Tensions between the United States (along with its allies including neighbouring Australia) and China are widening to an alarming concern despite being temporarily side-lined by the more public scrap between the United States (and NATO) and Russia over Ukraine.

The conflict language with China is starting to escalate to a militarist tone but is couched in a contrived narrative of China’s alleged military build-up in the Pacific, Taiwan, and human rights in Hong Kong and Xinjiang. It has the feel of setting the scene for an undeclared war.

However, this narrative does not include the United States own large military presence in the Pacific (including a nuclear capacity by the Korean peninsula; weapons on land were withdrawn in 1991), and human rights both in respect of its own population and those in authoritarian countries that it militarily supports such as Columbia.

The United States accuses China of disrespecting what it labels a ‘rules-based’ international system. But this is not an international system. It is an American system that it expects its allies, friends and the rest of the world (where it thinks it can get away with it) to follow.

New Zealand is placed in an awkward position in this widening escalation. Officially the country is not an ally but a ‘friend’ of the United States. But the military and economic ties are close. On the other hand, China is its biggest trading partner.

Foreign minister Nanaia Mahuta has handled this awkwardness with some adroitness but the pressure from the United States and its networks such as Five Eyes is considerable.

The Taiwan complication

Taiwan is an interesting complication. China regards Taiwan as its own and there is a historical argument to support this. But Taiwan continues to officially call itself the Republic of China (ROC). The history of the ROC was that it was founded in 1912 in China. However, Taiwan was then under Japanese colonial rule (previously it was part of China).

In 1949, following the Chinese Revolution led by the Communist Party  and the formation of the Peoples Republic of China, the defeated ROC government relocated to Taiwan (Japan had lost control after its defeat in World War 11). But the ROC continued to maintain a claim to be the government of all China including the mainland.

The claim for Taiwanese self-determination would be stronger if it were to drop the absurdity of calling itself the Republic of China. This would remove overblown pretentiousness and enhance legitimacy.

What’s really behind this narrative

But is this escalation really about human rights and China’s military. It began under President Obama, escalated under President Trump and is further escalating under President Biden. Some readers will find it almost sacrilegious to say this but Trump was the most honest of the three presidents on this matter.

Trump called a spade a spade; it was all about trade and so he launched a trade war against China. The pretence of human rights generated no interest.

In search of further insight I came across an absorbing article published last July in the American socialist magazine Monthly Review. is China imperialist or semi-periphery?

Written by Minqi Li, Professor of Economics at the University of Utah, it focusses on whether China is an imperialist country or not. His article has a much wider scope than my specific interest but I recommend it as a very good read in its own right.

Surplus value and China’s economy

Minqi Li’s perspective begins with his observation of China’s economy describing it as the world’s largest when measured by purchasing power parity. Its rapid expansion is reshapes the global geopolitical map leading western mainstream media to begin defining China as a new imperialist power.

Understanding surplus value is important for his analysis. Broadly speaking it is the excess of socialised value produced by workers’ labour over the remuneration paid. He adapts this to a country context in the international capitalist system.

Minqi Li acknowledges that China has developed an exploitative relationship with South Asia, Africa, and other raw material exporters.

But, in his assessment as an economist, overall China continues to transfer a greater amount of surplus value to the core countries in the capitalist world system than it receives from the periphery.

World-systems theory

Turning to world-systems theory to explain, Minqi Li divides countries into three types: core, semi-periphery, and periphery. The ‘core countries’ specialise in quasi-monopolistic, high-profit production processes. This leaves ‘peripheral countries’ to specialise in highly competitive, low-profit production processes.

The relationship between ‘core’ and ‘peripheral countries’ is illustrated by surplus value. That is, surplus value is transferred from the peripheral producers to the core producers, resulting in unequal exchange and concentration of world wealth in the core.

Where does this leave semi-peripheral countries. According to Minqi Li, they have “a relatively even mix” of core-like and periphery-like production processes. They take surplus value from some parts of the world and give it to others.

This is where he places China – predominately taking surplus value from developed economies and giving it to developing economies.

The ‘core’ of the ‘war’ against China

If China were to become a core country in the capitalist world system, the existing core countries would have to give up most of the surplus value they are currently extracting from the periphery.

It is inconceivable that the core countries would remain economically and politically stable under such a development unless they could develop new schemes of exploitation at such a massive level to seriously risk either rebellion or collapse.

Where does this leave the ‘core countries’, predominately in North America and Europe? They don’t want to wind back capitalism in China. They want to constrain it to ensure that while it continues to be an attractive market for them, China does not destablise them by progressing to a ‘core country’.