Act Two in the U.S.-China Cold War


Global Trade War: What’s Behind the U.S. Targeting Huawei and What Will Be the Consequences?


by Michael Pröbsting, International Secretary of the Revolutionary Communist International Tendency (RCIT), 24 May 2019,




The last few days have opened a new phase in the Cold War between the two largest imperialist Great Powers – the U.S. and China. The Global Trade War, which started nearly one year ago, escalated on 10 May when the U.S. imposed additional 25% tariffs on $250 billion in Chinese imports. Three days later, China retaliated by targeting $110 billion in U.S. products with higher tariffs. (1)


In response, the Trump Administration announced its plan to target another $300 billion in goods — a move that would cover everything China ships to the United States. In a related dramatic escalation, the US President also signed an executive order on 15 May declaring a national emergency, barring the use of telecommunications equipment made by companies that are deemed a threat to national security.


While this Executive Order did not name China or Chinese companies specifically, it cleared the way for an outright ban on products made by Washington’s arch-rival. Soon after that order was signed, the US Commerce Department also added the leading Chinese technology corporation, Huawei, and 70 affiliates to its “Entity List” alleging that the Chinese company was engaged in activities “contrary to US national security or foreign policy interests”. Inclusion on the list means that a US company, person, or government agency purchasing Huawei equipment now requires a specific license “to export, re-export and/or transfer (in-country).


Huawei is a major Chinese private corporation with 188,000 employees. It is a global leader in information technology and the No. 2 among the world’s leading smartphone companies – trailing only the South Korean technology giant, Samsung. In particular, Huawei has become the leading company in 5G technology – the latest generation of mobile networks. Targeting China’s leading monopoly capitalist in the field of modern technology is a crucial step of U.S. imperialism directed towards halting the ascent of its most important rival.


This has already had dramatic consequences for Huawei given the scale of global cooperation between technology companies. Several of its Western partners such as Google have already announced their intentions of cutting ties with Huawei. The chip-makers Intel, Qualcomm, Xilinx, and Britain’s ARM are following suit. Britain’s EE and Vodafone and Japan’s KDDI and Y! Mobile said they were pausing the launch of Huawei smartphones, including some that can be used on next generation mobile networks, amid uncertainty about devices coming from the world’s No. 2 smartphone maker.




Huawei was prepared




However, Huawei seems to have been prepared for such an attack by the Trump Administration. According to Bloomberg, it has stockpiled enough chips and other vital components to keep its business running for at least three months. (2)


It has also proactively invested in the development of its own chip manufacturing and Operating System. That is expected to make it completely independent of current Western sources. As a result, Huwai may choose to use this development to replace Western components with their own systems. According to a recently published research report by Jefferies, “Huawei Technologies is likely to be able to weather a reported suspension of business with UK chip designer ARM as it will be able to rely on its own Kirin chips. (...) If Huawei loses its core licence from ARM, it will be able to use its self-developed custom CPU core and CPU architecture, Wu said. (...) “We think ARM's suspension will accelerate Huawei adopting its own customer cores in new Kirin chips, and also developing its own Operating System and ecosystem,” said Wu. “We think Huawei will likely launch new Kirin chips in the near term to show little disruption to operations.” (3)


Huawei Technologies founder and CEO Ren Zhengfei said in an interview with Chinese state media on 21 May that it has been always clear to him that it was only a matter of time before an inevitable clash with the U.S.: “We sacrificed [the interests of] individuals and families for the sake of an ideal, to stand at the top of the world. (...) For this ideal, there will be conflict with the United States sooner or later.” (4) Ren also said: “US politicians may have underestimated our capability … Not only would it not affect us, but others cannot catch up with us, even after two to three years.” (5)




Beijing prepares its retaliation




As we have repeatedly pointed out in the past, the Global Trade War is making the inevitable transition to a long-term Cold War between the two largest imperialist powers. (6) Both camps are preparing the public for a long-term conflict. U.S. Treasury Secretary Steven Mnuchin is talking to Walmart and other companies about finding ways to ease the pain if Trump goes ahead with plans to extend import taxes to the $300 billion in Chinese products that haven’t already been hit with tariffs. The government is also working on an aid package for American farmers hurt by China’s retaliatory tariffs on soybeans and other U.S. agricultural products — on top of last year’s $11 billion farm bailout.


