The U.S. is in desperate economic and military “competition” with China and has lost a lot of ground fast.
By “competition”, what the U.S. capitalist ruling class really mean is consolidating their domination over China—preventing Chinese society from developing in any way that lessens U.S. control of both China and the rest of the world.
In contrast, China’s policy aims to break out of the crushing imperialist vice grip that has held the whole Global South in a position of poverty and dependence for more than a century.
The far-reaching consensus that the U.S. is or risks losing this battle, unless it takes decisive action, informs not only Trump’s tariffs on China but also previous U.S. policy—like Biden’s program of massive subsidies to U.S. industry and technology bans on China. Trump and Biden’s policies to China are different in form but have the same intent: crush China.
The conflict is not an example of “great power rivalry” as the chauvinistic anti-China propagandists would have us believe. Saying “great power rivalry” covers up the key dynamic of the conflict—it is occurring between two completely different types of societies. China is a huge and politically independent Global South society trying to prize away the strangling hands on its neck. The U.S. is the richest and most violent capitalist state on earth. Together with its rich-club allies (like Australia), the U.S. is desperately trying to maintain a strangulating grip on China (and the Global South as a whole).
For the imperial racists, the right of 1.4 billion Chinese people to dignified lives and development—and the same right for the whole Global South—are not important. Global North socialists who agree there is a “great power rivalry” (changing only the description to “inter-imperialist rivalry”) must hold a similar world view.
China has no stranglehold on the U.S. neck
The real “threat” that China poses to imperialism is that of breaking or reducing its own subjugation. By prizing the imperialist fingers away from its throat, by winning some more breathing space for Chinese society, what Chinese policy seeks to do is reduce the degree China is exploited by the imperialist societies. That is the real threat to imperialism posed by Chinese development.
Especially in the last three decades, economic expansion and wealth accumulation in the imperialist societies has been carried on the back of working people in China and across the Global South. All the growth industries this century have been built on the foundation of the massive, expanding, super-exploited and increasingly productive factory workforce in the Global South. Yet after decades of progress the same small club of countries (including Australia) remain many times richer than all Global South societies, including China.
Imperialist prosperity is built upon Global South exploitation. That is the key fact underlying the extreme anti-China hysteria. China’s development does not threaten to subjugate the imperialists. However, imperialist societies cannot exist in their current form without the continued subjugation of China and the global South. So advances in China do threaten imperialism. It is threatened with losing its ability to exploit, or the degree that it can exploit—that is suck out the wealth (or value if we use Marxist terms) produced by workers in China as a major contribution to imperialist profits. This parasitical form of dependency that imperialist society has become entirely dependent on cannot be overcome without entering into serious crisis.
Further, the threat that China’s development might enable that society to remove the hands gripping its neck, or to remove just one strangling hand, or even remove just a few of the fingers pressed into its throat, would have an unknown potential to create a situation where other global South countries can follow in China’s footsteps.
Imperialist Monopoly and China Today
The reason the imperialist countries are able to secure for themselves most of the wealth produced in Global South factories is ultimately due to their development of technological and scientific monopolies. That is the key underlying form imperialist stranglehold takes (on which all other forms of imperialist monopoly, such as financial, military and commercial are based). This is something widely accepted both by imperialist and Chinese policy.
The question “is China breaking the stranglehold” is really about whether China can break the scientific stranglehold that is held by the U.S. in combination with the other imperialist states. To answer that question we need to understand how, exactly, imperialism’s scientific monopoly expresses itself in global capitalist production for the world market, and in the global productive division of labour between imperialist and global South countries. To understand how the competition actually works, we can’t only “zoom out” but also need to “zoom in” close enough to see the labour process of the various producers and how the main distinctive types of labour process can be the basis for monopoly in some cases, or in other cases can not.
Broadly speaking, modern imperialist dominance has been based on a monopoly by the imperialist states over the capacity for continuously “revolutionising the instruments of production” (as Marx put it in the Communist Manifesto). China has not started to invent or bring to market fundamentally new technology that is “revolutionising the instruments of production”, and likely can’t. No major, new-to-the-world scientific technology comparable to, for example, electricity, oil, or the internet has been developed and brought to market by Chinese producers.
However, looking today at China’s most advanced producers, an important new phenomenon seems to have started. The increasingly rapid pace that Chinese producers are able to adopt and adapt existing technology may have begun undermining the ability of the imperialist countries to market new technology in the same monopolistic and super-profitable way that constituted imperialism’s historical model.
Countless numbers of claims have been made over the last two decades that China was beginning to displace the U.S. Until relatively recently China was mostly competitive in low-value and peripheral areas of production. What is new is that Chinese producers are now able to radically adopt techniques quite high up the value chain. This is a new phenomenon that has only really emerged on a wide scale since the Pandemic.
