TWILIGHT OF THE AMERICAN CENTURY AND CHINESE ASCENDANCY

Abstract

The more evidence we have that the American century of international hegemony is waning because of an increasingly weaker economy, the more scholars and analysts of international political economy insist that the 21^st century will not witness China’s global ascendancy. From prominent academics to journalists there is a refusal to acknowledge structural shifts in the global economy from West to East means that the US will be taking a back seat to China. Skeptics point to everything from China’s aging population to business debt and shadow banking problems, to political and social challenges for the ruling Communist Party as proof that China’s ascendancy is a myth and the American century will continue from the 20^th to the 21^st without a serious Asian challenge.   

Scholarly studies and Chinese government reports point to a number of problem areas in the country, including political and business corruption, a large percentage of the population living below the poverty line along with a rural-urban living standards gap, ethnic minority issues, legal reform and cleaning up the environment of decades of neglect. These are issues that many other countries also facing, including India trying to compete with China. 

While all criticism is legitimate and the one-party state is aware that it must address them, Western critics are obsessed that China must embrace the Western bourgeois political model and the neoliberal economic route in order for there to be an even playing field. At the core of criticism is that Beijing is refusing to accept the post-WWII American-imposed “transformation model”, and instead pursuing a quasi-statist centrally-planned modernization course under five year plans by the one-party state. 

Putting aside wishful thinking about imposing a US transformation model on China, shifts in the core of the capitalist system are not only evident by looking at GDP statistics and future prospects, but share of global trade and longer term the direction of US policies vs. those of China and how such policies would impact the global power structure ahead. While there are many studies indicating China will encounter trouble spots ahead that will permit the US to continue its global economic hegemony well into this century, the US will be confronting even more serious challenges than China and the future is already upon us. On balance and in the absence of a major war in Asia that could change everything for the entire world, established trends point toward steady US economic decline and Chinese ascendancy.

 Global Economic Leadership Shifts

Evolving since the 15^th century, capitalism as a world system lacked coordination under the aegis of international institutional structures. To manage the world economy under its hegemony, in the mid-1940s the US established mechanisms such as the International Monetary Fund (IMF), International Bank for Reconstruction and Development (IBRD now part of the World Bank Group)  followed by the General  Agreement on Tariffs and Trade (1948) GATT now World Trade Organization (WTO). Leadership within the international institutional structure mitigates the effects of cyclical expansions and contractions through coordination of central bank monetary policy but also trade and fiscal policies, thus essential to achieve a modicum of equilibrium rather than exacerbating the contraction. 

The absence of international leadership in coordinating monetary, trade and investment policies was partly to blame for the Great Depression of 1929 when retrenchment was inevitable combined with strong propensity by governments and capitalists to pull policy toward economic nationalism and away from global integration as a means of strengthening the home base. Invariably international financial and trade institutions have as a goal to strength capital especially in the core countries where it is strongest.

Disequilibrium on a world scale that took place in the 1930s forced core nations into a frenzy to retain as much of their global market share as possible against competitors. Only a decade after WWI, the Great Depression further weakened the core countries of international capitalism in northwest Europe resulting in economic power shift to the US positioned to assume both military leadership in WWII and global economic leadership following the war.

Chronic balance of payments deficits, deliberately under President Harry S. Truman to reindustrialize Western Europe, Japan, South Korea and Taiwan, combined with “Military Keynesianism” – deficit financing by allowing the defense sector to absorb surplus capital – were adopted for economic and geopolitical considerations but with the result of setting the stage for decline. The US creation of strong trade and strategic partners took place against the background of the nascent Cold War when both USSR and China emerged as military rivals challenging the US-based capitalist world order.

The long-term effects of postwar chronic balance of payments deficits resulting in higher public debt, currently at $19 trillion or about 106% of GDP, have taken their toll on America’s core position in the world economy. More ominous than public debt and chronic balance of payments deficits, US policies and current structure of its economy point to slow growth and continued erosion of US share of global GDP. Just the opposite holds true for China, especially as the US is more determined than ever to rely on “Military Keynesianism” at a point in its history when debt-to-GDP ratio, which averaged about 62% from 1945 to the present, is the highest it has been since 1945 when it hit 112.7%. 

