The China Factor and the Overstretch of the US Hegemony
3 books that can change your mind in 2005 about the
geo-politic and geo-economic dynamics going on
Interviews by Jorge
Nascimento Rodrigues, editor of Gurusonline.tv,
Transition Report is a quarterly online
journal edited by Gurusonline.tv
George Zhibin Gu, the Chinese consultant
based in Shenzhen and author of the forthcoming "China's
Global Reach" (Haworth Press, US)
Chalmers Johnson, president of the Japan Policy Research
Institute and author of "The Sorrows of Empire"
(Metropolitan Books, US)
André Gunder Frank, associate of the Luxembourg
Institute for Education and International Studies and
author of the forthcoming "ReOrient the Nineteenth
Century" (a sequel of his 1998's "ReOrient")
A view from an insider
George Zhibin Gu
CHINA IS BECOMING A GLOBAL THEATER
"A new power balance will emerge gradually and
most likely indirectly"
George Zhibin Gu considers himself a protagonist of
the Chinese lucky young generation of the 60's in the
last century. He heads a consulting group in Shenzhen
that borders with Hong Kong. Born in 1961 in Xian -
the most ancient capital of China -, Dr. Gu holds masters
degrees in both physics and mathematics and a PhD in
mathematics from the University of Michigan, in 1987,
in the United States. For 13 years he lived in the US.
He joined Wall Street in 1990, first in New York and
then in San Francisco. He returned to China to represent
Lazard and its clients in 1994. Later, he became independent
with his own partnerships. He provides investment consulting,
and more increasingly management consulting, for both
multinational and Chinese companies. George Gu helps
international companies to invest in China and Chinese
companies to expand in the international market. Till
now, he has done work in venture capital, M&A, joint
ventures, business expansions and restructuring. He
considers himself "a generalist with a focus on
strategies". "My passion is coaching and public
lecturing", he told Gurusonline. Dr. Gu is author
of China Beyond Deng: Reform in the RPC (Mcfarland &
Co Inc, 1991) and of the forthcoming book China's Global
Reach: Markets, Multinationals and Globalization, to
be published in Fall
2005 by Haworth Press, New York. In both books,
that's a rigorous view from an INSIDER.
Dr. Gu can be contacted by email
First idea: "Today, most Chinese would prefer to
be the one just following the leader. That is a safe
play, and a better alternative"
The full engagement of China with the world means
Daguo Xintai ( "mentality of global power")
or Heping Jueqi ("peaceful rise" as Zheng
Bijian introduced in 2003)? Has China a "mission"
as a global power as the Portuguese, the Dutch, the
British, and the US had in the past 650 years?
Strangely enough, the outside world feels more effects
about this fast developing China. Most Chinese are more
concerned to improve living standards and get more opportunities.
They are little aware about China's future role in the
global stage. More than often, the Chinese are shocked
when foreign visitors tell them that 21 Century will
be Chinese. Having this said, there is a common understanding
that a fast developing China will reverse the history
in this sense only: the Chinese will be treated as equals
in the global community. For some 200 years, Chinese
have been treated inferiorly. It is changing for the
better, finally. China is not ready to play a more significant
role in the global stage at all. Maybe it is because
that China has suffered terribly in the past for thinking
itself the center. Today, most Chinese would prefer
to be the one just following the leader. That is a safe
play, and a better alternative. Even the various European
nations have learnt their lessons from the recent past.
Being a world leader could also invite unwanted troubles.
For that, the US has yet to learn.
The Asia Rising - more than the US twin deficits
and the new terrorism - can be the main obstacle for
the consolidation of the hegemonic role of the US? Do
you think that, finally, the 21st century will be the
truly "Asian Century"?
Asia could provide a global leadership in a different
way. There are countless good merits in Asia. Asians
have strong family ties, love education, and are willing
to do hard work. Their best merit is this: they face
tough situations with a smile and harder work. These
are some of the merits for the rest of the world to
learn. As Asians gain more economic progress, the rest
of the world will become more willing to learn from
Asians. This will reverse the recent historical trends.
For this and only for this, 21 century will be Asian.
To me, 21 century will belong to the world, not just
Asia/China. For this century, sharing and common wealth
will become more significant than ever before. As a
result, more nations will benefit. This is a trend that
can only grow. For the world is already tightly linked
by business and economy. A car produced in Detroit has
engine made in Europe and wheels made in Asia - with
raw materials coming from Latin America and Australia.
It takes a shared work and its benefits go beyond any
single country. Also, at the next level, China and India's
strength lies in the low cost structure. But the developed
nations can easily tap into this market. They benefit
more than anyone else. Also, for consumers in the developed
nations, they can enjoy the cheapest products as well.
So, 21 Century belongs to the entire world. It presents
a grand platform for the convergence of global civilizations,
though only in its very beginning. Even so, it shows
a bright direction for the world, despite all the new
worries and conflicts
Second idea: "Even if the US is
not willing to be more open, it will be more aware of
the others' existence. In short, a new power balance
will emerge gradually, and most likely indirectly"
Can China emerge as a global challenger for the
US hegemony? Or its emergence will be episodic like
the Japanese short take-off as a global economic challenger
in the 80's of last century?
The reemergence of both China and India today will impact
on the global balance for sure. But it may come from
a different context. That is, it may come gradually
and indirectly. It is because that India and China take
40% of world population. If they double their income
in the next ten years, the rest of world will feel it.
Their enormous size means a lot already. How about the
US hegemony? Well, the US will become more willing for
consultations and dialogues with India, China and rest
of world. Even if the US is not willing to be more open,
it will be more aware of the others' existence. In short,
a new power balance will emerge gradually, and most
likely indirectly. More significant, it may not repeat
the bloody rivalry as in the past. History shows that
bloody rivalry may produce no winners. As far as the
US is concerned, it is also learning as to how to act
like a leader. There are no ready teachers for the leader.
