Since 1945, the United States has not managed a clear military victory with the exception of the 1991 Gulf War. Korea was a stalemate and Vietnam was a loss. Direct military action in Afghanistan, Somalia, Kosovo, Bosnia, and “interventions” in Libya, Syria, Yemen, Lebanon, and Laos/Cambodia did not produce a US “victory” with lasting objectives being achieved.
“Asymmetric warfare” is defined as a war between two forces when the belligerents’ relative military power, strategy, or tactics differ significantly.
However, the primary tactic of asymmetrical warfare is to use “all means available” to defeat the enemy and that does not necessarily mean with bullets and bombs. Sun Tzu in The Art of War: “The supreme art of war is to subdue the enemy without fighting.”
Bullets and bombs cost lives and the public hates to see young men and women come home in body bags more so without a victory. The US method of “asymmetrical warfare” has been economic sanctions.
Economic sanctions are scarcely different than surrounding a city and putting it under siege, depriving its citizens of essentials. The purpose is to get the inhabitants to surrender or to come out and fight. Modern economic sanction warfare was employed by the US with its trade embargo in 1940 to bring Japan to its knees or to start a war, either serving the US objective to halt Japan’s Asian expansion.
The war between the United States and China has begun without a shot being fired. Sun Tzu: “So in war, the way is to avoid what is strong, and strike at what is weak”. Why would China take on the US military, its strongest advantage? The Cold War was won by forcing the USSR to use its limited resources to support its military rather than its economy, which eventually collapsed.
December 2022: President Xi Jinping met with King Salman of Saudi Arabia. March 15, 2023: “Announced in Beijing, Saudi Arabia and Iran agree to re-establish diplomatic relations” and “Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales.”
March 29: “Saudi Arabia has agreed to join the Shanghai Cooperation Organization.” April 2: “Opec+ oil producers announced oil output cuts of around 1.16 million barrels per day.” On March 13, the crude oil futures price closed at $72.77. The closing price on April 7 was $84.94, an increase of 17 percent.
However, what Western minds are banking on—quite literally—is the fact that China has $1 trillion holdings of US Treasury bonds although at the lowest amount since 2009. But China has been buying US “Agency Bonds” issued by government entities such as the Federal Housing Administration and Small Business Administration.
China would never be foolish enough to use its holdings of US government debt as an economic weapon by massive selling because then China would incur huge investment losses. Or would it make strategic sense?
It cost the US a billion dollars a year to support anti-communist forces in Afghanistan, Nicaragua, Angola, and Cambodia. But the USSR spent $8 billion annually—which it did not have—to deflect the US impact.
By selling its US treasury and agency debt holdings, China could help cripple the US economy almost overnight. But doesn’t China depend on the US consumer market? Note that the European Union is China’s largest trading partner, and China is the EU’s largest trade partner.
February 8, 2023: “Trade between Germany and China rose to a record level last year, making China Germany’s most important trading partner for the seventh year.” In 2022, China was the third largest partner for EU exports of goods and the largest partner for EU imports of goods. The EU imports more goods from China than it exports, running a trade deficit.
China’s saber rattling near Taiwan has the focus of the US, which feels secure holding its big military stick. The US economy is currently fragile with high inflation, weak and uneven GDP growth, and falling employment. Sun Tzu: “The opportunity of defeating the enemy is provided by the enemy himself.”
E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.