Reducing the balance of payments and budgetary deficits through GDP growth above 2- to 2.5% seems highly unlikely in the next five years and probably longer. This is the optimistic scenario because at some point in the 2020s cyclical economic contraction is inevitable and it will result in runaway public debt and weaker dollar. The result will be further consolidation of the many economic centers especially China as catalytic to global trade and growth. All governments and corporations recognize that the US leadership role in the world system has diminished and it is highly unlikely to recapture its preeminent position of the early Cold War era when the dollar was pegged to gold and its value held steady.

By contrast, even if half of China’s global economic development and global integration plans come to fruition, ascendancy is inevitable because it has laid the foundations for future growth on a model that appeals to governments and businesses. Narrowly focused on militarist policies and using its defense hegemony as leverage to retain its preeminent role rather than focusing on the civilian economy, the US is hastening China’s global ascendancy as much as US portfolio and direct investment in China. 

China’s economic growth prospects in the next ten years are estimated above 6%, while European and American growth prospects are below 2%. Even more significant, the entire Western World has been experiencing downward socioeconomic mobility and lower living standards for the middle class with fewer upward mobility opportunities in the next ten years. Even with problems of corruption and political challenges to the one-party state, China is expected to triple its middle class population over the same period. This factor alone spells continued optimism for China despite inevitable cycles of contraction and political internal and external hurdles along the way.

 US Unilateralism, Economic Nationalism and Militarism

America’s withdrawal (1 June 2017) from the Paris Climate Accord raised serious concerns within the country’s political and business elites and among allies worried about President Trump’s unilateralism (pursuing a policy and/or acting upon it without coordination and collaboration of other countries). The concern among allies relying on American leadership reflects general uneasiness because the government extends unilateralism beyond the climate agreement and into economic nationalism. He demonstrated when he rejected the Trans-Pacific Partnership (TPP) trade agreement not because it was a bad deal for workers but because it did not provide favorable terms of trade for the US. 

In the age of globalization that has benefited US multinational corporations, Trump has repeatedly used economic nationalist rhetoric about unfair practices by trading partners in the Western Hemisphere (Canada and Mexico under NAFTA) and the rest of the world (from China to Germany). The implication is that the terms of trade that historically favored the US now favor exporters to the US, although the US negotiated and agreed to those terms. Rather than looking at US domestic policies as impediments to growth, the Trump administration blames trade partners for America’s chronic balance of payments deficits and loss of high-paying jobs amid continued de-industrialization. Making US allies even more apprehensive, Trump has cast doubt on the benefits of strategic alliances, especially NATO to which members do not meet their GDP percentage quota spending, thus raising the specter of isolationism.

The cumulative effect of unilateralist, isolationist and economic nationalist rhetoric leaves no doubt that the current administration has no use for Wilsonian multilateralism as a foundation for foreign policy and foreign economic affairs. On 6 June 2017, former president Barak Obama warned that Trump is moving dangerously toward isolationism and erosion of Western values. Despite some minor policy changes amid very sharp change in rhetoric by Trump in comparison with Obama and even George W. Bush, the vast majority of US trade, investment, strategic and foreign policies remain largely as they were under previous administrations. Though they differ on the modalities, the goal of both political parties to globalization is unchanged. Wall Street and the defense establishment wholeheartedly support the same goals and so do both political parties.

While Republican and Democrat parties have pursued multilateralism since the Wilson administration, both parties have practiced unilateralism within varying degrees, no matter their public pronouncements about a commitment to multilateralism as a Western value. As a core country in the capitalist system with institutional obligations in the WTO, IMF and all international institutions established to manage/coordinate the world economy since Bretton Woods, the US is structurally locked into multilateralism no matter the deviations on specific treaties such as the Paris Accord. Nevertheless, there are some billionaires in Trump’s cabinet and his inner circle of advisers, like Commerce Secretary Wilbur Ross, who question the very foundation of the American-based Bretton Woods system because they believe that it serves surplus exporting countries like China and Germany.  

Combined with economic nationalism and isolationist rhetoric, unilateralism even as symbolic as the Paris Accord withdrawal inadvertently yields global leadership to China. Sufficiently powerful economically to assume such a role, China does not instigate but benefits from certain US policies that widen the global economic power gap. In January 2017 at the Davos World Economic Forum, President Xi Jing-ping raised the issue of global stability guaranteed by Beijing. 

