Last week I hinted that the rapidly spreading SVB crisis — from Silicon Valley Bank to Signature and First Republic Banks, to Credit Suisse — could have important implications for the US China conflict. I am now back in Beijing for the first time in over three years, giving me a different perspective to ponder this worrisome possibility.
So, what does this latest financial crisis have to do with China and the escalating Sino-American conflict? For the past 20 years, a group within the senior ranks of the Chinese leadership has argued that America is in a state of permanent decline, providing an opening for China’s global ascendancy. This view gained support in the aftermath of the US-made Global Financial Crisis, and most assuredly will gain even more support as the SVB crisis hits a new segment of the US financial system.
A rising China could hardly ask for more. At a time when the Western financial system is once again suffering from self-inflicted impairment, the recent imagery of Russian President Vladimir Putin and Chinese President Xi Jinping embracing each other in the Kremlin as “dear friends” pretty much says it all. China apparently views a cold war and the carnage in Ukraine as a small price to pay to strengthen its push for geostrategic hegemony.
There is an important footnote to China’s view of a declining America. While Mao alluded to it in broad terms — a US “paper tiger … in the throes of its deathbed of destruction” — this argument was first fully articulated by Wang Huning in his 1991 book, America Against America. Based on Wang’s first-hand observations while living in the US, the book was a scathing critique of America’s social, political, and economic decay.
Wang is hardly an innocent bystander to China’s new assertiveness. He was the chief ideological adviser to Xi Jinping’s two immediate predecessors, Jiang Zemin and Hu Jintao, and has played a similar role for Xi in the exposition of “Xi Jinping Thought” as China’s new ideological anchor. And Wang, one of only two holdovers who remained on the top seven-man leadership team (the Standing Committee of the Politburo), has also just been named Chairman of the Chinese People’s Political Consultative Conference. The demise of SVB only cements Wang’s stature.
In the end, it pays to ponder Chinese etymology. The Mandarin word for crisis, wéijī (危机), has the dual meaning of danger and opportunity. From SVB to Wang Huning, that’s precisely the point of the increasingly worrisome interplay between another US-made financial shock and a sharply escalating Sino-American cold war. A rising China is taking dead aim at crisis-prone America.
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