THE ANTI-CHINA MANIA IS LEADING IN ONE DIRECTION: NON-PAYMENT OF THE CHINESE-HELD DEBT

The Trump administration is stoking anti-Chinese resentment, if not frenzy. The latest is Mike Pompeo’s statement, made without offering any evidence, that there is “enormous evidence” that the coronavirus originated from a Chinese lab. Already voices on the right are calling for the non-payment of the federal debt owed to the Chinese as a response to the trillions of dollars of damage that the pandemic has caused. Trump denies that this option is on the table. Saying otherwise would throw the stock market into a tailspin. But after preparing public opinion for some sort of reprisal against China, Washington will thrust the decision to default on the Chinese portion of the debt on the world, just like Nixon did in 1971 when he took the dollar off the gold standard. Actually, it’s a logical move. The U.S. Federal debt was around 20 trillion dollars at the end of 2019, 79.2 percent of the nation’s GNP, and with the stimulus bill and related payments, it will be increased by an estimated 3.8 trillion. The situation is unsustainable, as everyone knows. The Republicans themselves harped on this until Trump came to power. Defaulting on the Chinese portion of the debt would be a bold but desperate move, but one that may be required given the desperate circumstances that U.S. capitalism finds itself in. It’s not unthinkable. It happened in the 1930s in Europe in a crisis situation. What is occurring today is a crisis of equal or greater magnitude. In declaring partial default, Washington will be turning its back on the sacred principle of the rights of property, which as everyone knows is far from sacred. 

Defaulting on the Chinese debt would be far from a panacea for U.S. capitalism. And the fallout with regard to confidence in the global financial system would be great. But Washington has demonstrated, particularly under Trump, that it doesn’t care much about confidence in and admiration for the U.S. With the U.S.’s undisputed military strength, the attitude is they may hate us, but they respect us (ie, fear us). When Trump froze the assets of numerous foreign companies that had dealings with Venezuela and Iran, and turned over assets owned by the Venezuelan government (CITGO) and companies like Rosneft, they were obviously violating property “rights,” an action which may have undermined faith in the system. But they did it anyways. These actions are reflections of the desperateness of U.S. capitalism. They’re looking for a quick fix, which if successful boosts confidence as well as Wall Street stock shares. It works in the short run.