Portraying his country as responsible and committed to global economic integration President Xi assured all countries that they can rely on China to ensure stability and global integration. Presumably, the message was that the world can no longer rely on the US, not only because of Trump’s rhetoric, but owing to reckless bipartisan militarist policies resulting in destabilization of the Middle East and Asia where North Korea has been a focal point. President Xi signaled that the US has abdicated its role as catalyst to global integration under international conventions and institutions whereas China is there to lead within the existing structure and institutions of international capitalism. 

Even US strategic allies pursue multidimensional relations by accepting Chinese leadership in the domains of trade and investment, thus demonstrating that their future is in East Asia. Beijing has been laying the foundations for a global economic empire with trading partners that include US neighbors like Mexico and Canada. Ironically, while Washington is pursuing military encirclement as part of a containment policy toward China, Beijing is pursuing economic encirclement of the US, all along claiming that global trade requires stability that US militarist policies threaten. The question is whether US military containment policy will be sufficient to slow down China from pursuing global integration under its aegis, while making the US even more dependent on Chinese exports in exchange for buying US government bonds to keep the dollar strong.

The contradiction of American foreign policy is that the US retains global military hegemony while some of its close allies are economically integrated with China. This is very clear in the case of Asian countries even where there are US military bases as in the Japan, South Korea, Malaysia, and Philippines. While militarism has become America’s single most important leverage in global affairs and an integral part of the domestic economic stimulus, China is pursuing hegemony through global trade. Economic dependence on China and simultaneous military dependence on the US is a reality even in NATO countries where the US has used its influence to stop governments like Greece under EU-IMF austerity from selling some national assets to Chinese interests. 

Managing its imperial interests almost exclusively by relying on its military might and securing multi-billion dollar defense contracts, as was the case in May 2017 with Saudi Arabia and Gulf States, the US projects the appearance of ensuring superpower status for the duration. In point of fact, the US conceded civilian economic leadership to China longer term while weakening its national economy by remaining narrowly focused on exorbitant defense spending and neoliberal policies resulting in massive capital concentration. 

Inordinate reliance on the military affords a false sense of security and power because no country in the history of the world has survived for very long spending massively on defense at the expense of a weak economy. (Paul Kennedy, The Rise and Fall of Great Powers. 1987)  Nevertheless, there are calls by Trump and both Republicans and some Democrats to rebuild the navy. The estimated cost will be an additional 20% per year over the next 30 years to the already bloated defense budget of $620 billion. Under Obama and now Trump, the US has been actively pursuing a new arms race in the Middle East, Europe and Asia not only for geostrategic reasons, but to strengthen its defense industries and to force other countries to allocate more on defense, thus securing a derivative economic advantage by the weakening of other economies be the catalyst to maintaining superpower status?  http://www.chinadaily.com.cn/world/2017-01/17/content_27974455.htm; https://www.thetrumpet.com/13221-a-new-global-arms-race

The US is so far ahead of the rest of the world in defense spending that it can only insist on an arms race to provide some stimulus for its own economy while preventing other nations from gaining any more competitive advantage in the civilian economy. “The U.S. outpaces all other nations in military expenditures. World military spending totaled more than $1.6 trillion in 2015. The U.S. accounted for 37 percent of the total. U.S. military expenditures are roughly the size of the next seven largest military budgets around the world, combined.” https://www.nationalpriorities.org/campaigns/us-military-spending-vs-world/

The obvious benefits to the defense industry aside, military spending at unsustainable levels is detrimental to the civilian economy, especially when combined with massive tax cuts for the wealthiest people in society. The result is chronic balance of payment deficits, rising public debt and declining living standards, downward social mobility and erosion of global competitiveness. Those advocating stronger defense point to China, Russia, North Korea, Iran and Syria as “existential threats” as though the US is Switzerland without a defense sector or a nuclear deterrent. They further point to jihadist terrorism as justification for building conventional weapons despite the inherent asymmetry between a conventional military and terrorist who cannot possibly be deterred or defeated militarily even if the US and its allies spent 100% of the national budgets on defense.

