The hegemonic decline of the United States and the eastward shift in the global capitalist economy The WritePass Journal

The hegemonic decline of the United States and the eastward shift in the global capitalist economy Abstract The hegemonic decline of the United States and the eastward shift in the global capitalist economy : 33) In turn, this will end up hurting the most powerful sovereign nation, which will find it increasingly difficult to maintain military hegemony without the ability to print out as many dollars as it needs. The erosion of political sovereignty as a result of the Great Recession of 2008 and the reaction to it by the ‘Second World’ goes hand in hand with the idea of privatisation of economic power, managed at supranational and extraterritorial level by powerful private concerns (Khanna, 2008: 41). These supranational concerns are in the process of setting up their own regulatory schemes, imposed on individual territorial states, which are finding it increasingly difficult to resist them. My preliminary findings show that the realignment of economic international systems is the main conduit by which harmonisation leading to an hegemonic shift in favour of China will be activated. In addition, there is a definite reaction by what I would call the Shanghai Cooperation Orga nisation bloc (notably China and Russia, but also the likes of India and Iran). The harmonisation process is proceeding apace in the West. This reaction in the Second World is generating its own kind of harmonisation. The political sovereignty of nations could also be further impaired by the conflict that will arise as a result of it. Trying to eliminate the logic of anarchy brings with it the possibility of conflict. As Schmitt put it, the political cannot exist outside the realm of conflict. It is expected that the United States will not let China accumulate the necessary military capabilities in order to establish itself as the new hegemon. Preliminary findings There are several factors which enables us to think that a hegemonic transition is taking place. A massive, imposing display of Chinese-constructed fighter aircraft and other military equipment was used to commemorate the 60th anniversary of communist Chinas founding, on 1 October, 2009. At the same time, Chinas space industry was rapidly burgeoning and continuing to develop. Along with the fact that the Chinese economy continued to expand during a global recession and a rising position on the world political stage, these technological advances indicate Chinas movement towards the status of a world superpower. While the rest of the world struggled in 2009, the Chinese economy exemplified a remarkable flexibility in returning to significant growth. The Chinese government attributes this economic resilience to Chinas blend of communism with capitalism, in contrast to the laissez-faire approach taken by the West (Guthrie, 1999: 122). In early 2009, a migration of millions of workers from urban areas to rural locales resulted from the closure of factories that produced exports on the east coast and south coast of China. The steep price of fuel and food had put pressure on household budgets in 2008, and in order to halt inflation, stringent financial and credit policies were set in place. These policies caused the construction industry to dip, as well as a slump in the property market. In response, the Chinese government created a stimulus package in November 2008 that was worth 4 trillion yuan (about $586 billion). Approximately 50% of the stimulus package was set aside for improving infrastructure, such as railways and airports, primarily in rural regions, while a further 25% was designated for the Sichuan province, which had been severely affected by a May 2008 earthquake and was in need of rebuilding. Banks were ordered to increase lending, and the result was a 164% upsurge of loans in the first three quarters of 2009. This facilitated a rebound of the economy, which occurred far more quickly than in other countries. (Wright, 2010: 221). Additionally, the latter part of the year saw the recovery of exports, which set China up to overtake Germany as the top exporter world-wide. As a result, speculation grew as to whether China could reclaim the dominant position that it once held prior to the early 1800s, at which time it provided roughly one third of manufacturing in the world, compared to just 25% of manufacturing in the West. This outcome was rendered more probably by a trade deal with the Association of Southeast Asian Nations that transpired at the end of the year. As the worlds largest creditor, China had a symbiotic and mutually beneficial relationship with the U.S., the globes biggest debtor, that had become vital in the effort to rebalance the global economy. Zhou Xiaochuan, governor of the Peoples Bank of China (PBOC) issued a statement on 23 March 2009 that called for an interna tional currency that would replace the U.S. dollar as the primary global currency and would remain unattached to individual countries; he argued that this currency would have increased stability over time. The Peoples Bank of China also proposed that Special Drawing Rights, which were designed in 1969 by the IMF for utilisation between international institutions and governments, might be employed on a wider scale and used as payment in international finance and trade transactions. This would reduce fluctuations in price and the risks associated with these fluctuations. The initiative was made again at the yearly Group of Eight (G-8) summit that took place in Italy in July 2009. Delegates from China, India, Brazil, Mexico, and South Africa (also known as the Group of Five) were also invited to the summit, where China, along with India and Russia (a G-8 member) called for an overhaul of the global financial system and a halt to dollar domination. In the latter part of September 2009, the president of the World Bank, Robert Zoellick, cautioned that the U.S. dollar faced an increasing threat due to the rising force of both the euro and the Chinese yuan. At this juncture China had surpassed Japan as the main creditor of the U.S.; there were concerns coming from Beijing that the $800.5 billion value of U.S. Treasury securities, along with other assets that constituted 60% of Chinas foreign-exchange reserves and 30% of foreign-exchange reserves globally, would be attenuated by American debt and decreasing confidence in the U.S. dollar. 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