It makes more mistakes on its own weight. This weight
may become too burdensome for it to handle. It has happened
countless times in Man's History. Interestingly, the
great powers in the past have all been pulled down more
by their own weight than anything else. Should the future
be any different?
Third idea: "China is being very
careful not to let world politics mess its economic
development. This will become a long-term strategy as
well as a dominating mentality"
Is China able to grow, even if slowly, a sustainable
coalition against the incumbent power, something that
the new Russia never gets since the 80's? The strategic
agreements with strategic countries all over the world
(like those in 2004 - Brazil, Venezuela, South Africa,
Iran, Golf Council) can change the world balance?
Economically, the world is more connected. But political
rivalry is still intense. The political mentality must
be changed to meet the changing realities. Otherwise,
this cold war mentality will produce a mess for the
world. China's growing economy will create more economic
partnerships than anything else. China is being very
careful not to let world politics mess its economic
development. This will become a long-term strategy as
well as a dominating mentality. China is also being
very conscious about the international concerns. It
now acts as an eager learner willingly. It shows that
China has gone beyond the old mentality. That has made
China's development a global thing as today.
Do you think China in this first half of the century
can surpass the US in pure economic terms, as Goldman
Sachs Reports are saying?
It is less meaningful to say that China will surpass
US in any given time. However, China's growth is real
and sustainable, despite all the imperfections. This
conclusion is based more in the massive population size
and their desires for a better life than in relation
to their economic realities that still are very low.
Many regions in China are only beginning to develop.
It may be more meaningful to look at it this way - for
example, if every five Chinese will use one more Kodak
film role a year, China will double the size of US.
In the mobile phone business, China is already more
than twice the size of the US. But no, China will remain
a low-income nation for a long time. A direct comparison
may be less meaningful. Even so, China will enjoy a
prosperous life if its income per capita reaches 20%
of the US. Similar things may also be true for India
and many other developing nations. Importantly, we have
new lesson for the world: burdensome large population
may be turned into a productive force if a fair and
rational platform is created. In this context, both
India and China are moving forward brilliantly.
China must enter in a G-something world big powers'
club? Some think tanks proposed this year that China
must enter a G4 with US, European Union, and Japan.
It is highly positive for the outside world to be more
open. But let us not expect too much that memberships
will get benefits. Even so, gaining access shows the
increased international interest in a growing China.
Walking out the old world mentality takes efforts for
Korea and Taiwan are real volatile issues for Chinese
strategy, compromising the possibility for a "peaceful
For China, the Taiwan issue is most urgent. It is so
complex, because it involves the US interest significantly.
But it is more than a political issue. Economically,
Taiwan is well connected to Mainland China. One highly
feasible way is not to let the water boil too much and
wait for the future generations for solutions. The only
problem for now is that politicians on both sides are
impatient somehow. It is made worse by the troublemakers
in Washington. The Korea issue is easier. China is willing
to play its part in finding a resolution. Even so, one
should not expect a smooth sail for the Korea issue.
It still poses a great challenge for the world.
The Chinese Diaspora (the Overseas Chinese) in South
Asia (Singapore for instance) and all over the world
(including Americas and Europe) is important for China
globalization, as it is the Indian Diaspora (the so
called "bollystan" by the Indian strategists)?
So far, overseas Chinese as a group are the biggest
investor in China. Also, they add more values by playing
a bridge role for China and the outside world. However,
their power displays best by their vast numbers. They
mostly focus on low-end businesses. For example, Hong
Kong businessmen are the biggest investment group in
China. But they focus on toys, clothes and household
products mostly. Individually, the foreign multinationals
are more influential in China as a group. They are the
leader in IT, pharmaceutical, energy, auto and other
capital-intensive businesses. Most Chinese professionals
want to work for the multinationals. For now, more than
23 million Chinese work for the overseas employers.
Fourth Idea: "This hub is bound
to expand in all directions. It is now being upgraded
and moving toward R&D, financial and services. This
process is unavoidable. Also, it may take less time
China will be the World Factory, the world-manufacturing
center of the 21 Century? Or it can be more that that,
also with a global positioning in off-shoring business
processes and other services, including R&D and
So far, China has been able to build a manufacturing
hub for the world. This hub has emerged in a natural,
and even accidental, way other than by design. But it
is reaching a rational level by now. This hub is bound
to expand in all directions. It is now being upgraded
and moving toward R&D, financial and services. This
process is unavoidable. Also, it may take less time
than thought. Things keep getting fed on their own merits.
For this, international multinationals play a large
role. So far, around 400 new sizable R&D centers
are in operation that are all owned by foreign parties
or joint ventures. The Chinese companies are also trying
hard to move up in the value chain. For example, China's
retail chain business is vibrant, though only about
10 years old. A better Chinese economy will have to
come from innovation. Also, it is not restricted to
technological issues. To me, it is more concerned with
leadership, organizations and governance.
What you mean by that management revolution?
There is a huge room for innovation for all these things
and beyond. Otherwise, R&D would not make business
sense. In general, Chinese businesses are still weak
in building professional organizations and effective
management. Professional management is new to China.
In the West, a CEO may work for five different companies
in his career. In China, he can work only for one. It
takes time to build modern professional organizations.
Also, there is an overcrowd situation in every sector
now. For example, China has some 400 air-conditioning
makers and some 100 carmakers. They face deadly competition.
To move ahead, there must be consolidations. But rational
consolidations demand a more professional setup and
management. Otherwise, M&A would not work. Now facing
a deadly market competition, China is beginning to embrace
merger activities. Indeed, if China's electronics and
home-appliances makers, now counting about 1,300, are
reduced to half dozen, these resulting companies will
be the biggest in the world. This may take a couple
of decades to materialize. The great thing is that China
is fast moving, significantly due to the international
involvement. The troublesome issues concern how to turn
both the state sector and private sector companies into
professional organizations before meaningful mergers
can function right. There are no small issues when China
is concerned. Turning China from a government-centered
economy into a modern economy demands to create the
entire package. It must have all the right components.