Beijing is also considering further retaliatory measures. Two of China’s three major state-owned airlines — Air China Ltd. and China Southern Airlines Ltd. — demanded compensation from Boeing for the grounding of the plane maker’s 737 Max jetliners after fatal crashes in Ethiopia and Indonesia. The third state-owned carrier — China Eastern Airlines Ltd. — made a similar request last month.


There is also fear that Beijing will eventually try to limit, or even choke off, Apple’s iPhone production and sales in China. That threat has triggered an $80 billion loss in shareholder wealth so far, this month. “There is rampant fear that Apple has a target on its back, and China is getting ready to fire,” Wedbush Securities analyst Daniel Ives said. (7)


In addition, the regime is considering using its dominant position as a global supplier of rare earths. Rare earths are a crucial element in modern technologies. They are used in rechargeable batteries for electric and hybrid cars, advanced ceramics, computers, DVD players, wind turbines, catalysts in cars and oil refineries, monitors, televisions, lighting, lasers, fiber optics, superconductors and glass polishing. (8) They are difficult and costly to mine and process cleanly. China has most of the world’s processing capacity and supplied 80% of the rare earths imported by the United States from 2014 to 2017. In 2017, China accounted for 81% of the world’s rare earth production. (9) China already used its dominant global position in this area during a conflict with Japan in 2010. (10)


The Stalinist-Capitalist regime in Beijing has offered tax cuts to software and chip companies as U.S. export controls threaten Chinese tech companies. Under the new measure, most software and integrated circuit companies can skip paying income taxes for two years and will see their tax bills cut by half for three years after that, the Finance Ministry said.


The regime has also started airing Korean War movies to arouse patriotic feelings in the public. This is a period, 1950-53, when China and the U.S. were engaged in ferocious military conflict.


China’s President Xi Jinping has stressed the need for self-reliance and innovation in order for Chinese capitalism to become completely independent from U.S. technology companies. “Technological innovation is the root of life for businesses. Only if we own our own intellectual property and core technologies, then can we produce products with core competitiveness and [we] won’t be beaten in intensifying competition.” (11)


Rousing patriotic feeling, Xi called upon the nation to embark on a “new Long March”, referring to the famous CCP event organized by Mao in China’s civil war in 1934: “We are here at the starting point of the Long March to remember the time when the Red Army began its journey,” Xi told cheering crowds on Monday, in footage posted on state broadcaster CCTV’s website on Tuesday. “We are now embarking on a new Long March, and we must start all over again!” (12) The remarks of the Chinese President should serve to prepare the people for scarifies and also to accept the policy of authoritarian capitalist regime. “China must be clear-headed about the long-term, complex nature of unfavorable domestic and international factors and well prepared for any difficult circumstances, Xi emphasized, adding that the most important thing for China is to do its own job well. (...) Just like the Red Army in the Long March, "as long as we hold firm ideas and faith and strong revolutionary determination, we can overcome obstacles one by one. Those traps, encirclements, pursuits and blockade lines will be left behind by us," Xi said. (13)




Both imperialist camps are beating the drums of chauvinism




Strategists on both sides are increasingly outspoken about the strategic and long-term nature of this conflict as it touches the most fundamental interests of the two rival imperialist powers.


Steve Bannon, Trump’s former chief strategist, is openly advocating an “all-encompassing war” against China. He recently said in an interview with the South China Morning Post: “The executive order is 10 times more important than walking away from the trade deal. It [Huawei] is a major national security threat, not just to the US but to the rest of the world. We are going to shut it down.” (14)


Bannon is also calling for shutting Chinese companies out of American capital markets. “The next move we make is to cut off all the IPOs, unwind all the pension funds and insurance companies in the US that provide capital to the Chinese Communist Party. (...) We’ll see a big move on Wall Street to restrict access to capital markets to Chinese companies until [they agree to] this fundamental reform.” Bannon also declared that “an economic war” with China “is not going to be resolved quickly. This is the beginning of a very long and tough process.