Because the US is taking a back seat to China in global economic leadership, deliberately choosing to focus on massive arms buildup, unilateral withdrawal from the Paris Accord brought to the surface the reality that the world capitalist system’s core is shifting toward East Asia in part because of US policies. The US is hastening that irreversible process by policies presumably intended to halt that eventuality, when in fact they backfire. This is partly because multinational corporations operating internationally invest wherever they can realize the highest return. Ironically, the nature of capital accumulation on a world scale which has favored Chinese remarkably rapid development means that US multinationals had a hand in undermining the American national economy in favor of China where they are chasing lower labor costs and a large domestic market share that they helped to create.

No matter the finger pointing at China, Mexico, Canada, Germany and other countries, de-capitalization, which clearly hurts the national economy and public finances, starts with policies designed to concentrate capital especially in speculative sectors where nothing is produced and money is made by recycling investment in financial markets benefiting the wealthiest Americans. Decrying Chinese currency, trade, and fiscal manipulation by the US which has its own manipulation issues may be politically receptive rhetoric for frustrated populists and economic nationalists, but it does not alter any empirical realities of how capital accumulation on world scale works and it does nothing to slow down China’s ascendancy.

Just as the Chinese have created their problems with inequality, corruption, pollution, etc. so has the US created its own problems among them weakening the state structure. Under globalization, neoliberal policies have actually weakened America’s state fiscal structure. Hegemony of markets over states under the neoliberal model entails using the state as a conduit to transfer income from the mass taxpayer to corporations and the wealthiest Americans and privatizing public services to strengthen a private sector that would otherwise be much weaker without public money flowing into it. This process has sacrificed a strong fiscal structure that could have acted as a driver for economic growth instead of confronting a GDP-public debt ratio of 106% with the prospect of rising above 120% in the next five years. 

American unilateralism, economic nationalism and isolationism are reactions to the weakened state structure manifesting itself in weakened national sovereignty. When Trump uses populist rhetoric such as “Make America Great Again”, it is a tacit recognition that globalization undercuts America’s national sovereignty and favors other countries despite its positive derivative benefits of globalization to America’s multinationals. To gain the advantage, the US wants more incoming investment and capital repatriation (estimated $3 trillion), combined with a monetary and trade policy by other countries such as China that enjoy a surplus at the expense of the US. In short, the strategy is to use government policy as the sole mechanism to address the disequilibrium America has been suffering in its balance of payments deficit.

Of course, without China buying US treasuries, the US would have a much weaker dollar because of the public debt. Of the $19 trillion US public debt, $6.3 trillion is foreign-owned, $1.1 trillion by China and an equal amount by Japan, both enjoying a surplus at the expense of the US. In June 2017, China announced that the national currency has stabilized sufficiently to the degree that Beijing was prepared to purchase even more US treasuries. As an export economy, China favors a strong dollar as does Japan. Washington’s long-standing policy of maintaining an artificially high dollar has benefits but it also entails that the consumer-driven American economy suffers chronic balance of payments deficits.

Are unilateralism, neo-isolationism, and economic nationalism the road to “Make America Great Again”, or do the rightwing populist president and his political, business and media supporters keep blowing a lot of smoke across the world while benefiting certain business sectors at the expense of others? Few doubt that withdrawing from the Paris Accord was a case of blowing smoke; a symbolic ideological/political gesture of projecting the illusion of American strength when in reality it brought to the forefront deep-seated structural weaknesses in a society already deeply divided and becoming weaker internationally because it refuses to alter course in its political economy.

 The framework of US foreign policy

As Western Europe and Japan began to reindustrialize while USSR and China developed massive defense sectors during the early Cold War (1945-1960), American decline began to take place. In 1958, the IMF warned President Eisenhower about chronic balance of payments deficits impact on the dollar’s artificially high value as a reserve currency. Although Eisenhower warned the nation about the military industrial complex, the US pursued “Military Keynesianism”, massive defense spending as a means of stimulating economic growth while also strengthening its defense alliances to keep its superpower status.

Using the artificially high dollar as a reserve currency afforded the US the luxury of “guns and butter” as the Johnson administration argued in pursuing the war in Vietnam and the “Great Society” social welfare program. Naturally, there were limits to “guns and butter” dreams that turned into nightmares in the mid-1970s when the US lost the Vietnam War and realized that a multi-polar world structure was slowly threatening its hegemony.