Can you give an example?
One large example is with the big four state banks.
Despite an economic boom, they have been faltering up
to now. There is an urgent way to clear up the banking
house. But it is hardly a banking or business issue
alone. It takes to reform the entire political-economic
framework in place. In short, these four banks must
be turned into independent professional organizations
with a right ownership and governance as well as a professional
management. In particular, it will have to serve the
market needs other than government. Today, more actions
are taken in this new direction. More is urgently needed.
You wrote that China is an "old man with baby
clothes". The major obstacle to China growth is
the bureaucratic power?
This uncontained bureaucratic power has been the ultimate
and lasting problem for China. In my book, I state that
this bureaucratic problem is like cancer and it has
spread all over the body. To be sure, China's bureaucratic
power has been expanding for 2,200 years, from Qin Dynasty
to Mao era. This bureaucratic power has been able to
contain all the private initiatives effectively and
completely. China has always had a vibrant private sector,
but it has failed to create a modern market economy
and a true private ownership. Since 1978, China's bureaucratic
power has been on the decline. It has directly given
birth to the sharp rise of private sector. It is this
private sector that is most responsible for a booming
economy. What a contrast! This contrast is even more
meaningful when considering that China has the same
soil, land and people. But people are happier, more
prosperous and more productive than in Mao era.
The pragmatic approach of the old Sun YatSen in the
1910's and of the late Deng XiaoPing in the 1970's is
not sufficient for a path of political and social change?
Throughout the long search for a better nation in the
past 200 years, China has not really had the opportunity
to resolve the basic issues of this untamed bureaucratic
power from the root-causes. Instead, there have been
full of shortcuts. Socialism is nothing but a shortcut
in China in the past half century (though many outsiders
argue that China has not had a true socialism). Through
this socialist slogan, the government power has been
expanded into the lowest grassroots levels. The society
and people have been deeply trapped for long. China's
economy went dead. But the government bureaucrats have
benefited greatly. Their power has expanded in all possible
ways, and eventually reached the household level. No
citizens were left independent, not even monks. This
never happened before in China's entire history. In
particular, each old dynastic government had a small
official body. One hundred years ago, the government
had only some 20,000 officials administrating over this
vast nation of 400 million at the time. But since 1949,
this bureaucratic body has grown to mount to several
millions. Yet, in Mao era, China encountered the biggest
manmade tragedies with the people's commune, Great Leap
Forward, and Cultural Revolution. Even today, it is
still the highest, as well as most formidable, goal
for China to contain the bureaucratic power.
Fifth idea: "Chinese businesses
have tiny profits made at home. Instead, they must seek
active partnerships with the outside world. China is
to become the dumping ground for low value added business.
This new type of strategic alliances will become more
The IBM-Lenovo agreement is a signal
of a new Era for Chinese multinationals? Is this a different
path from the Japanese strategy of the 1980's that you
reported so clearly in the interesting "theatre"
dialogue in some chapters of your book?
Chinese companies have gained enormous progress, especially
in manufacturing. But they have gained limited progress
with brands, intellectual property and distribution
network, especially in the outside world. Moreover,
their profits are tiny due to intense competitions and
low value added manufacturing business. As a result,
there is no way for the Chinese to follow the Japanese
model for the international expansion. Japanese businesses
made healthy profits at home before they went out. But
the Chinese businesses have tiny profits made at home.
Instead, they must seek active partnerships with the
outside world. This is a realistic way for the Chinese.
Good progress is also visible in this context. For example,
TCL has joint ventures with Thomson and Alcatel on TV,
DVD and mobile phones. Now there is the high-profile
deal for IBM-Lenovo. Why did IBM do it? It not only
dumps a low profit business, but also gains a growing
partner that is beginning to tap into the outside world.
Also, through partnership, IBM hopes to cross sell more
products to China. For Lenovo, it is a dream coming
true. Upon it, it is a global player. This could become
a trend. That is, China is to become the dumping ground
for low value business. This new type of strategic alliances
will become more popular. In this way, the best resources
from both worlds can be better utilized.
What are the main economic clusters that are changing
the international specialization profile of China?
China is on everyone's map. An effective channel is
built and being expanded. More international companies
will add programs to get more from China, both as a
factory and market. There is a need for China to move
beyond a mere manufacturing hub. The urgent needs include
a better banking, more effective financial system and
services, and a higher intellectual work. For a long
time, China is known as a cheap labor hub. Now international
businesses realize that there is a vast pool of intellectual
talents in China. Oracle and HP only need to pay $800
monthly to get a top Chinese engineer. For this, India
is far ahead of China. Indian IT companies are also
leading global players.
What's your main advice for foreign investors, particularly
There are great success stories of European companies
in China. They include names like Glaxo, Zeneca, Nestlé,
Nokia, Siemens, Unilever, Philips, BP, Fiat, Carrefour,
H&Q, Makro, HSBC and Volkswagen, among many others.
Siemens has 30,000 Chinese employees and 45 factories
in China now. For Volkswagen, China contributes 20%
sales already. It is adding 8 billion euros now and
hopes to make China half of its global business. Carrefour
can make more profits in China than in any other place.
Now, it has 60 mega stores and is adding more. Its only
problem, seemingly, is that American Wal-Mart is following
its tails. For Unilever, China is already its heaven
for profits. But it must compete with American P&G
and many other brands.
How did they succeed?
Well, all happy players are the same, while the unhappy
ones each has its own stories. The successful ones have
done all the right things in China. These things include
long-term commitment, well-organized and flexible organizations,
realistic strategies, and most significantly, leadership.
Also, a localized management is significant. No shortcuts.
The bottom line is this: grow with China. My book offers
more than a dozen case studies, both successes and failures
© Gurusonline.tv, December 2004
A TALE OF A NEW AFFLUENT CHINA
"China will be turned into a nation called Global
China. This makes a strong contrast to what is inside
Japan where things are still a Japanese play at large.