As part of his anti-China campaign Bannon revived on 9 April this year the cold war Committee on the Present Danger: China (CPDC). The CPD was first established in the early 1950s during the U.S. Cold War efforts “against the influence of communism in the US”. After being temporarily disbanded, it was reconstituted in 1976 by US foreign policy hawks to counter the Soviet Union during the final stages of that cold war. A third iteration of the CPD emerged in 2004 with the mission of rallying the American people to support the imperialist “war on terror” against "radical Islamists" who "threaten the safety of the American people and millions of others who prize liberty."


However, it would be wrong to imagine that the CPDC is an isolated project of Bannon alone. When this group held its recent conference it had among its speakers leading Republican politicians like Senator Ted Cruz and former House Speaker Newt Gingrich. The CPDC claims, in its “Guiding Principles”: “The United States is likely to face in the foreseeable future a determined and aggressive superpower adversary, prepared and willing to use force, as well as non-military forms of warfare, to defeat this country decisively.” The Chinese leaders seek to "weaken and ultimately defeat America" and "subvert Western democracies" in order to clear China's path to "global hegemony." After “decades of American miscalculation, inaction and appeasement,” the group calls on the United States to meet this challenge by “mobiliz[ing] all instruments of national power.” It warns that there exists “no hope of coexistence with China as long as the Communist Party governs the country.” (15)


In response, Beijing’s English-language mouth piece, Global Times, denounced in an editorial Bannon’s saber-rattling in strong terms as “the most hysteric advocacy by this ultra right-wing opinion leader. Bannon is addicted to the rhetoric of general war on China. With China-US relations heading downward, this radical figure makes himself heard by talking loud. (...) Bannon's China policy is a kind of economic fascism. His real objective of forcing Beijing to carry out fundamental reforms is the economic subjugation of China. Bannon's threatening words toward China are bringing an opium high to some people amid the US frenzy of suppressing China. Regrettably, besides Bannon, a group of economic fascists have emerged in the US. They view China's economic development and prosperity as a fundamental threat to the US.” (16)


As we pointed out in our last article on the Global Trade War, the anti-Chinese Cold War strategy is not limited to the Republican or Trumpian camp. Senator Bernie Sanders, running as a “progressive” presidential candidate for the Democratic Party, attacks Trump for not being hard enough against Beijing. “There is a bipartisan consensus that China is America’s greatest long-term strategic challenge,” said Robert Daly of the Kissinger Institute on China and the United States at the Woodrow Wilson Centre in Washington. (17)


Leading Chinese strategists are equally aware of the long-term and fundamental nature of the conflict between the two Great Powers. Jin Canrong, an international relations professor with Renmin University of China, said in an interview with a Chinese website,, that the endgame of Washington’s hawks is to “force China to give up its development” instead of seeking balanced bilateral trade.


Mei Xinyu, a fellow at the research institute under the Ministry of Commerce, said the current trade talk deadlock was similar to the Panmunjom peace talks during the Korean War in the 1950s. “Even if a deal is reached, it could be torn apart [by Trump] easily at any time,” he said. Beijing should prepare for the worst-case scenario to defend its rights in climbing up the global value chain through technological catch-up, Mei added.


The trade war, as seen from the current situation, will be a long-term issue,” Zhang Yongjun, a senior economist of the China Centre for International Economic Exchanges, said. “To fight the trade war, China must boost its domestic market demand.” (18)


Graeme Maxton, a British economist and former Secretary General of the Club of Rome, summarized aptly: “What is at stake here is not just business access. It is about the chance to influence Chinese thinking and so the country’s long-term political development. It is, at its core, a battle for hearts and minds. (…) This is not just a fight about trade. It is an ideological war.” (19)




