries between a dozen countries constrained free circulation of production and industrial integration. However, in the common zone, the countries of the European Union have close ties in industrial structure and trade but do not have many integrated trans-European companies, which created difficulties to the European enterprises in funding their research and development and makes it hard for them to compete with the United States and Japan. For instance, even in the large European countries such as Germany and France, the largest companies can but count as second-class compared with those in the United States and Japan. Hence they have suffered many losses in the international market. In the development of industries such as aerospace, computer technology, information technology and microchips, the Europeans have been pushed behind when competing with the United States and Japan. This has been strongly felt by the Europeans and therefore there is a will to withstand the sufferings of long-term macro-retrenchment brought by the common currency and cede to the European Union part of their national sovereignty in order to achieve Europe's unification.

Shift in US global strategy
The appearance of the European Union compelled the United States to reconsider its global strategy. Its first reaction was to put forth hastily in 1993 the NAFTA, which, under a 1994 proposal, would be expanded to cover the two American continents by 2005. Furthermore, the US is also trying hard to bring the whole Pacific Rim into the domain of its economic influence.

So why don't Americans thwart the Europeans' will for unification and hang on to their interests in Europe, instead of trying other efforts in the Pacific regions instead? The key lies in the trend toward a long-term change in US economic interests.

When World War II ended, the overseas investments of the United States were mainly in the Americas, and those in Europe only accounted for 12 percent of the total overseas investments. Then the United States got a foothold in Europe while helping post-war reconstruction, as before the war Europe was the most wealthy and developed area in the world. By the mid-1970s, US investments in Europe accounted for more than half of its total overseas investments. The so-called post-war economic globalisation wave referred in fact to the industrial restructuring of the United States and Europe on both sides of the Atlantic. Thus the situation whereby the critical centre of US overseas economic interests was in Europe had been formed.

From the end of World War II to the early 1970s, China had been suffering from military encirclement and economic blockade. With Nixon's unexpected visit to China in early 1972, Japan first broke the limitation of the Western camp and established formal diplomatic relations with China, followed by more Western countries, including the United States. The background of the abrupt thaw between China and the Western world was so-called "Nixonism". Nixon's former secretary of state, Henry Kissinger, has pointed out that, after World War II, the United States fought two wars in Asia, in Korea and Vietnam. The post-war military focus of the United States was in fact placed on Asia; the focus of the overseas economic interests, however, was in Europe. It was a mistake to maintain the incongruence of the focus in military affairs and economic interests. The two aspects should coincide. Therefore, the Vietnam War had to come to an end and the military focus had to be moved to Europe to protect US economic interests. Therefore, it was necessary to foster cordial relations with China to antagonise the Soviet Union, which was the main content of Nixonism. This shows that the US strategy toward China was never considered in isolation but was a part of a global strategy, which, in turn, is determined by the focus of US overseas economic interests.

With the further development in Japan and the development of the Four Asian Dragons⁽¹⁾, coupled with the industrial rise of the Association of Southeast Asian Nations (ASEAN) member countries, India and mainland China, a tendency began to show that the centre of the world's economic growth was moving to East Asia. This resulted in changes in the domestic regional structure in the United States. Since the Independence War in the 18th century until the 1970s, the US economic centre had been in the 14 north-eastern states, where more than 50 percent of its population lived, producing 70 percent of the country's manufacturing production value. With the thriving of the Asian economy, the industrial division and ties in trade between the western coastal areas of the United States and the Asian areas have become clearer and closer. The new economy that sprang up in the late 1980s in the United States started from the western areas, and a division of labour has been formed with the East Asian countries and areas on the other side of the Pacific Ocean. Thanks to the growing concentration of population and economic output in the south-western areas of the US, the growth rate since the 1970s has been much higher than in the north-east, where the traditional industries are located. This started a long-term shift of the US domestic economic centre from the north-east to the south-west and great changes have taken place in the location of the population and economy. In 1982, for the first time, US trans-Pacific trade exceeded the trans-Atlantic, in 1997 the former became 50 percent higher than the latter, and the combined gross domestic product (GDP) of Japan, Hong Kong, South Korea, Taiwan and mainland China had become larger than that of the EU countries. In 1980, the US Census Bureau found that the population of the south-west was bigger, for the first time, than of the north-east. In 1990, the US south-west accounted for 56 percent of the national total output and this percentage has been growing even further in the 1990s.

