The immediate economic impact, of course, was great, as it was in many other places. China was among the first economies to be hit by COVID-19. The Chinese government managed to contain the spread of the virus with some extreme lockdown measures, isolating whole regions of the country. During that time, production and consumption seized up, and many activities stopped.

However, coming into the summer of 2020, the virus was pretty much contained. The Chinese economy rebounded, with the help of a huge financial stimulus. It was just like the aftermath of the global financial crisis. The Chinese government told the state banks to open the floodgates of lending. If you look at the data for loan creation in the middle of 2020, it paid off with a strong economic rebound.

But this lending or financial stimulus increased the indebtedness that had already been haunting the economy since 2009. Coming into the middle of 2021, we already saw the Chinese economy slowing again, weighed down by the heavy indebtedness of many corporations. The pattern just recurred: like the situation after the financial crisis, the economy rebounded quickly with this stimulus, but in the long run, it also created a drag on the economy’s long-term performance.

It has definitely had an impact, but not on the long-term direction of US-China relations. As I have often argued, US-China relations have shifted from a kind of honeymoon situation to a more rivalrous relationship, starting with the Obama administration. It was after the global financial crisis that the Chinese state became more aggressive in securing a domestic market share for particular state-owned enterprises in China itself, later even expanding overseas to compete with foreign corporations — including, of course, US ones.

This intensifying inter-capitalist competition between Chinese and US corporations, as well as other corporations from Europe and Japan, was the underlying force behind the souring of relations between the United States and China. It all started in the second term of the Obama administration, which did a lot of things to change the direction of Washington’s China policy.

This included the pivot to Asia, with the deployment of more military aircraft carriers and Navy groups to the South China Sea to counteract China’s claims of sovereignty against its neighbors. At the same time, Barack Obama also sped up the TPP, the Trans-Pacific Partnership negotiation. He had the intention of lining up US allies (and some not-so-allies) in a free-trade package, excluding China, in order to put pressure on the latter.

In other words, they had all the practical measures that signaled this change, but diplomatically, the Obama administration continued to use very polite rhetoric when discussing issues with China. Interestingly, in the early days of his administration, there were signs that Donald Trump might be softer on China than Obama. For example, in the first half year after he was inaugurated in 2017, the Trump administration stopped the freedom of navigation operation in the South China Sea. They didn’t send warships there for a few months.

Some of the Republicans, as well as Democrats, worried that this might be a sign of Trump being too soft on China. However, although Trump might have come in as a softer president when it came to China, that underlying inter-capitalist competition between the United States and China didn’t abate. In the end, Trump also had to get tougher on China — on trade and many other issues.

The big difference between Trump and Obama was that his rhetoric was rawer and used a lot of colorful language that made an impression on people and raised their awareness of what he was doing. As a result, there is a popular perception that US-China relations only took a turn for the worse under Trump, when in fact it started under Obama. The Biden administration is basically continuing many Obama-era approaches to China.

The Chinese didn’t have any fantasies about the Biden administration. They are very much aware that this increasingly hard-line US approach to China started with Obama. During the 2016 election, many official media commentators and scholars in China were hoping out loud that Trump would win, because they thought that Hillary Clinton was likely to continue the policies of the Obama administration. But there was no fantasy about Trump later on, when structural forces pushed him toward a more hard-line approach.

The same can be said with regard to the Biden administration. During the election in 2020, there was a lot of talk among official scholars and media in China to the effect that the Biden administration would not be very different from Trump. After all, a lot of tough US measures on China didn’t come from the White House but rather from Congress, with bipartisan support.

We can now all see that Joe Biden has been very tough on China. He didn’t revoke Trump’s tariffs. In its first few months, the administration was very active in lining up allies in Europe and Asia to form a united front with which to confront China. Not only in terms of rhetoric but also in terms of policy, it is clear that the new president has not pulled any punches, and indeed has continued with many policies of the Trump era.

I think it does still hold true today. When it comes to China, it’s always very important to distinguish the rhetoric from the reality. We know from Chinese official media that there is a lot of talk about how China is going to overtake the United States in many areas. For example, people say that the Chinese currency is going to become a dominant global currency that can topple US dollar hegemony. But it’s questionable how much of this reflects reality.

In The China Boom, I argued that we need to look at the data. We shouldn’t be fooled by the propaganda. China is definitely a very successful and important economy. It is one of the most important markets — one that corporations have to try and get into. But at the same time, China is still far behind the United States in many different areas.

In terms of currency, at the time of the 2008 financial crisis, there was a lot of talk about US dollar hegemony being over, with the Chinese currency replacing it as the global reserve currency. But now, more than a decade later, the US dollar is still the standard transaction currency and reserve currency in the world. The Chinese currency hasn’t made a lot of headway: in fact, there’s been some regression in its international usage, because the Chinese Communist Party (CCP) is jealously guarding its financial system and the currency is not yet freely convertible.

When China lends money to countries in the Belt and Road Initiative, or further afield in Latin America, it lends to them in dollars rather than in its own currency. China has been competing with Japan to become a top lender for many Southeast Asian countries. It has been able to outcompete Japan because the Japanese lend in yen while China offers to lend in dollars. Chinese exports are also mostly invoiced in dollars. This international usage of the Chinese currency lags far behind not only that of the US dollar but also of the British pound sterling.

In another area, the production of microchips, China relied on the United States or its allies. When Trump imposed sanctions on China, as parts of a US policy of cutting China off from high-tech sectors, many Chinese tech enterprises suddenly got into big trouble, because they could not obtain enough supplies of microchips.