Clash of antagonistic strategic interests




It is evident that this is going to be a long Cold War. Even professional optimists from the ranks of the bourgeoisie are increasingly worried. David Dollar, senior fellow at the Brookings Institution and a former official at the World Bank and U.S. Treasury said, “I increasingly think that this is going to turn into a long-term trade conflict. We have to entertain the possibility that there is no deal.” (20)


In a recently published report, US brokerage Academy Securities noted, “there is reason to believe that the US has now crossed the Rubicon in terms of dealing with China”, adding that the Trump administration is now showing a “true commitment” to treating China as the “strategic competitor” it had labeled it as. (21)


The U.S. attack on Huawei points directly to a core issue of the U.S.-China Cold War: dominance in the strategic sector of informational technology. Graeme Maxton explains: “As with Huawei, though, the fight is really about security, economic power and sovereignty. With Huawei, the US fears that with the shift to 5G communications technology, China will control large parts of the networks across which the world’s data flows. It is not just about who provides the equipment. It is a question of who controls access to the internet’s plumbing. For America’s hi-tech firms, China is different from almost every other market. They have failed to completely dominate the tech and information industry as they have almost everywhere else, largely because China is one of the few countries to have successfully established competitive rivals – firms like Weibo, Alibaba,, Baidu, Tencent and Lenovo. As a result, US firms have very little access to Chinese data.” (22)


The whole dynamic points to the inevitable decoupling of the two largest economies. They will increasingly limit the access of their rivals to their domestic markets. They will strive to become independent of each other in the field of information technology. This could also result in the creation of a “digital iron curtain”, dividing the world into two separate technological spheres.


Related to this are the efforts of Washington and Beijing to pressurize their allies to side with them against their respective rivals. The Trump Administration has demanded that their European and Asian allies join its boycott of Huawei. Beijing also used the latest meeting the Shanghai Cooperation Organization in Kyrgyzstan to seek support from Russia and from its Central Asian neighbors. (23) With its gigantic Belt and Road Initiative, involving infrastructure development and investments in 152 countries and international organizations, China has a powerful foundation to rally global support.


As a result the European Union, a divided imperialist conclave with less weight than the U.S. or China, is already coming under pressure from both sides. On 12 March, the European Commission issued a statement that characterized China as an “economic competitor” and a “systematic rival.” (24) The EU is increasingly worried about China’s growing influence in Europe. Beijing has successfully approached individual EU member states in recent years. The so-called 16+1 forum facilitates China’s partnership with 16 countries in Central and Eastern Europe and includes 11 EU members. In addition, Italy recently joined the Belt and Road Initiative. (25) At the same time, the EU, until now, has rejected Washington’s pressure to boycott Huawei.




An inevitable and long-term Cold War




The latest escalation in the Global Trade War should not surprise anyone. Marxists have explained for some time now that the rivalry between U.S. and Chinese imperialism is a key feature of the current historical period. The RCIT has elaborated in a number of works that such a development is the result of the decline of the U.S. as the dominant Great Power and the parallel rise of China. These are developments which are taking place within the moribund decay of capitalism. (26)


We predicted one year ago, at the onset of the Global Trade War, that while short-term compromises are possible, a full-blown conflict is inevitable: “Of course, it is not inevitable that a full-blown Global Trade War will take place in the next few months. As mentioned above, both U.S. as well as Chinese capitalists fear such a development and its consequences for the world economy. (...) For all these reasons, one cannot exclude that Washington and Beijing might find a temporary compromise and delay an all-out global trade war for some time. However, given the fact that warmongering in the Middle East and economic protectionism are essential aspects of Trump’s political project, it is very unlikely that such a compromise could last very long. Despite all the inner contradictions and obstacles, there can be no doubt that militarism and protectionism are the key answers of U.S. imperialism against its decline as the hegemonial global power. This would also be the case if the U.S. would have a less mentally deranged and more perceptive President. For all these reasons, a full-blown Global Trade War is inevitable sooner or later. (27)


At this point, we do not intend to repeat our analysis of the Global Trade War that we have elaborated over the past 12 months in numerous articles. We limit ourselves to re-emphasizing that it is impossible to understand the character of the present tensions between the Great Powers without the appreciating the class character of the parties involved. More specifically, the precondition for a correct understanding is recognition of the imperialist nature, not only of the old imperialist powers – the U.S., Western Europe and Japan – but also of the emerging imperialist powers, China and Russia.