China responded to slowing economic growth, especially the burst of its speculative price bubble in real estate from 2021, with increased government stimulus to manufacturing. This was concentrated in what Chinese policy calls “new quality productive forces” and especially the “new trio” of industries—electric vehicles, batteries and photovoltaic products, including solar panels. While the Chinese domestic market is huge, the scale of these industries means they are also highly dependent on exporting. The resulting wave of cheap Chinese exports has threatened to overwhelm competing businesses in many of the imperialist states and is dubbed the “Second China Shock”. This is a large part of what Trump’s tariffs and other U.S. economic aggression are responding to. Its key features are what needs to be examined to understand the state of U.S.-China competition.
Chinese Development and Imperialist Super-Profits
The first “China shock” occurred after China was admitted to the WTO in December 2001. That resulted in a huge wave of cheap Chinese exports in much lower value sectors such as clothing and footwear, textiles, furniture and cheap consumer items which the key imperialist monopolies were already disinvesting from due to their low profit rates. Comparing the two shocks reveals the change in the nature of China-US competition.
Long-held U.S. nationalist mythology tells us that the rapid advance of manufacturing in China, especially after the country was admitted into the WTO in December 2001, decimated the manufacturing sector in the U.S. causing large losses in employment and destruction of industrial communities. In reality, the decline in U.S. manufacturing employment is a long term trend that pre-dates China’s entry onto the capitalist world market. It is principally caused by increased labour productivity inside the U.S. through the replacement of manual labour with progressively greater levels of automation. At the same time as this trend produced a decline in manufacturing employment the absolute value of U.S. manufacturing output rose—including after 2001.
Besides automation, the decline in U.S. manufacturing employment also resulted from changes to the production process and the international division of labour that were orchestrated by the U.S. and other imperialist ruling classes to their own benefit. Underlying the “neoliberal globalisation” of production processes in the 1980s, 1990s and 2000s was a high degree of technical specialisation. The type of labour different countries contributed to the overall labour process is the critical factor.
The pattern was (and largely remains) polarised in a manner that parallels the polarisation between the wealth and income of countries. Global South countries specialise in what Samir Amin dubbed “ordinary” labour or various types.1 The imperialist states specialise in the opposite type: high-end technical and scientific labour. The pattern of labour (and therefor productive) specialisation maps onto the pattern of poor and rich countries in the world and is the principal cause of the great wealth divide.
China has long been the largest destination for the southward shift in ordinary labour processes, especially after 2001, but not the only destination. Nor did it determine or control the trend. Much of the increased manufacturing in China resulted from U.S. businesses shifting their own production to China and sending products back to the U.S. (though for several years now U.S. planners has been trying to shift much of that production to Mexico or other Global South countries they hope to more easily control).
China’s rapid ascent as a manufacturing and exporting nation has been within this U.S.-led imperial framework. Obviously, U.S. capital makes gigantic super profits from this globalised arrangement. Super-exploitation of Chinese and other Global South labour has increased the overall profitability of U.S. capital by reducing production costs and cheapening consumer goods (making it easier to hold down domestic wages). Of course, some marginal capitalists were left behind and went bankrupt, but overall U.S. capital is richer than ever, especially big capital.
The “shock” influx of Chinese made consumer goods onto the U.S. market in the 2000s was not the main cause of the brutal dislocation among working class communities in former industrial heartlands but it served as a convenient scapegoat. By the 1970s and 1980s, U.S. capitalists sought to break the industrial and social power of the U.S. working class. “Off-shoring” ordinary labour processes (i.e. organising the polarised global division of labour described above), in addition to greater automation, was a big part of how they did it.
The Pattern of Polarised Globalisation
The idea that today the U.S. cannot compete with Chinese production, and that increasing U.S. tariffs is a response to its loss of competitiveness is an abstraction. It is true of certain products (or services) but not true of others. But the difference is not random. It follows the same definite and understandable pattern.
It is true the U.S. cannot compete—even against Bangladesh or Indonesia, let alone China—in production of most clothing and footwear. For example, the U.S. imports more than 99% of the shoes it consumes. On the other hand, the U.S. can compete and in fact wins the competition for production of many other things. For example, the U.S. has massive exports, or export surpluses, in sectors such as oil and gas, aircrafts and parts, specific types of machinery, certain agricultural products, financial and commercial services and media. Why is that?