But China's theater will have countless international
What are the main growth "engines" today
Consumer products. One example, by the end of 2004,
China had 330 million mobile phone users. So far, international
suppliers have made more profits by selling their chips,
components, equipment and raw materials to the growing
Chinese manufacturers. But the badly needed things are
services, especially financial, education, logistics
and retail. In short, China needs everything and anything
can be profitable if done right.
Can we consider that a middle class is booming in
the Chinese society?
Urban centers are the hubs of great wealth. So, 50 top
Chinese cities possibly take 50% or more of wealth in
China. Most urban residents in the big cities are already
middle class one way or another. Of which, businessmen,
teachers, civil servants and professionals are the core.
The rural income growth is less impressive. But 150
million rural migrant workers effectively narrow the
gap. Many of them make profits in cities. They then
open their own shops at home. It is said that they run
millions of small retail outlets and beauty shops now.
This is a very significant factor in promoting an overall
Probably in less than a decade China will have more
cybernauts and customers (for a market economy) than
the US. What will be the major consequences?
It will produce more international flavors. It will
be more open, diverse and mature, but more competitions
as well. In a way, China will be turned into a nation
called Global China. This makes a strong contrast to
what is inside Japan where things are still a Japanese
play at large. But China's theater will have countless
international actors. In many sectors, such as auto,
films, beauty products, retail, and IT, the foreign
businesses are also the leading players. In short, China
is becoming a global theater. This makes China's development
more positive and interesting. A grand lesson from China
is this: no nation can truly develop without making
itself open to the world.
A PERSONAL STORY
THE LUCKY GENERATION
What impressed you more - as a young urban Chinese
- in the shift period after the fall of the "Gang
of Four" (the leftist heirs of Mao)?
It was an age of wonder and hope. The most impressive
thing in 1978 was that colleges were reopen. Some of
us, say 4% of youth, could go to college (Today, this
number is much bigger). Before then, for some 12 years,
urban high school graduates were sent to work in rural
regions. All in the sudden, we could get a college education.
Immediately, schoolteachers became important. Also,
kids took books seriously. Some incidents happened where
kids who failed to enter college committed suicide.
It was also an age of eye opening and rationalizing.
In the late 1970s, a traditional government centered
society suddenly became restless, having gone through
all the bitter events. All Chinese became interested
in things outside China, anything and everything. We
were eager to know what is in the outside world. We
developed a mentality that everything in the West was
great and everything at home bad. That was the beginning
point to open China to the outside world. By the high
intensity, we vaguely felt that bigger things would
emerge. Yet, we did not quite know what.
In your book you consider yourself and the generation
born in the 1960's as a lucky generation. Why?
This generation is a lucky group indeed. They directly
entered the era of reform at the right age. They have
more opportunities than their elders. They have been
young enough to get what they want. The society has
changed so that they can focus on things they are interested.
Many high-profile businessmen today are in this age
group. They are more open and eager to accept international
Do you think this lucky generation is today the anchor
for the changes needed?
This lucky generation has done a right job. They have
performed a leadership role in changing things for the
last two decades. They have created a new competitive
economy at large. But the future belongs to the younger
generations. They are more open, their tastes are more
international, their desires boundless. They are more
egoistic, entrepreneurial and better educated. They
will lead China into the next stage for sure. Also,
changes are so dramatic that an 8-year difference may
make a new generation - a reality in China today.
STORY NUMBER TWO
A critical view from the center of the Global Power
CHINA REPLACED THE UNITED STATES AS THE TOP EXPORTER
"The US is treading the same path followed by the
Chalmers Johnson is concluding a trilogy of books
devoted to the decline of the US global power. Blowback:
The Costs and Consequences of American Empire (New York:
Holt Metropolitan Books, 2000) was the first and The
Sorrows of Empire: Militarism, Secrecy, and the End
of the Republic was published by Metropolitan in 2004.
Blowback won the 2001 American Book Award of the Before
Columbus Foundation. Both books have translations for
Portuguese (with Brazilian Grupo Editorial Record -
and Spanish (with Editorial Crítica in Barcelona
- and Editorial Laetoli of Pamplona - www.laetoli.net).
The final book of the trilogy is titled Twilight of
the American Republic and will deal with "the consequences
of American imperialism and militarism". The main
argument of the trilogy: the US is embarked on a path
not so dissimilar from that of the Soviet Union in its
decline period. "The United States was by far the
wealthier of the two Cold War superpowers, so it will
certainly take longer for the sclerosis to set in and
for the collapse of the whole edifice", said Chalmers
to Gurusonline. This decline of the US gives a window
of opportunity for global challengers. Chalmers Johnson
is president of the Japan Policy Research Institute,
a non-profit research and public affairs organization
based in California and devoted to public education
concerning Japan and international relations in the
Pacific. He taught for thirty years, 1962-1992, at the
Berkeley and San Diego campuses of the University of
California and held endowed chairs in Asian politics
at both of them. At Berkeley he served as chairman of
the Center for Chinese Studies and as chairman of the
Department of Political Science. His B.A., M.A., and
Ph.D. degrees in economics and political science are
all from the University of California, Berkeley. His
personal story is linked with Asia. He first visited
Japan in 1953 as a U.S. Navy officer and has lived and
worked there with his wife, the anthropologist Sheila
K. Johnson, every year between 1961 and 1998. Chalmers
has been honored with fellowships from the Ford Foundation,
the Social Science Research Council, and the Guggenheim
Foundation; and in 1976 he was elected a fellow of the
American Academy of Arts and Sciences. He has written
numerous articles and reviews and sixteen books, including
Peasant Nationalism and Communist Power on the Chinese
Revolution, An Instance of Treason on Japan's most famous
spy, Revolutionary Change on the theory of violent protest
movements, and MITI and the Japanese Miracle on Japanese
economic development. He was chairman of the academic
advisory committee for the PBS American television series
"The Pacific Century," and he played a prominent
role in the PBS "Frontline" documentary "Losing
the War with Japan." Both won Emmy awards. Chalmers
Johnson is a member of the American Empire Project.
of the American Empire Project
Website of the Japan
Policy Research Institute
Blowback at Amazon
The Sorrows of Empire at Amazon
Chalmers Johnson can be contacted by email
US Global Power is at the end of its geo-political
cycle? Or can the US double the hegemonic mandate as
the British did for more than 200 years?