In a position to pursue unilateralism when it suited its interests, while reverting to a multilateral approach when there is no choice, the US used its preeminent global defense network to exert political and economic influence. This is something that both Republican and Democrat administrations have done since Harry Truman. It is one thing to go at it alone when all nations in the world are weak as was the case from the Truman to the Nixon administration. It is entirely another matter when the US share of global GDP has shrunk by 50% between 1960 and 2014 (from 40% to 20%). 

While China’s share of world GDP stands at 15%, it contributes 30% of the world’s growth. The annual GDP growth under 2% in the last ten years and high probability that it will remain at those levels in the next five years is a reflection not just of the structural weakness of the US economy but the dispersed nature of the global power in the second decade of the 21st century. The IMF among other organizations do not expect the US to be the engine of global growth, looking instead to Asia. The persistence of ideological unilateralism against the realities of American waning global influence is not only demonstrated by US taking itself out of the Paris Accord, which Obama and his supporters have criticized, but even under Obama who claimed that he would pursue multilateralism but in practice deviated. 

In February 1914, Assistant Secretary of State Victoria Nuland imposed unilateralism when it came to US policy to manipulate Ukraine’s internal politics at a time that the EU was more cautious because of its dependence on Russian natural gas and as a trade partner. While seeking multilateral cooperation, the US position remained one of unilateral decision only to be validated by a multilateral political cover. Despite its severe limitations, unilateralism projects the image of strength while multilateralism is often seen as weakness because it means yielding in negotiations with other countries. 

Not just those immersed in the imperialist ideology of “American Exceptionalism”, but militarists and economic nationalists would argue that unilateralism is best suited to serve national security and economic interests. One problem is that US-based multinationals operate in an international arena where US policies intended to achieve advantage over other nations could undercut US corporate interests. This is precisely the case with NAFTA partners Canada and Mexico that the Trump administration has singled out as unfair competitors. In fact, US-based corporations and portfolio investors in Canadian and Mexican stock exchanges have benefitted from the regional trading bloc. 

Under the neoliberal corporate welfare economic model, the US cannot compete with China’s quasi-statist development model seeking to integrate as much of the world economy as possible under its aegis. Demonstrating remarkable military restraint in the past three decades in comparison with the US, China’s economy is not based on “Military Keynesianism” and its main goal is not military containment but economic expansion. US military containment of China, which is also intended to contain China’s global economic expansion, runs into contradictions because US corporations among others from around the globe profit from Chinese expansion and want it to continue. This contradiction has frustrated the American political, military and some US manufacturers, forcing them to embrace economic nationalism.

Oddly enough, the Paris Accord from which the US withdrew reflects these contradictions of a government unable to cope with the country’s continued economic decline under the neoliberal-corporate welfare model. Disagreements among capitalists from the Koch brothers opposed to the Paris Accord to Michael Bloomberg in favor of it reflects not just ideology, politics, and which vision of the future will prevail, but how government will allocate resources from which certain corporations benefit. Considering that climate-related economy has enormous potential, it could represent as much as one trillion in the US economy of about $17 trillion. 

Considering that the US was the main force behind multilateral organizations, including the United Nations and its various sub-agencies, the IMF and World Bank, General Agreement on Trade and Tariffs (GATT, now WTO), it is ironic that Washington would strongly defend them when it serves its narrow interests and try to bypass if not undermine them when it sees them as obstacles to its prospects of remaining hegemonic. The creator of multilateral organizations rebuffs its own creations because the world has changed to the degree that other countries exercise influence in multilateral organizations the US cannot use as its sole foreign policy instruments as it did during the early Cold War. 

Based on the foreign policy record under Obama, Washington has been pursuing a going alone policy when it can get away with it and multilateral policy when it needs to do so. As an isolationist and economic nationalist, Trump is simply more skeptical about multilateralism and sees it as an impediment to “America First”, even if this means questioning close ties with historic allies or proposing a Muslim travel ban that hurts cooperation not just with Muslim nations, but EU allies and US corporations in the tourism business. 

EU and non-EU countries alike are confronting American unilateralism by looking for a multilateral partner. China with its multibillion “One Belt, One Road” global economic integration program is waiting to play an even greater global role. With the goal to cover 65% of the world’s population and one-third of global GDP, China’s 21^st century Silk Road is a sharp contrast to the US determination to retain superpower status by remaining narrowly focused on a new arms race and stimulating the defense sector as though it is the panacea for economic development. 