During the post-war years, the US overseas economic focus had been in Europe. By 1997, however, the GDP of the eastern US areas plus that of EU countries was well matched with that in the western US plus the countries around the Pacific Ocean – i.e., Asia Pacific Economic Co-operation (APEC) members. To put it another way, from the viewpoint of the world economy, as far as stock is concerned, the present economic scale of the circum-Atlantic basin is roughly equal to that of the circum-Pacific Basin; and since the 1970s, and especially in the 1980s, the growth volume in the circum-Pacific areas has been far larger than in the circum-Atlantic areas. Therefore, sooner or later the focus of US overseas economic interests will be moved to the Pacific Rim.

The changes in the external and internal economic spatial structures will be inevitably reflected in the readjustments in policies, and the key is to transfer the US strategic focus from the circum-Atlantic basin to the circum-Pacific basin, i.e., the strategic focus in both economic and military affairs will move "eastward", which is the core of the new world strategy of the United States after the Cold War. Though Americans have not said explicitly that the focus of their economic interests will move to the Pacific, they have clearly put forth the issue of shifting the focus of the military strategy eastward. The US 2000 White Paper on National Defence states that the focus of the US military strategy would be moved from the Atlantic to the Pacific in the next five years. It also states that in the near future the distribution proportion of submarine forces in the two areas will be adjusted from 6:4 in favour of the Atlantic to the reverse. At the same time cruise missiles, which had never been employed overseas, have been deployed in Guam and Japan. Aircraft carriers have resumed their mission in the Taiwan Strait, and military exercises with the nations neighbouring China have greatly increased in intensity. The change of focus of the US military strategy reveals a change of the overall strategy following the shift of economic focus, which is based on the same spirit as Nixonism.

The West Pacific Economic Zone
However, whether the US can smoothly realise the eastward transfer of the country's strategic focus does not only rest on the Americans' will, but also on whether the Pacific Rim nations can obtain greater benefits in the shift and will agree to being included into the economic zone of influence of the United States.

In the late 1990s, from Shenzhen in the south to Shanghai on the east coast and to Zhongguancun in Beijing, a huge belt of electronic industries was set up along China's coastal areas in the east within only five years. In 2000, electronic communications became the largest industry in China, accounting for one-sixth of GDP, which is even higher than in many developed countries. Such changes in China are largely related to the transfer of capital and technologies arising from the US "new economy" to China's coastal areas, but more closely related to the transfer of industries, capitals and technologies from Japan, Hong Kong, South Korea and Taiwan to mainland China, which has accelerated the economic integration between them. A rough calculation shows that from 1990 to 1997 exports from Japan, Hong Kong, South Korea, Taiwan plus mainland China totalled about US$1 trillion, 50 percent of which was exports among those five economies. These five western Pacific economies share a common regional space and are now moving on a trend similar to the one promoting EU economic integration. Hence in the near future, a regional economic community similar to the EU and NAFTA might well appear, which could be named the "West Pacific Economic Zone". Therefore, the evolving tendency of the world's economic situation after the Cold War is probably that regionalisation is stronger than globalisation.

Since the 1990s, because of the economic integration of North America and Europe, exports from Japan, Hong Kong, South Korea and Taiwan to North America and Europe were checked and trade conflicts continually escalated. For example, prior to NAFTA, East Asian textile exports to the United States were dominant in North America. In 1996, only three years after NAFTA was created, this position was replaced by Mexico because it enjoys trade preferences as a NAFTA member, far beyond the reach of the East Asian countries and areas. Thus the trade flows of Japan, Hong Kong, South Korea and Taiwan began to make an abrupt turn toward mainland China. In terms of trade structures, these four economies maintained large trade surpluses with the United States. However, since the 1990s these surpluses have either greatly shrunk or become trade deficits. On the other hand, they have achieved trade surpluses with mainland China by way of transferring technologies and industries. In the same period, only mainland China has maintained a trend of growing trade surplus. Japan, Hong Kong, South Korea and Taiwan once based their economic growth on trade and for a long time practised a US- and Europe-oriented export strategy. This had been maintained since World War II, but came to an end with the appearance of the EU and NAFTA, which objectively forced them to swerve their trade orientation and look for a market that could absorb their production. Except the United States and Europe, this market can be none but China, which is maintaining a high growth rate. Thus the rapid economic development of China has in fact become the most important driving force in the integration of the western Pacific areas, while mainland China, still in the intermediate stage of industrialisation, badly needs the introduction of capital, technology and management experiences from Japan, Hong Kong, South Korea and Taiwan. This trend toward integration based on the common economic interests within the western Pacific areas, if unchecked, could shut the United States out of the trade ring.

