Is there a new cold war behind the US and China?
We are in a competition to win the 21st century, and the starting gun has gone off.  Thats how Joe Biden describes the USs rivalry with Chinaa high stakes battle to dominate the globe for the next 80 years. With that warning last week, the senate passed a 176 billion package of subsidies and sanctions to boost US industry against Chinas. The New York Times newspaper called it the most significant government intervention in industrial policy in decades. Biden then toured meetings of the G7, the Nato military alliance and the European Council to get his Western allies singing from his hymn sheet. Writing in the Washington Post newspaper ahead of his visits, Biden repeated two themes. These were security against threats from China, and ensuring that market democracies, not China or anyone else, write the 21st-century rules around trade and technology. Now pundits speculate whether this makes for the beginning of a new cold war. Theyre referring to the second half of the 20th century, when two competing superpowers, the US and Russia, divided the world into rival blocs. China is the first rival imperialist power to challenge the US since Russias collapse in the 1990s. But this isnt the Cold War on repeat. The Cold War is often cast as a great clash between two ideologiesWestern freedom and Russian communism. In reality, this clash was between two competing ways of making capitalism workthe Wests free market capitalism and the state-dominated capitalism of Russia. This time there is no such great ideological battle. Bidens obligatory yet cursory nods to democratic values are a much thinner veneer for the economic competition thats going on behind. The 176 billion China competitiveness bill includes a 35 billion subsidy to US makers of semiconductor chips. These are essential to almost any electronic deviceand theyre at the sharp end of the competition between the US and China. The US has been one of the worlds biggest semiconductor manufacturers for decades, while China mostly has to import them. Now China wants to make its own, and break its tech industrys reliance on the US. The same bill also paves the way for sanctions and bans on Chinese companies that the US government says are violating US firms intellectual property rights. Behind this is a fear that Chinas growth as an economic and military power means that it will replace the USs global dominance. Chinas share of global GDPthe market value of all goods and services produced in the worldis already higher than the USs. International politics is still dominated by US trade deals and military alliances. But Chinas growth has led it to start forming its own deals and alliances that challenge the US. Now, they are both building their military and naval forces in one of the worlds biggest shipping lanesthe South China Sea. Thats where economic competition becomes military competition or, where a cold war could start real wars. Locked together in cooperation and competition  Joe Biden is planning a raft of sanctions and tariffs against China, all justified by what he says are Chinas unfair trade practices.  He links this to the Chinese states control of trade and industry, which he says unfairly supports Chinese businesses and restricts the USs. In fact, the relationship between the state and private businesses in Chinaand their dealings with the USare not so straightforward. The Chinese state owns some of Chinas largest, most important businesses and industries, and has many close ties with private companies too. But these private companies are growing, and have business, trade and investment links with other states through the global market. This is all part of Chinas growth as an economic power. And its at least partly thanks to the fact that since the 1970s, the US has helped to make China part of the global free market economy. The US wanted to make China part of its world order, rather than a challenge to it as Russia was. Now China has become a rival to the US within that system. But even as they compete, the US and China still depend on each other for trade and investment. China is the largest holder of US treasury bill bondsa source of government debt. Chinas vice president and the USs treasury secretary discussed pragmatic trade cooperation last week. They both agreed their economic relationship is very important. This is how capitalism often works. In search of immediate profits, states and their businesses can cooperate with trade deals and alliances. But the backdrop is the competition fundamental to capitalism, with each side trying to get the upper hand. When one becomes a challenge to the power of another it ends in confrontationeven as they seek to make money from one another. Bidens war threat no different to Trumps  Joe Biden is planning a raft of sanctions and tariffs against China, all justified by what he says are Chinas unfair trade practices.  But both Biden and Trump agree that China is the USs greatest threatand that it has to be confronted aggressively. In an article before he was elected as US president last year, Biden wrote that the US needs to get tough with China.  He said that meant the US had to build a united front of US allies and partners against China. Now Biden is putting those words into action. The other part of this is building up the USs military against China. US defence secretary Lloyd Austin last week issued a directive declaring China to be the number one focus of the US military. And Bidens plan for military spending earlier this yearwhich he proposed raising to 546 billioncalled China the USs top challenge.  Pundits focus on Bidens use of diplomacy to contain China. But its all backed up with military might and the threat of devastating war.