The new Asian Infrastructure Investment Bank will need several trillion dollars to provide financing for China’s global economic expansion plans. Despite US objections, many countries and companies throughout the world including close U.S. allies have signed on to China’s infrastructure bank. Just as they accepted the IMF decision to have the Yuan as part of the basket of hard currencies, governments other than the US realized it was in their interest. That US multinational corporations have fallen in line with Chinese global economic leadership as much as European and South Korean is indicative that capital, which goes where it can realize the highest profits, has essentially validated the reality of a multi-polar world in which the US is in relative decline and militarizing instead of focusing on the civilian economy. 

Climate Politics, American Unilateralism and China’s Global Ascendancy

On June 1, 2017, the EU declared that along with China it would fill the leadership role against the background of the vacuum the US is leaving by withdrawing from the Paris Accord. The three main goals are: 1. The global average temperature increase held below 2 °C above pre-industrial levels, while temperature increase 1.5 °C above pre-industrial levels; 2. Lower greenhouse gas emissions without threatening food production; 3. Financial decisions to be made consistent with a pathway towards lower greenhouse gas emissions and climate-resilient development.
 

Multinational corporations support the Paris Accord for a number of reasons, including the fact that it would be implemented in many countries within the framework of the neoliberal model where government incentivizes the private sector to adopt new technologies. “American taxpayers footed a $16.6 billion bill (in 2007) for energy subsidies, tax breaks, loan guarantees, and the like in 2007 alone, according to data from the U.S. Energy Information Administration (EIA). That’s more than double the Federal subsidy level from eight years earlier. In fact, on an energy fuel basis, Congress has increased subsidies for renewable fuels considerably, from 17 percent of total subsidies and support in 1999 to 29 percent in 2007.” http://instituteforenergyresearch.org/studies/energy-subsidies-study/

The Paris Accord, which Obama signed in 2014 but the Republican-dominated Senate never ratified, pledged billions in subsidies to corporations pursuing renewable energy technology. It is true that fossil fuel industries also benefit from government subsidies and from a fiscal policy that allows many to pay the least amount in taxes, regardless of the theoretical 35% tax rate. However, there is also the issue of international competition in new technologies that made it necessary for US-based multinationals to follow the trend of their rivals overseas. 

There are political, economic, and scientific dimensions to this complex issue which on the surface appears to be solely about the environment and the 2 degrees Celsius ceiling. The withdrawal from the climate change treaty by the embattled Trump administration is symbolic of American unilateralism as an affirmation of national sovereignty supposedly undermined by liberal environmentalist-multilateral advocates who have impeded the fossil fuel industry from maximizing profits through heavy regulation and restrictions on drilling. It is also about the appearance of yielding the advantage to China and India whose economies are growing three times faster than the US using fossil fuels. 

When it comes to providing the infrastructure, subsidies, tax incentives and loan guarantees for private companies, including those in the renewable energy business, the role of government is catalytic in the existing corporate welfare state. The questions of national control and international competitiveness are valid as much by the US as any other country. Because it is simply impossible to work toward clean environment on a country-by-country basis as though each country is on another planet, US withdrawal from the Paris Accord demonstrated a superficial understanding of globalist capitalism and its short-term and longer term benefits to each country. 

Nor does it help to argue against scientific consensus and to claim that climate change is a hoax and a Chinese invention intended to afford China an advantage over the US. Backed by a number of Republicans and powerful businessmen like the billionaire Koch brothers, Trump wanted to demonstrate America’s ability to stand alone as a global hegemonic power against the reality of a slow decline in a world that is multi-polar world where China would derive more advantages than the US. 

Naturally, as a result of the Republican decision against the Paris Accord the private sector had some tangible winners and some losers. There are estimates that the clean energy domain and derivative industries ranging from high tech to solar power could be worth several trillion dollars by 2030. Just as multinational corporations will adjust and make profits without the Trans Pacific Partnership treaty that Obama had negotiated but Trump dumped, similarly corporations will do the same with the Paris Accord withdrawal until the next administration comes along to reverse course. 

