How US must rise to China's challenge

Almost nothing is bipartisan in US politics today except confronting China. Despite the very different styles and worldviews of President Donald Trump and leading Democrats, Washington's conventional wisdom has rapidly converged on the threat of its superpower rival.

This competition will play out in world trade, energy, maritime East Asia and, perhaps, the Persian Gulf region. Regardless of who wins in America's November elections, it is almost inevitable that tension will ratchet up in Washington as China senses the moment, and attempts to take its opportunity, to overtake the United States.

Of course, the Chinese economy currently is in no great shape. It was already slowing before the Covid-19 crisis, with the trade-war headwinds, a falling working-age population and a massive accumulation of corporate debt. It will further suffer from the slump in its main customers: 20% of its exports last year went to North America, 20% to Europe, 10% to oil exporters.

On the other hand, America's dreams of "energy dominance" have evaporated with the fall in energy prices. It is anyway not clear why the US ever wanted to beef up its role as a supplier of raw materials - oil, gas and soybeans - in a contest over the high-tech future.

Against such somber realities, the Trump administration has been spoiling for a fight to distract November's voters from the White House's failing record amid the Covid-19 pandemic.

China holds about $1.1 trillion of US government debt, and American officials have reportedly discussed canceling part of it as reparation for pandemic damage - so what has been considered the world safest financial instruments would immediately become one of its most risky, now open to political interference like any Third World bond. The US dollar's dominance would be immediately undermined.

Chinese firms would make it imperative for Beijing to develop a financial architecture not reliant on the US (spelling, incidentally, the effective end of sanctions against Iran and other states).

America's demonization of China and Beijing's attempt to usurp America's global leadership raise the specter of globalized chaos in a manner never before possible to anticipate. Superpower confrontation, a weakening of global trade and economic connections, democratic retreat from Washington to Budapest to Ankara, greater poverty and food insecurity and the growing reality of climate damage, are a recipe for state breakdown and proxy wars in vulnerable countries.

American military power across the Middle East has been understood as protecting its oil and gas supplies and those of its increasingly disillusioned allies against threats including, first, the old Soviet Union, then Saddam Hussein, Iran and terrorist groups. Yet the presence of the Fifth Fleet in Bahrain also is a powerful threat to China, a reminder that the US controls the source of 45% of its oil imports and 16% of its liquefied natural gas.

For its part, China has carried out some anti-piracy operations from its base in Djibouti at the southern gates of the Red Sea, and has built up Gwadar port in Pakistan, near the Strait of Hormuz.

The Chinese military is not (yet) present in Gwadar, and it did not participate in either the US-led or European naval missions in the Gulf, nor mount an independent patrol as Japan, India and South Korea did, following a string of attacks on shipping last year blamed on Iran. But as Chinese interests and investments in the Gulf mount, littoral countries may come under growing pressure to choose sides.

Two pipelines, Russia's East Siberian Pacific Ocean pipeline for oil and the Power of Siberia pipeline for gas, are key parts of diversifying Moscow's exports from the mature European market.