I believe that the United States today is treading the
same path followed by the former USSR up to its collapse
in 1991. There were three main causes of the Soviet
disintegration, all of which are starting seriously
to assail the United States.
Can you detail?
First, extreme rigidity in economic institutions, dictated
by an overly literal reading of either Marxist-Leninist
or capitalist ideologies. The U.S. today is characterized
by a union between capitalist robber-barons and extreme
right-wing politicians, much like the so-called "gilded
age" of 1890 to 1914. Corruption in government-business
relations is deep and institutionalized, as we see in
cases like Enron, the weak governmental oversight of
the pharmaceutical industry, and in the gutting of the
environmental protection laws for the sake of big corporations.
The second cause was imperial overstretch, as defined
by historian Paul Kennedy. The U.S. today has over 700
military bases in 132 countries and is going deeply
into debt maintaining them, on top of its military adventures
in Iraq and Afghanistan. This is a fatal condition.
Third, inability to reform. In the case of the former
USSR, Gorbachev tried to reform the system through "perestroika"
and "glasnost" but failed. The U.S. is not
even trying to reform itself. Instead, the public has
re-elected the suicidal George W. Bush as president.
First Idea: "The World changed
on November 2, 2004. Bush's war has changed into America's
To achieve an extended period of hegemony in the
middle of great change in the geo-political arena, what
is more "suitable" for US Global Power - an
"indirect approach" or a "pre-emptive"
strategy? Voting for George W. Bush second term, the
majority of Americans apparently expressed their "feeling"
that US must act openly as a lonely hegemonic power,
in the traditional warfare way that dominate the geo-politics
till the end of 2nd World War?
The world changed on November 2, 2004. Until then, ordinary
citizens of the United States could claim that our foreign
policy, including our invasion of Iraq, was George W.
Bush's doing and that we had not voted for him. In 2000,
Bush lost the popular vote. This time he won it by over
3.5 million votes. The result is that Bush's war has
changed into America's war.
What's the consequence?
Whether the American people intended that or not, they
are now seen to have endorsed torture of captives at
Abu Ghraib prison in Iraq, at Bagram Air Base in Kabul,
and at Guantánamo Bay, Cuba; a rigged economy
based on record-setting trade and fiscal deficits; the
greatest reliance on secrecy of any postwar American
government; the replacement of international law with
preventive war; an epidemic of nuclear proliferation;
and many other aberrations that can only elicit hostile
and defensive reactions in all other nations of the
world. For supporters of American imperialism, an indirect
approach, such as that of former president Clinton,
is much to be preferred. He disguised American hegemony
under such rubrics as "humanitarian intervention"
(Serbia and Kosovo) and "globalization" (using
the IMF to make the poor countries of Latin America
even poorer) and pretending to support the U.N. Security
Council. George W. Bush has dropped the mask and is
proclaiming a unilateral right to bring about regime
change in countries that try to resist America's imperial
sway (the "axis of evil"). As a result the
world today is quietly and indirectly creating structures
to frustrate anything and everything the Americans try
to do in the world. When the American empire collapses
the world will be no more sorry to see it go than when
the Soviet empire collapsed.
The third globalization wave of the 1970's and 1980's
of last century is over, as you mention at your recent
As I argue in Chapter Nine of The Sorrows of Empire,
globalization has now been revealed as a hoax sponsored
by the United States. Globalization is an attempt to
camouflage American economic imperialism by claiming
that American behavior abroad is dictated by ineluctable
forces and technological developments, not by conscious
policy. It was the aftermath of the September 11, 2001,
that more or less spelled the end of globalization.
Whereas the Clinton Administration strongly espoused
economic imperialism, the Bush government was unequivocally
committed to military imperialism. However, whenever
globalization might damage American economic interests,
it is invariably ignored (as in George W. Bush's protection
of the domestic steel industry and America's agro businesses).
Increasingly even people who believed in pro-globalization
solutions to international economic and environmental
problems threw up their hands in despair. The only people
left who believe in globalization are university professors
of economics, who continue year-in and year-out to recycle
their old lectures.
Second Idea: "The twenty-first
century will certainly be dominated by a rich, confident,
and well-educated East Asia but it will also feature
the continued integration of the European Union and
the development of a genuinely anti-American bloc in
Latin America and the Caribbean"
The Asia Rising - more than the US twin deficits
and the new terrorism - will be the main obstacle for
the extension of the US hegemonic role? Do you think
that, finally, the 21 century will be the truly "Asian
The U.S.'s military stance in East Asia is anachronistic.
The major trends in the area are commercial, including
China's decisive turn toward capitalist economic development,
free-trade agreements between the Southeast Asian countries
and China, and the growing economic integration between
Taiwan and the Chinese Mainland. As China begins to
achieve levels of wealth comparable to those of the
rest of East Asia, a basis for genuine stability, not
one imposed by military force, is created. The main
cause for pessimism in East Asia is the political and
economic situation in Japan. The twenty-first century
will certainly be dominated by a rich, confident, and
well-educated East Asia but it will also feature the
continued integration of the European Union and the
development of a genuinely anti-American bloc in Latin
America and the Caribbean. The most important developments
are the opening of the China market to Latin American
agricultural exports, China's competition with the United
States for Canadian oil, and China's long-term investments
in countries like Iran and Kazakhstan. The old-fashioned
reliance on military force will probably drag the United
States down and Japan with it.