This is a challenge to the US plan for a strategic move eastward. The Americans thus have an interest in finding a crack in international relations beyond economic interests to block the successful integration in West Pacific Economic Zone. That could be done, following a Cold War mentality still alive in some sectors in the United States, to single out a possible enemy in East Asia, which is assumed to pose a military threat against all Asian countries. Thus the Asian countries have to depend on US military protection and, further on, possibly fall into economic submission.

Troubled waters in the Taiwan Strait
In the western Pacific area, there is the issue of the Korean Peninsula, but North Korea is too small to ignite fear among East Asian countries or elsewhere in Asia. Moreover, the two Koreas are discussing the issue of peaceful unification, so this card will soon not be very strong. Therefore, issues have to be stirred up such as demonising China, the heated issue of the Taiwan Strait, the new Japan-US Security Pact, Theatre Missile Defence (TMD), etc. In fact a common understanding had been reached by 1992 between the two sides of the Taiwan Strait, and a unification form acceptable to both sides was being sought. After 1994, however, the relations across the Strait made a sharp turn for the worse, when Taiwanese president Lee Teng-hui put forth a "two-state theory", then the Democratic Progressive Party assumed the reins of government in Taipei, and along with all these, the United States continually threatens mainland China on the issue of the Taiwan Strait, openly stating that it will protect Taiwan by force. What is more, openly casting off the principles of the three Sino-US communiqués, it continually raises the amount and technological level of arms sales to Taiwan. The United States has never had an independent Taiwan-oriented policy, since this is always subject to its China-oriented policy; neither has it an independent China-oriented policy, which is always subject to its global policy. Therefore, just as with Nixonism good relations with China were subject to America's strategic westward move, now it can serve the US strategic eastward move to worsen Sino-US relations.

One reason the United States often makes a fuss over the Taiwan Strait is to bolster the image of China as a military threat in Asia and coax Asian countries to seek US military protection for fear that China holds the reins in the process of economic integration in East Asia. Only by doing this can the US draw the whole Pacific Rim into its zone of influence. Nonetheless, the integration of the West Pacific Economic Zone is where the common interests of the peoples of Japan, Hong Kong, South Korea, Taiwan and mainland China lie, and the trend cannot be blocked. In the end the Americans might have to retreat to their corner of North America and become a regional power.

A world in three
In the 1990s, of the newly increased exports from Japan, Hong Kong, South Korea and Taiwan plus mainland China, trade among themselves accounted for more than half, but exports to ASEAN only accounted for 18 percent. Therefore, the economic unification in the Asian areas since the 1990s has taken place only among the five countries. In the long run, the integration issue with ASEAN will be posed, but will have to wait for the right time with proper conditions.

Looking into the 15 years ahead, after a rough calculation, the total population of Japan, Hong Kong, South Korea, Taiwan, mainland China, plus the Russian Far East, all in the western Pacific region, is about 1.7 billion, and GDP is $25 trillion. With the expansion of the European Union, its population will reach 500 million, its GDP $21 trillion; in NAFTA, the population is 400 million, and GDP about $19 trillion. Therefore, the world structure after the Cold War is a pattern of "a world in three", and the largest economic zone is the West Pacific Economic Zone. In light of this, we should find a new starting point to study China's strategy.

Notes: 1. Also called the Four Asian Economic Giants, i.e., Hong Kong, Singapore, the Republic of Korea and Taiwan (translator's note).