Cheap renewable energy and natural gas out-competing fossil fuels obviate anything the US does in terms of climate change policy, especially considering that multinational corporations and banks have already invested heavily in renewable energy. Europe’s and China’s solar power manufacturing capacity, which is larger than any other in the world, has been the driving force behind policy on reducing emissions but US multinationals fervently support it because they know the clock cannot be turned back to the age of coal. 

As a strong supporter of the Paris Agreement, China still remains coal-dependent and emits more carbon dioxide than any other country on earth, followed by the US, and India. This allows the US a modicum of a political safety net while it preaches compliance to the world. It is easy of course for the Western industrialized countries to preach environmental policies to the developing nations that are trying to develop their industrial sector. When the Western World was industrializing (18^th century England, 19^th century continental Northwest Europe, US, and Japan) had no environmental standards and all pollution emanated from the West. 

Although voluntary, Paris Accord implementation is very expensive for poorer countries that need foreign aid. Keeping within the economic nationalist-unilateralist ideological framework, the Trump administration criticized the climate agreement that called for rich nations to provide foreign aid to poorer ones dealing with climate issues and a green economy. It is hardly a secret that the loose environmental laws of developing nations along with cheap labor and domestic market share are the reasons that Western-based multinationals decide to invest there. 

Some of the world’s biggest polluters are multinational corporations and the beneficiaries their investors in wealthy nations. Middle class consumers in advanced countries wholeheartedly but hypocritically embrace the environmental movement, as long as they derive the benefits in cheap products while pollution is not in their own land. Without question, the environmental issue is both a class issue and one of developed vs. developing nations that goes to the heart of uneven income distribution geographically and along class lines. 

The class-based nature of environmental politics aside, the Trump administration’s decision to withdraw from the Paris Accord reflects the gap that the US is creating by permitting China to accept the leadership scepter of the new technologies of renewable energy sources and forging ahead with the rest of the world toward the renewable-energy economy of the future. Presumably, this means that well-paying jobs in the clean energy and related fields are inadvertently lost to competitors, thus contradicting the argument that the Paris Accord costs jobs in the anachronistic fossil fuel domain instead of creating many more in renewable energy and derivative sectors. 

To prove that multilateralism was wasteful by draining US taxpayer money, Trump claimed that more than $1 billion had gone to the UN Framework Convention on Climate Change intended to support natural resource management in poor developing nations. In reality, the US had pledged $3 billion to that fund, but had only paid $500 million. Considering the US contribution to carbon emissions since the nascent phase of its industrial development, and considering the emissions of US multinationals around the world, contributing for the collective effort of a clean environment may seem very unreasonable to unilateralist “American Exceptionalists” who remain in an imperialist mode of thinking of colonial powers dictating the terms to client states.   

Withdrawal from the Paris Agreement was part of a pattern in US policy casting doubt on the wisdom of multilateralism because such a course does not serve certain corporate interests while contributing to the chronic balance of payments deficit and rising public debt. Although the science behind climate change and the need to protect the environment are empirically verifiable, and although all life forms from humans to birds and sea-life benefit from a clean environment, the political economy under which environmental policies are executed favor corporate interests. One reason that Republicans have been effective appealing to the irrational is because many among the popular masses see the environmental issue as part of liberal identity politics that the wealthier middle class embraces. 

There is no question that political parties around the world have been using this issue to deflect attention from social justice subordinating it to the environmental agenda. Just as the Democratic Party in the US has been using the Cold War anti-Russia controversy to oppose Trump and mobilize popular support away from social justice issues such as free college education, free universal health care, and higher living standards, similarly it has used climate change to co-opt the popular base into the neoliberal mainstream. 

The day after Trump took office there were mass demonstrations for social justice in major US cities; a seemingly grassroots effort expressing opposition to authoritarian politics. The day after the US pulled out of the Paris Accord there were popular demonstrations demanding Trump tell the truth about his administration’s Russia links, as though the Russian-Trump controversy regardless of its merits is somehow catalytic to social justice and the lives of people. Higher living standards, universal free healthcare, free college education, all issues of the Bernie Sanders wing of the Democrat Party have been subordinated to Russia. Despite its sound scientific merits, the Paris Accord like the Russia-Trump issue is one around which media have rallied reflecting the Democrat Party’s agenda. 