Can China emerge as a global challenger for the US
hegemony? Or its emergence will be episodic like the
Japanese short take-off as a global economic challenger
in the 1980's? Is China able to grow even if slowly
a sustainable coalition against the incumbent power?
China is destined to become a superpower -- one with
an economy as big as that of the United States with
five times the population. China is not a military threat
to the world, but it will soon have the capacity to
defend itself against American aircraft carriers and
satellite surveillance systems. China's achievement
of great economic strength might have military implications
in the future, particularly if the United States continues
to menace it, but economic growth is more likely to
give the Chinese people a stake in peace and stability
and provide the foundations for a transition to democracy
comparable to the one that occurred in Taiwan in the
late 1980s. Taiwan today enjoys democratic government,
but until 1988 it was ruled by a single-party autocratic
regime that had imposed martial law for forty years.
The achievement of high levels of income in Taiwan ultimately
made the authoritarianism of the Nationalist Party untenable
and led to the end of its monopoly of power. That is
what is happening in China today. The greatest threat
to further progress is the warmongering of the United
Can you give an economic fact that expresses the
change of relations between the two powers - China and
Japan - in Asia Pacific?
As a sign of this Chinese progress, in the second half
of 2002, China replaced the United States as the top
exporter to Japan. China is still Japan's number two
trading partner behind the United States, but the figures
indicate that China is rapidly passing the U.S. as the
top exporter to Japan. Roughly 17.8 percent of all goods
imported by Japan came from China during the first half
of 2002, according to the Japan External Trade Organization
(JETRO). That is just behind the U.S., which accounted
for 18.2 percent of Japan's imports over the period.
But whereas imports from China increased over the period,
imports from the U.S. decreased -- narrowing the gap.
The growing economic integration between China and Japan
and China and Taiwan reveals how threadbare the United
States emphasis on military bases and carrier task forces
Third Idea: "During the 1990s Japan's
political system failed to reorient the country's economic
strategy, and thus Japan began a long decline until
it may soon become the Argentina of East Asia - a once-rich
country that has lost its way"
As a privileged observer of the Japanese reality,
do you think Japan can reemerge as one of the global
powers, or Europe, China and India will "bury"
the Japanese Dream?
Japan is the sick man of Asia. After Japan's tremendous
postwar economic growth, it made several decisive errors.
Instead of enlarging domestic demand and establishing
mutually beneficial trading relations with the other
countries of East Asia, it continued to rely on its
old Cold War relationship with the United States. During
the 1990s Japan's political system failed to reorient
the country's economic strategy, and thus Japan began
a long decline until it may soon become the Argentina
of East Asia - a once-rich country that has lost its
way. It has tied itself too closely to the United States
as a military satellite and economic dependency. As
a result it is in danger of losing its ability to adjust
to the world of post-communist Asia. As the country's
decade-long economic recession continues and its political
system has proven unequal to the challenge, Japan seems
unable to forge an effective economic strategy. Japan
is beginning to look like a one-time prosperous country
that through complacency and an obsequious pursuit of
American economic nostrums is declining into mediocrity.
Do you think Japan can reverse that trend?
Despite innumerable calls for reform and continuous
churning of the Japanese political system, nothing has
changed. Its single-party system is still torn by corruption
and incompetence. Japan's only real future lies in cooperative
integration with China and the rest of East Asia. So
far many Japanese businesses understand this and are
making important investments in China. But the prognosis
is not good. Japan needs a revolution, one that its
leaders cannot envisage and that its American military
masters would try to frustrate if it ever seemed likely
From the recent US "pre-emptive" doctrine
first applied in the Middle East, what kind of "blowbacks"
can we expect at the world level?
Let me begin with the concept of "blowback".
Even an Empire cannot control the long-term effects
of its policies. That is the essence of blowback. The
term was invented by officials of CIA for their internal
use, but started to circulate among students of international
relations. It refers to the unintended consequences
of policies that where kept secret from the American
people. And because we live in an increasingly interconnected
international system, we are all, in a sense, living
in a blowback world.
And about the long-term mean of Iraq operation?
The Iraq war is very possibly the most serious self-inflicted
wound in the history of American foreign policy. It
was caused by American imperialism and militarism, which
are the subjects of my recent book The Sorrows of Empire.
Imperialism and militarism are not outdated ideological
Let me make clear what I mean by imperialism and militarism.
According to the Pentagon's annual inventory of real
estate -- its so-called Base Structure Report -- we
have over 725 military bases in some 132 countries around
the world. This vast network of American bases constitutes
a new form of empire -- an empire of military enclaves
rather than of colonies as in older forms of imperialism.
Our military deploys well over half a million soldiers,
spies, technicians, teachers, dependents, and civilian
contractors in other nations. To dominate the oceans
and seas of the world, we maintain some twelve carrier
task-forces, which constitute floating bases. We operate
numerous espionage bases not included in the Base Structure
Report to spy on what the people of the world, including
our own citizens, are saying, faxing, or e-mailing to
one another. Our installations abroad bring huge profits
to civilian industries, which design and manufacture
weapons for the armed forces or, like the now well-publicized
Kellogg, Brown & Root Company, a subsidiary of the
Halliburton Corporation of Houston, undertake contract
services to build and maintain our outposts. One task
of such contractors is to keep uniformed members of
the imperium housed in comfortable quarters, well fed,
amused, and supplied with enjoyable, affordable vacation
facilities. As an official with Kellogg, Brown &
Root put it, "We do everything but pull the trigger."
