By Stephen Brawer, Chairman of the Belt and Road Institute in Sweden and Distinguished Research Fellow with Guangdong Institute for International Strategies
At the invitation of the President of the United States of America, Donald J. Trump, President of China, Xi Jinping paid a state visit to the United States from September 23rd to 25th. The summit between the two leaders has set the stage for a new type of international relationship between the two leading world economic powers. As Xi Jinping stated in his remarks at the arrival ceremony at the White house, he rejected the inevitability of the so-called “Thucydides Trap”, insisting that China’s continued “Rejuvenation” and “Making America Great Again” do not need to collide and end in conflict and war. The fact that Trump met President Xi personally, on his arrival at Andrew Air Force Base, marked the first time since US President John F. Kennedy met an arriving foreign leader over 60 years ago. It is the first time since the end of World War II that the dominant Anglo American power alliance has acknowledged the rise of China as an equal partner in global affairs. All this is not just theatrics or optics, as the mainstream media has reported. It is the potential for global stability and dialogue between the two leading international economic powers.
Yet, despite this possibility for dialogue and cooperation, there remain many trade and financial issues, as well as geopolitical differences of opinion on the wars in Iran and Ukraine. The emerging multipolar world order has been strengthened coming off two very recent and very successful conferences of the Shanghai Cooperation Organization and the BRICS. However, presently, the rise of the Global South and China’s Belt and Road Initiative are not policies that are supported or endorsed by the US nor its allies in the EU and NATO. By all present assessments this is not going to change in the foreseeable future. This is the challenge that still confronts the policy makers negotiating between the US and China.
The reality, despite the optimism of the Trump-Xi Jinping Summit, is that there is still an active containment policy directed against China. The US National Security Strategy policy paper from 2025 openly includes the operating perspective that embraces a continuation of the old unipolar world. It means that the geopolitical thinking which began with the Halford Mackinder doctrine in the beginning of the 1900’s is alive and unfortunately, not yet dead. Considering this, US President Trump has certain executive power, but hardly the unlimited power that he would like to think he has. These networks include the security apparatus of Five Eyes and NATO and maintain the thinking that Mackinder articulated as “he who controls the heartland (meaning the Asian heartland) controls the world,”. This old colonial geopolitical idea of the British Empire is that Europe and the Asian landmass will never be allowed to cooperate economically and politically. This is immediately evident in the ongoing EU trade sanctions directed against China that is leading to an inevitable trade war.
China’s development and rejuvenation will continue. There is the option for Europe and the US to join the BRI as an alternative to a continued conflict and war policy. That is a challenge that would necessitate a new way of thinking for the political leadership in Europe and the US.
Is that change in thinking possible? Theoretically yes, but it will mean a shift away from the presently dominant radical free market economic policy back to national economic planning characterized by the term “physical economy” which was initiated in the beginning of the American Republic by the Treasury Secretary, Alexander Hamilton. This does not mean the need to reinvent the wheel. The policy was referred to as the “American System of Political Economy, in respect that it was directly opposed to the British free trade theorists as Adam Smith, David Ricardo, Thomas Malthus et al. The three key elements of this policy were first a National Bank, not a central bank, since its purpose was to the secure the common good of the people of the nation, as opposed to allowing private banks under the control of elite families and aristocratic wealth and power to shape the nation’s economic policy. Second, a credit system that is designed to promote manufacturing industry and infrastructure. This allowed credit to circulate with the very reasonable restriction that the credit would be issued by the national bank to the private banks specifically to stimulate real physical development and trade. In this sense, purely speculative ventures could be limited or even eliminated. Third and lastly, the policy for manufacturing development involved the simulation and inspiration of the creative minds of the people to invent new technologies for the general progress of the nation. These policies are based on guiding the market in the direction of the common good of the nation. They are historically, not socialist policies as such, since Marx was not even born at the initial stages of the development of the American System. Yet, there are common elements in both the American System of political economy and in China’s central planned market economy or socialist market economy or what President Xi Jinping calls “Socialism with Chinese Characteristics”.
Unfortunately, present financial policies in the USA and Europe are completely dominated by purely speculative monetary policies which protect the extremely wealthy in which monetary flows are controlled by central banks. This has been the case since World War II and especially under the dollar-based system which emerged with the end of the Bretton Woods system in 1971. Although these present policies are failing miserably, a transition back to those physical economic policies which worked is still a long way off. The false belief that money is the ultimate basis for the total reality of economic policy would be replaced by the understanding of physical economy and national banking in harmony with the common good. Thus, the credit and monetary policies would be determined by the national interests of the people of each sovereign nation rather than the private interests of the banks and the extremely wealthy. This would require a fundamental shift in thinking which threatens the present dollar-based economic power. But perhaps the greatest challenge to the long-term successful cooperation between China and the US lies in uncovering this true history and the alternative possibilities that it presents to the world at large. This would break the virtual total monopoly held by all the leading western academic institutions in the USA from Harvard to the London School of Economics in Europe that have deliberately prevented all knowledge of the existence of this historical alternative.
Let the possibilities of greater stability and partnership between China and the US go forward for the best interests of both nations and the international community. However, for this to be ultimately successful, it needs to be based on the deeper substance of how true economic cooperation can be built.