Indubitably, America’s withdrawal from the Paris Agreement revealed a contradiction between the persistence of ideological unilateralism and the realities of America's declining power in the world. It also revealed the deep divisions among capitalists. Although rightwing billionaires financing the climate change deniers stand to profit because their industries do not have to comply with environmental regulations, they project an ideological position that unilateralism is inexorably linked to patriotism and its abandonment a reflection of weakness and lack of resolve on the part of US leadership. Therefore, the illusions inculcated by the media into the minds of the masses are illusions that American elites project.

Conclusions

Coordination and macro-management of the world economy in consultation and cooperation with the rest of the world seems to be in doubt under Trump when compared with the previous administration. Nevertheless, there is a debate among America’s political, business, media, military and academic elites whether the future of US policy is toward greater unilateralism that many equate with strength and the glory of Pax Americana or a multilateral approach that reflects the new realities of the global power structure. 

Because the US has moved so far to the right since the Kennedy-Johnson administrations to the degree that political choices in 2016 were between a rightwing populist Republican and a neoliberal militarist, voters were faced with choices placed before them by the corporate elites who completely disregarded social justice. The rhetoric notwithstanding, neither of those choices provides upward social mobility opportunities and neither offered a platform that would stimulate the civilian economy back into rapid growth mode. The only agreement was on strengthening defense, as though this sector would guarantee global competiveness and domestic upward mobility. 

Given the asymmetry between its military might and declining share of global GDP, the US is unable to stop the clock that is ticking increasingly louder in Asia that is destined to be the center of world capitalism. Continuing with Cold War “Military Keynesianism”, military interventions and counterinsurgency operations to destabilize countries where the US wishes to exert influence at the economic, political and strategic levels has obvious limitations. After all, the US under George W. Bush and Barak Obama spent an estimated $4 trillion for wars with only public debt and lower living standards as the legacy to tax payers. 

Ideologically, the US elites are so indoctrinated into the mindset of “Exceptionalism” and Cold War militarism that it is extraordinarily difficult to face the empirical realities of the multi-polar global power structure even when it comes to climate pacts. The vast network of active foreign, defense and intelligence policy staff, consultants, and the media reflecting the status quo are holding on to anachronistic models of growth and development as they are to military operations. The example of endangering South Korea’s security to provoke North Korea by deploying THAAD missiles, only to be rebuffed by president Moon Jae-in of South Korea speaks volumes of how reckless American militarism has become and how arrogance of power is the driving force behind unilateralism.

Refusing to examine internal contradictions in the “Military Keynesianism” and neoliberal approach to superpower status, the American elites, the media, consultants and many academics insist on wearing blinders. Consulting firms, government agencies, media companies, private corporations and even many educational institutions hire people who operate within the framework ranging from the neoliberal Cold War militarist to the rightwing populist bordering on Fascism. The result is recycling of more of the same and the race to outdo one another on who offers the “best” solution within a framework leading to decline. 

Scholars, political and business observers pointing to China’s many internal problems as impediments to its ascendancy may be right. However, they view China through the prism of Western institutions, policies, values and with a neoliberal bias they wish to impose on China as part of a transformation policy the US imposed on the entire Western World after the end of WWII.

Even if everything goes absolutely wrong for China as critics argue while everything goes absolutely right for the US and the EU in the next half century, there is still the issue of global interdependence and what it would mean to the entire world if China lapses into a chronic crisis. Western-based corporations, portfolio investors and governments have no interest in a China that will collapse, knowing they benefit by its continued expansion. Ironically, many countries, including the US, are so well integrated with the Chinese economy that it is in their interest to keep it growing, relatively strong, and stable. 

The economic crisis that started in the US with Lehman Brothers on the road to bankruptcy in August 2007 amid the subprime lending environment which lasted until 2012 in some countries and much longer in others provides a good lesson of why Chinese economic power is catalytic to global stability. As exports dropped 18% in 2007-2008, China provided a massive growth stimulus ($586 billion or 13% of GDP). The US-based great recession’s impact would have been much worse than that of the Great Depression of the 1930s if it were not for China enjoying the world’s fastest and highest GDP growth while providing a stimulus to capitalism amid the most severe global economic contraction since the 1930s. Even with Trump and world populism and economic nationalism on the rise, it is difficult to see many governments and multinational corporations not advocating China’s ascendancy, even if many favor self-imposed growth limits to achieve greater global equilibrium.