To understand the pattern, we only have to recall the two opposite types of labour that make up the overall labour process already mentioned: ordinary labour versus high-end or scientific labour. The predominant type of labour needed to produce something determines what can be competitively produced in Global North economies where labour is expensive, or in the Global South where labour is cheap. Where a product (or part of a product) consists of mostly hi-end scientific or technical labour, producers in the imperialist states will more often prevail. Where it consists mostly of “ordinary” labour, Global South nations can prevail and do.
If a complex product consists of a mix of the two types of labour, its production tends to be globalised: partly completed in the Global South and partly in the imperialist states. Many products or industries have this mixed character involving various amounts of each labour type. In this case competition revolves around not only which company or product gets sold on the market (or its price) but also around which companies (and which societies) are able to secure for themselves the larger portion of money earned when the product is sold.
Obviously, if a country contributes 50 percent of the labour needed to make a product but gets only 10 percent of the selling price, this represents a non-monopolistic position. The most famous example of a product of this kind is the Apple iPhone. Numerous studies have shown that the portion of the final selling price of the iPhone going to China is well under 10 percent despite the product being assembled there and Chinese producers contributing a much higher proportion of the necessary labour.
Less well known is that the same dynamic tends to be true also for complex products brought to market by Global South producers. For example, the Chinese produced passenger aircraft, the COMAC C919, relies on U.S. and French companies such as General Electric and Honeywell for advanced components like the plane’s engine, avionics, auxiliary power systems, “fly-by-wire controls” and navigation systems. Even if COMAC runs at a loss, these imperialist companies can still gain monopoly profits. In fact they can drive COMAC into losses by demanding high prices—if China remains dependent on them for high-end inputs.
The Rhythm of Forming Monopoly and Breaking Monopoly
Commercialisation of new technology (which in the modern era is produced by imperialist states not companies) gives a super-profit to the monopolist corporations based in the imperialist states. The textile industry in Manchester in the 19th Century, the auto, shipbuilding and machine tools of the U.S. in the 20th Century, or the “Magnificent Seven” giant U.S. tech monopolies today all obtained their super-profits (i.e. higher than average profits) as a result of their technological superiority over contemporary rivals.
However, any given production process that starts out as high-technology ceases to remain so forever. As it becomes more common, well-known, and standardised, the now not-so-new production process sinks more and more into the category of production predominantly requiring only “ordinary labour”. Once this shift has occurred, little or no advanced, scientific or technical labour or specialist knowledge is required any longer. That has long been the case, for example, for most clothing manufacture.
At the point when production becomes standard there is no longer any basis within the labour process for companies to monopolise it. As more and more other producers begin to make the same or similar products, monopoly super-profits (i.e. higher than average profits) will dry up and turn into average profits or worse. At that point it is irrational (from the capitalist’s perspective) to keep paying high, Global North wages for labour that can by then be done by Global South workers much cheaper.
Seeing the role of China on the world market over the last several decades we are very familiar with the effects of this rhythm of monopoly and the breaking monopoly. Chinese producers have long been renowned for their innovative capacity to reverse-engineer and re-engineer many product types. While early examples of this capacity were derided as simple “knock-offs” (copies), in fact Chinese producers must be the most highly developed in the world at that specific form of ingenuity, i.e. the development of new ways to simplify (and therefor cheapen) the production of products that are identical or similar to more complex monopoly products. This is an important and socially progressive attribute of Chinese production.
While it may serve the advancement of human productive forces—simplification of existing products does not serve to create a monopoly position for Chinese producers. A recent example is the Chinese DeepSeek AI chatbot. DeepSeek does not outperform the various competing U.S. based chatbots. Rather it achieves the same or similar results using far fewer resources (especially power) and less advanced microchips. DeepSeek does not establish its own technological monopoly. Rather, the very nature of simplifying the labour process, of achieving the same result with less advanced processors tends to undermine the monopolistic character of the process altogether (hurting those U.S. companies who had made investment decisions based in the expectation of a strong monopolistic position).
It is precisely through this type of competition with non-monopoly Global South producers over the last several decades that U.S. monopoly capital has shed much of its lowest-end manufacturing like clothing and footwear, cheap consumer products or dirty, low margin industries such as “rare-earths” processing or other environmentally damaging and dangerous processes. The “loss” of these low-end processes was never a threat to U.S. imperialism’s dominance on the world market. Divestment and re-investment higher margin areas was an important part of re-structuring the U.S. economy in the neoliberal period to maintain dominance.
This continuous rhythm of monopoly followed by the breaking of monopoly, means that to sustain their monopolistic position across the decades imperialist corporations have had to fairly regularly bring new advanced production processes to market—fast enough for them keep starting again at the top—ideally before their old monopolies have been torn apart. Of course certain companies failed, but overall that that system worked well in the past for the imperialist ruling classes as a whole. Just lately they seem a little flustered.