Many people think that Xi Jinping marks a huge departure from previous leaders. There’s no doubt that the CCP has been more confident and more aggressive in many ways: for example, in terms of unleashing its diplomats to direct insults at US leaders. On the other hand, just as in the case of the United States with Trump, there were already changes going on behind the rhetoric at a more structural level.

Since Xi came to power fully in 2013, his rhetoric and style has definitely been more aggressive. Another big change that he made was to abolish the term limit for a top Chinese leader, meaning that he can be a lifelong dictator, unlike his predecessors, who had a clear term limit of ten years, after which they were expected to leave the scene.

However, a lot of the change in China’s policy toward the US state and US corporations has been more structural in its origins. The revival of state capitalism and the squeezing of the private sector in China, as well as foreign companies, started in the aftermath of the global financial crisis. The watershed moment in that respect was not really Xi Jinping coming to power, but rather the crash of 2008.

State bank lending kept a lot of well-connected enterprises afloat after 2008: even though they were not profitable, they still got loans and financial resources. There are issues with overcapacity and indebtedness in many state enterprises. The legacy of this stimulus in 2009–10 is that China has been struggling with economic slowdown, indebtedness, and sluggishness. It’s a typical overaccumulation crisis of the kind that Japan experienced in the 1990s.

With a shrinking overall pie, they have been trying to increase the slice of that pie going to the state enterprises by squeezing private enterprise in China and abroad more aggressively. They also began to export capital. Steel is one example: there was huge overcapacity in the Chinese steel industry, so China started to export steel all around the world, which created trade friction with a lot of different countries, including South Korea and some European states.

The watershed moment was the 2008 financial crisis and the Chinese stimulus that followed, which created this overaccumulation crisis in the Chinese economy, in turn prompting China to compete more aggressively with US and other foreign corporations. The coming of Xi Jinping to power overlapped with this structural change. Xi, like Trump, just made a trend that was already in place more apparent with a more aggressive style and rhetoric.

It is a very interesting phenomenon that many people are discussing right now. Some will say that the Chinese government is finally paying attention to social justice and cracking down on these monopolies.

First of all, the target was the big tech company Alibaba and its affiliate the Ant Group, which had scheduled an IPO in overseas markets, before the Chinese government stopped it at the last minute. Tencent, another big tech company, has been facing huge criticism and regulatory pressure from the state. However, the attack has since moved on to all kinds of large, privately owned companies in China, including sectors like extracurricular tutoring, education, delivery platform companies, and many other firms.

But I’m skeptical about whether the concern of all this is with promoting social justice and cracking down on monopolies. If you look at the targets of this crackdown, they are all private companies in China, while these well-connected state or parastate companies have still been getting all the support they need to continue to be a monopoly. It is more about the insecurity felt by the state about its control of the economy. It is going after these private companies to ensure that the state companies can remain on top and will not be overshadowed by private enterprise.

There has been a recurrent theme in Chinese history, ever since the Qing dynasty in the eighteenth century, of the state using private entrepreneurs to grow the economy, increase state revenues, and strengthen the empire. At the same time, when those private merchants became too influential and too powerful, then the state began to worry about them and cracked down on them. In some cases, the state confiscated their wealth or put them under arrest.

I think we are seeing a kind of recurrence of this history. In the early stages of economic growth, the Chinese state used private companies — including foreign companies — to grow and assist the projection of Chinese state power abroad. However, when they grew too big, particularly alongside this economic slowdown, the state began to feel the need to crack down on private entrepreneurs. I think this is the main impetus behind the recent crackdown.

In the last ten years, while there were no independent trade unions, we saw a lot of wildcat strikes and sporadic labor unrest across the country. As many people have pointed out, the new labor law that was instituted in the early 2000s was a response of sorts to these sporadic labor protests: they put pressure on the state to do something to improve the conditions of workers. But of course, there is always a kind of cat-and-mouse game at work: when labor wins something, the state and the capitalists always find a way to get around it. Some manufacturers and employers found a way to get around the new labor law and put workers back in a more precarious situation.

On the surface, we don’t see a so-called typical labor movement. But I’m confident that these forms of unorganized, spontaneous, and sporadic labor unrest and community protest are going to continue. It doesn’t need a formal organization. Sometimes a labor movement can even get better results when it’s less organized and more spontaneous.

For the time being, with the pandemic and a very aggressive crackdown on civil society by the Chinese government, it seems that protest of all kinds has died down. But if we take a longer-term perspective, I am quite confident that these spontaneous manifestations of protest and unrest will continue in different sectors. Sometimes it might not be a protest — it might be an everyday form of resistance, using all kinds of different tactics. I’m sure that this sort of resistance will go on and bring about change in the long run.

Of course, the United States and China have to cooperate to solve the global climate crisis. In terms of China, there has been some progress with the expanded production of electric vehicles. It has also become the top producer of solar panels, wind turbines, and things like that. But there are also contradictions when it comes to environmental policy.

On the one hand, China sees a future in the market for green technology products and is investing a lot to expand capacity in those sectors. But at the same time, China has all kinds of other sectors, from steel mills to coal plants, that still have overcapacity. There are a lot of vested interests in the state and beyond that are tied to those sectors. China’s coal capacity is still growing, and it is also exporting coal plants to many other developing countries, as a solution to this problem of overcapacity and overaccumulation, instead of letting those sectors go bust and die.

Overall, it is a mixed bag. We see a huge expansion of the green technology sector but also of these old sectors. Of course, if China is going to join the global effort to fight climate change in a serious way, not merely paying lip service, it is going to require more coordinated efforts in terms of energy and new technology sectors. But right now, there is not much coordination. The growth of coal capacity is driven by the logic of economic growth and the overaccumulation crisis rather than by concern for the climate crisis.