In Iraq, there is evidence that they also do some of
that. Today we have a professional, permanent standing
army, plus its array of privately outsourced services,
that costs around three-quarters of a trillion dollars
a year -- that is, about $750 billion. This amount includes
the annual Defense Department appropriation for weapons
and salaries of more than $425 billion, plus another
$75 billion for Iraq and Afghanistan operations, $20
billion for nuclear weapons in the Department of Energy,
and at least $200 billion in pensions and disability
payments for our veterans. We are not actually paying
for these expenses but putting them on the tab. Since
we are today running the largest governmental and trade
deficits in modern economic history, our militarism
threatens us with bankruptcy. The final sorrow of empire
is financial ruin. It is the only sorrow that will certainly
lead to a crisis. In my book I devote the final chapter
to the likely consequences of our imperialism and militarism.
These are perpetual war, the end of the Republic, official
lying and disinformation, and bankruptcy. I go into
detail on each, documenting how advanced they are in
our society. My intent is to mobilize inattentive citizens
to information that I know they don't have because our
government does everything in its power to see that
they don't, but that they need if they are not to lose
our Republic and the civil liberties it defends.
Fourth Idea: "The main feature
to watch for within the United States is the progressive
enlargement of the power of the Pentagon leading eventually
to a military take-over of the government"
In a prospective approach what kind of unexpected
events, emergent signals or other geo-political footprints
and trends do we must follow with particular attention?
The main feature to watch for within the United States
is the progressive enlargement of the power of the Pentagon
leading eventually to a military take-over of the government.
The Roman Republic, from which the founders of the United
States drew many institutional precedents (separation
of powers, term limits, fixed elections, toleration
of slavery), offers the best example of the pattern.
The Roman republic, which collapsed in 27 BC, failed
to adjust to the unintended consequences of its imperialism,
leading to a drastic alteration in its form of government.
The militarism that inescapably accompanied Rome's imperial
projects slowly undermined its constitution as well
as the very considerable political and human rights
its citizens enjoyed. The American republic, of course,
has not yet collapsed; it is just under considerable
strain as the imperial presidency-and its supporting
military legions-undermine congress and the courts.
However, the Roman outcome-turning over power to an
autocracy backed by military force and welcomed by ordinary
citizens because it seemed to bring stability-suggests
what might happen after Bush and his neoconservatives
are thrown out of office.
Can you tell us the main subject of your forthcoming
I did not set out to write a trilogy on the twilight
of the American republic. It was dictated by events.
Blowback (2000) predicted that victims of our clandestine
activities abroad would carry out some form of retaliation
against the United States. This occurred on September
11, 2001. The Sorrows of Empire (2004) detailed the
connection between our growing imperialism and our militarism.
Twilight of the American Republic, the final book of
the trilogy, spells out the trap we have set for ourselves
and the likely failure of the American political system
to heal the wound we have sustained as a nation. It
portends the decline and fall of the American republic.
Twilight consists of seven interrelated chapters, ranging
from an analysis of the trap itself -- the president's
breaking the balance among the branches of our government
because of his use of a secret, unaccountable army under
his personal command (the CIA) -- to the inevitable
bankruptcy that will accompany our imperial overstretch
and isolation in the world. Salient features of this
book are a chapter on how militarism and imperialism
destroyed one of the models the founding fathers drew
upon in creating our government: the Roman republic;
an up-to-date exposé of the military-industrial
complex and its huge vested interests in more wars;
and a new and original report on one of the most secret
aspects of our imperialism-how we use the Status of
Forces Agreements (SOFAs) we impose on our satellites
to keep them in line and ensure that they help pay for
the upkeep of our empire.
Fifth Idea: "The only thing that
will work is a series of events that will cause considerable
suffering for most ideologically mesmerized Americans"
What was the main feedback to "The Sorrows
of Empire" that impressed you more?
Americans are scared. They fear that we have already
crossed our own Rubicon and that there is no way to
reverse the deteriorating conditions we have created
domestically and internationally. A majority of U.S.
voters seemed to regard November 2nd as "An Electoral
Affirmation of Shared Vales," which is the title
of a front-page article by Todd Purdum in the November
4, 2004, New York Times. According to a survey that
a consortium of all the major news agencies in the country
conducted on election day, the American public put "moral
values" ahead of the economy, "terrorism,"
Iraq, health care, taxes, and education, as the "issue
that mattered most." Of the people who chose "moral
values" as their top issue, 80 percent voted for
Bush. For people who chose the economy, 80 percent voted
for Kerry. Nearly one-quarter of the electorate was
made up of white evangelical and born-again Christians,
and they voted four to one for Bush. They are totalitarians
in the strictest meaning of the word. The thought that
American policy is being made by religious fundamentalists
may well drain all legitimacy from virtually everything
the U.S. tries to do in the world. The Sorrows of Empire
was a very successful hard-back best seller in the United
States, but it was not read by the overwhelming mass
of Americans, who are ill informed about the world and
about their own government. It is not clear that the
American public can be enlightened by any book. The
only thing that will work is a series of events that
will cause considerable suffering for most ideologically
mesmerized Americans -- which is precisely what is unfolding
© Gurusonline.tv, December 2004
A contrarian view from Europe
Andre Gunder Frank
"We are witnessing the re-emergence of Asia"
The 21 Century will be Asian. But first
the US global power must be "dethroned" and
Asia and Europe have a common interest in doing so -
that's the argument of André Gunder Frank, 75,
a contrarian economic historian and globe-trotter since
he was born in Berlin in 1929. Surprisingly, Gunder
Frank reverse all the traditional Braudel historiography
about the "eurocentric" hegemony of geo-politics
since the Discoveries by the Portuguese lead by Henry
the Navigator till the US emergence in the 19th Century.
His research in the 1990's published in his book ReOrient:
Global Economy in the Asian Age, 1400-1800 (University
of California Press, 1998), reexamined world historical
evidence which shows that Asia was predominant in the
world before and still during that entire period between
the 15th and the 19th Centuries. Even China did not
really "decline" until after the Second Opium
War in 1860. That's why Frank entitled is forthcoming
book ReOrient the 19th Century as well. The geo-political
consequences of this argument are uncomfortable for
western euroatlantists: first, the Western hegemony
is much more recent and short than the common idea,
and "perhaps passing", says a provocative
Frank; second, the present Asia rising, and particularly
China rising, is a re-emergence, a coming back to the
balance of power before the 19 Century. All the life
of Gunder Frank was an "Oddisey"" around
several continents - he is truly a "global"
citizen, managing seven languages ("but in each
one of them badly at best", he says laughing).