The Non-Monopoly Character of Chinese Production
It is important to again emphasise that imperialist monopoly, when it is smashed by Global South competition, is not replaced by Global South monopoly, or at least not of the same type. The DeepSeek example represents the general pattern. By transforming a product into a more simple version, the type of labour then involved in its production is also transformed from advanced to “ordinary” labour.
For that reason it can more easily be carried out by capitalist producers in many parts of the Global South. Any process transformed in this way loses its monopoly character. A producer can hardly mark-up the selling price of a product (to gain an above average profit) if that product is relatively easily produced. Domination of a standardised (non-monopoly) production process cannot be the basis for sustained monopoly super-profits.
Advanced production processes can command monopoly super-profits. Standardised production processes can only command non-monopoly profits. China, in general, can only achieve non-monopoly profits—even in the relatively advanced industries where it has destroyed monopolies and is beating international competition.
This vicious dynamic pushing down on China is powerfully reinforced by the nature of producing commodities for sale on the world market. The non-monopoly profits that China and other global South producers mostly obtain (i.e. profits at a lower rate than China’s imperialist competitors) are, by definition, small. These are not high enough to readily fund investment at the scale required to create new-to-the-world technology. Not only this, but the established, polarised international division of labour among producers for the world market means most of the labour force in China and other global South societies is forced, in their daily activities to engage in fairly routine or standardised, not scientific, labour processes. This must also create powerful additional cultural barriers to any attempts at “revolutionising” the production process.
As stated, only new scientific developments could form the basis for China’s own technological monopolies on the world market. China has not brought to market any major new technology. The imperialist world division of labour, and historical monopolisation of science does not permit the Global South to be creative in that way. So long as China and the Global South remains within the confines of the capitalist world market, the same old system of global apartheid will remain.
The non-monopoly character of most Chinese production explains why China’s apparent dominance in so many areas of production and its massive exports has not resulted in much higher national income. Per-person income in China is currently seven times lower than the U.S. and five times lower than Australia! The massive discrepancy between China’s productive success and its low income and consumption is because China has been winning in the competition to dominate large parts of the world’s non-monopoly production.
The “Second China Shock” and Imperial Panic
The first so-called China Shock did not threaten imperialist monopoly over the highest areas of the production process, rather it accelerated the off-shoring of low-end production that was already heading South. The “Second China Shock” is different. Rather than low-end products it relates to middle level or mixed products especially electric cars, batteries, and solar panels. These are far higher tech and therefor account for a greater portion of imperialism’s profits than China’s previous areas of market dominance. Car making alone accounts for a significant part of sales and profits in most important capitalist economies.
There is also another big change. In the past, Chinese “reverse engineering” destroyed the monopolistic character products already in mass production. Imperialist-based producers had usually already enjoyed an extended period of super-profitability. Only later were non-monopoly producers then able to take over. That was the case, for example, in the assembly of personal computers. When the Chinese Lenovo bought out IBM’s PC business in 2005, IBM had already enjoyed a sustained period of profits during the period when PC assembly had been a higher-end business. By 2005 it was no longer high-end and IBM moved on to more profitable activities.
Today, in electric vehicles, that is hardly the case. While mass marketing of high-end electric vehicles occurred first in the imperialist core, only one company, Tesla, had already reached mass production before Chinese producers achieved more or less comparable quality. China’s challenge to Tesla’s monopolistic position was illustrated by Tesla’s large price cuts in April and May 2024. Various Chinese makers are already mass marketing what is a relatively new product type (or at least sub-type) before major European, Japanese and North American auto companies have completed the switch from internal combustion engines to electric.
Battery electric vehicles (BEV) are not a new technology. For example, in response to the state of California’s zero-emissions vehicle mandate law passed in 1990 General Motors released the very popular “EV1”, a mass market BEV vehicle between 1996 and 1999. GM ended EV1 production after 1999, and in fact recalled and destroyed all the cars which had been distributed on a lease scheme, as depicted in the 2006 documentary Who Killed the Electric Car? By 1999 the car and oil companies had managed to get the emissions mandate squashed.
While the technology may not be new, Chinese entry into electric vehicle production still massively complicates the energy transition for some of the largest imperialist companies. Are the U.S., Japanese and European auto monopolies—that historically enjoyed sustained super-profits in the production and sale of internal combustion vehicles—now going to transition to BEVs where the ability to obtain monopoly super-profits is already significantly undermined? That is not how capitalist investment decisions work. Trump’s massive auto tariffs must aim to shield the U.S. automakers as they make the transition.