He left Germany to Switzerland as a 4 years kid when
his parents had to escape the Nazi regime in the 1930's.
In 1941 Frank family entered the United States. He was
educated at the University of Chicago, where he received
his Ph.D in Economics in 1957 with a dissertation on
Soviet Agriculture. In 1962 he went to Latin America
and became associate professor at the University of
Brasilia. He was head of staff for President João
"Jango" Goulart, until the military coup of
1964. He went to Chile and then to Mexico, and from
1966 to 1968 he was professor in Montreal, Canada. In
1968 he came again to Chile, where he was involved in
the reforms of the late President Salvador Allende.
After the military coup of Pinochet in 1973, Frank and
family escaped to Germany. From the 1970's till the
present, he changed country frequently. His elder son
says that he has moved 43 times with his father. Andre
Gunder Frank was linked to the "Dependence Theory"
of the sixties, as one of the founders. The motto of
that decade was the "development of underdevelopment"
In Latin America and in the Third World. In the 1990's,
Frank changed his attention to world history and became
this contrarian research about the world system in the
last five thousand years. Frank is the same human that,
as a young searching for employment in the States, was
considered, by a test, with "aptitude for nothing,
and especially no intellectual aptitude". Some
of the short answers that André Gunder Frank
gave to Gurusonline speak for themselves. Frank works
now as an associate of Luxembourg Institute for European
and International Studies, and also as a visiting professor
of the Universita di Calabria, in Italy. He is a senior
fellow of the World History Center, in Boston.
ReOrient: Global Economy in the Asian Age, 1400-1800
The Chinese are shocked when analysts from Europe
or the US tell them that the 21 Century will be "Chinese"
and that China will be the challenger of the US global
power. Pragmatically they say they prefer that geo-politics
do not mess its strategic long goal of economic development.
What is your opinion?
None for now about what the Chinese say.
One of the conclusions of your recent studies about
the world system it is the contrarian idea that the
Western hegemonic geo-political cycle is a short historical
period, probably from the Second Opium War in 1860 till
now, with a short Pax Britannica and afterwards a Pax
Americana. This contradicts also the studies about the
long geo political cycles that identifies the Portuguese
as the first global power in the XV Century. Why you
argue so clearly against this westernised view of history,
referring, on the contrary, the centrality of Asia?
The common idea is clearly nonsense. Little Portugal
and Netherlands could not possibly have exercised hegemony
over the world. And of course they did NOT in Asia where
most of the world lived/lives. Even trade, they never
had even 10 percent of Indian Ocean or South China Sea
trade, none of the north China Sea and none of the caravan
trade. Actually British hegemony was not much and not
long nor US either. Since my book World System (1993)
edited with Barry K. Gills, we argue that the contemporary
world system has a long history in which the rise to
dominance of Europe and the West are only recent - and
perhaps passing - events. My main thesis is conveyed
by my little book The Centrality of Central Asia (1992).
Central Asia remained an important economic crossroads
until at least 1800, was the site of the "great
game" for its domination by others in the 19 Century,
and again for yet another "great game" of
geo-political domination. Then, in my book of 1998 titled
ReOrient: Global Economy in the Asian Age (1400-1800),
I examine world historical evidence which shows that
Asia was predominant in the world before and still during
that entire period. Even China did not really "decline"
until the Second Opium War in 1860. That is why I am
entitling my forthcoming book as ReOrient the 19th Century.
So, you consider that the present Chinese world
emergence is a kind of re-emergence, a path to a return
to the balance of power before the mid-19th century?
Yes. My recent papers argue for the opportunity and
likelihood of an Asian alternative. It is noteworthy
that the economically most dynamic regions of East Asia
today are also still or again exactly the same ones
as before 1800 and which survived into the 19th Century.
Asia, and China in particular, are very likely to recover
the predominant place and role in the world economy
that they already had until at least 1800.
What could be the role of Europe in this transition?
Also an important participant. There was no hegemony
then and probably will not be now.
The 4/5 of the US debt is financed and supported
by Asia. Almost 45% of the US Treasury Bonds are hold
by the Chinese Central Bank. US future is an hostage
and depends on the humour of Asia?
The US trade deficit is now 550 billion a year and
still growing. Every year, 100 billion is supplied by
Europeans, other 100 by China and about 120 by Japanese.
The rest is supplied by others, especially other East
Asians - Taiwan, South Korea, Malaysia, and also by
India now. Of the 700 billions treasury bonds, Chinese
Central Bank holds 300 already, and the Bank of Japan,
Europeans, and oil exporters most of the rest.
What could be in the future the spark that can trigger
the whole change of this "arrangement"?
China has the power to make the yuan an alternative
reserve currency in world trade by simply denominating
all Chinese exports in yuan. This sovereign action can
be taken unilaterally at any time of China's choosing.
A dollar crash would wipe out the Americans' free lunch
and dinner. It would show up the US as the weak giant
Paper Tiger that it is. But Americans don't know that
and why they consume for free now in a kind of doughnut
economy, and they won't understand why they suddenly
cannot do so any more. Listen - China could double its
per capita income very quickly if it made more real
investments at home instead of financial ones in declining
dollars and paper-US treasury bonds.
From 1896 (when the British discovered astonished
the "Made in Germany" and heard of the presidential
election of Mac Kinsley in the US) till 1945 we have
a period of terrible transition from one global power
to another. Do you think we can have a similar transitional
period till the middle of this Century?
Yep, would be my response.
© Gurusonline.tv, December 2004