Chinese dominance of global battery production may present an even bigger threat to U.S. imperialism. According to the April 28, Australian Financial Review (AFR),
Fuelled by surging demand within China itself, Chinese batteries account for nearly 90 per cent of global capacity for energy storage systems (ESS), including a market share of more than 80 per cent in the U.S. and more than 75 per cent in Europe.
In battery production we can again see the same pattern: Chinese production of a similar product but cheaper. Non-Chinese high-nickel content batteries—most often made in Republic of Korea—have a higher energy density than the standard Chinese batteries which are lithium iron phosphate (LFP). This makes Korean batteries a higher-end product. However, according to the AFR article, “the rise of cheaper and increasingly high-performance Chinese alternatives, has led to a shift over the past decade towards LFP as the industry standard. The paper argues that “Korean companies […] are building new LFP production lines [and] converting some high-nickel ones” to LFP. Further, Korean battery makers like LG and Samsung are yet to produce LFP batteries competitively at scale.
It seems the same problem is occurring in battery production as in cars—perhaps to a greater degree. Higher cost producers in high wage countries (in this case Korea and Japan) have difficulty competing with China in a non-high-end technology (i.e. lower energy density LFP batteries). Yet if that technology has already become dominant, or even an industry standard, the rich country producers have little choice—unless a total tariff barrier is erected.
Speaking about the prevalence of industrial robots in some types of Chinese factories, Jimmy Goodrich a senior adviser for technology analysis to the Rand Corporation observed the same dynamic in effect. He told the Singapore state news channel CNA, “Obviously China didn’t lead in those technologies. Those are first invented by Japan, parts of Europe, Germany and Korea, but where China has really excelled is driving down the cost of those industrial robots.”
Especially worrying for the imperialists is that batteries, and to some extent electric vehicles look like the type of emerging industries that imperialism has historically dominated. As transport and industry are progressively electrified, and as electricity is progressively switched over to cheaper (i.e. more labour efficient) renewable sources which require battery back-up, demand for batteries is set to grow rapidly. There is likely to be an extended period of boom with substantial profits to be made. It is the same for solar panel manufacture.
Historically, such a mammoth new market would have been the source of massive profit bonanza for those who dominate the roll out. But in 2025 it is China, not the major imperialist states that dominates the production of solar panels, batteries, and to some extent electric vehicles. This shows how threatening China has become to imperialism’s ability to reproduce itself.
Is Imperialism’s Monopoly Still Possible?
The threat that Trump’s tariffs and Biden’s industrial policy seek to address is not that China is itself beginning to replace the imperialist societies and take over the role of revolutionising the means of production—i.e. itself become the monopolist. This is why China cannot itself become imperialist.
Still, China’s achievements in developing its productive forces are epoch defining. The great advances in non-monopoly production achieved in China seem to have reached the point where they are beginning to undermine imperialist monopoly formation. It is easy to see that if new monopolies are being broken too quickly, that makes monopoly itself impossible. The scale of investment required to create and bring to market a major advanced technology is usually enormous. If an extended period of super-profits cannot be expected because Global South producers are developing too rapidly, then no monopoly is possible on a capitalist basis.
If the imperialist societies can no longer achieve sustained super-profits by developing or marketing new production processes in the way they have throughout their modern history, that fundamentally undermines the ability of imperialism to function as it has. For a start, the very high levels of material consumption by working people in the Global North can only be secured on the basis of sustained imperialist super-profits.
Critically, without super-profits, imperialist societies cannot accumulate the scale of capital and social, societal resources necessary for them to re-invest in the reproduction of their monopolistic position vis-a-vis the Global South. Put another way, capitalist imperialism’s historical ability to monopolise to itself all of humanity’s collective scientific and technological progress relied on making products that it could sell on the market at prices high enough to give it super-profits. If the super-profits break-down, so does imperialism’s stranglehold on the world’s social resources.
It is difficult to know just how threatening China’s productive forces really are to imperialism without a far more detailed technical analysis. Escalating, generalised U.S. military and economic aggression against China causes most people to assume (usually without any real analysis) that the threat level must be existential. However, the history of imperialism is one of extreme aggression even against threats that are not existential. Even a partial undermining of U.S. hegemony or a partial write down of their capital is deemed completely unacceptable to the racists at the top of the U.S. state. They might not have a choice.
For a more detailed elaboration of the key concepts informing the analysis in this article see: King, Sam, Imperialism and the Development Myth: How rich countries dominate in the twenty-first century, Manchester University Press, 2021.
Notes:
1. Samir Amin, Unequal Development: An Essay on the Social Formations ofPeripheral Capitalism, Sussex, Harvester, 1976, p. 211.