From such a Marxist understanding must flow a consistent revolutionary and anti-imperialist stance in conflicts like the Global Trade War. This means a position of consistently opposing all imperialist powers and of intransigently fighting against their national chauvinism and militarism. In our “Six Points for a Platform of Revolutionary Unity Today” we have summarized the position that we believe is the only legitimate stance for Marxists:


It is only possible to understand the driving dynamic of the present period of capitalist crisis and to take a correct position if one recognizes the imperialist character not only of the US, EU and Japan but also of the new emerging powers, Russia and China. Only on such a basis is it possible to arrive at the only correct, anti-imperialist program on this issue – proletarian internationalism and revolutionary defeatism, i.e., the perspective of consistent struggle of the working class independent of and against all imperialist powers. This means that revolutionaries refuse to lend support to any Great Power in inter-imperialist conflicts under the slogan ‘The main enemy is at home! (28)


We call all those who share such an outlook and strategy to join us in building a Revolutionary World Party fighting for a socialist future that will liberate humanity from the heel of the imperialist powers in both the East and West!






(1) See on this e.g. Michael Pröbsting: The Next Round of Escalation in the Global Trade War. After negotiations ended without results, the U.S. imposes new tariffs on Chinese imports and Beijing retaliates, 13 May 2019,


(2) Bloomberg: Huawei Built At Least a Three-Month Stockpile Ahead of Trump Ban, May 17, 2019,


(3) See e.g. Iris Deng: Huawei will use its own phone chips amid report UK design firm ARM has cut business ties, says analyst, 23 May, 2019


(4) Li Tao: Huawei founder Ren Zhengfei says clash with the US was ‘inevitable’, 21 May, 2019


(5) Mimi Lau: Huawei boss defends US companies against rising Chinese nationalism, 22 May, 2019,


(6) Joint Statement: Global Trade War: No to Great Power Jingoism in West and East! Neither Imperialist Globalization nor Imperialist Protectionism! For International Solidarity and Joint Struggle of the Working Class and Oppressed People! 4 July 2018,; Michael Pröbsting: The Global Trade War is Escalating. Trump’s new Tariffs on about $200bn worth of Chinese Imports Reflect the Accelerating Rivalry between the Great Powers, 19 September 2018,; Michael Pröbsting: Anti-Imperialism in the Age of Great Power Rivalry (Chapter VI. The Acceleration of Inter-Imperialist Rivalry and the Global Trade War),; Yossi Schwartz: Capitalist Trade and the Looming 3rd World War, 15 July 2018,; Michael Pröbsting: The Global Trade War has Begun. What is its Meaning and what should be the Response of Socialists? 13 July 2018,; Michael Pröbsting: Where Do Socialists Stand in Face of the Looming Global Trade War? A Showcase of the Practical Consequences of the Assessment of the Class Character of the Chinese State, 17 June 2018,; Michael Pröbsting: World Perspectives 2018: A World Pregnant with Wars and Popular Uprisings. Theses on the World Situation, the Perspectives for Class Struggle and the Tasks of Revolutionaries, RCIT Books, Vienna 2018, Our documents on the Global Trade War are collected at a special sub-page on our website:


(7) Joe McDonald and Michael Liedtke: China has more weapons in US tariff war - but do they work? 2019-05-23


(8) Rare earth metals are a group of 17 elements - lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium, yttrium - that appear in low concentrations in the ground.


(9) Explainer: China's rare earth supplies could be vital bargaining chip in U.S. trade war, May 22, 2019 /


(10) See on the conflict between China and Japan Michael Pröbsting: No to chauvinist war-mongering by Japanese and Chinese imperialism! 23.9.2012,


(11) Jun Mai, Amanda Lee; Xi Jinping calls for self-reliance as China grapples with long-term US challenge of trade war and ban on Huawei and other technology manufacturers, 22 May, 2019


(12) Zhou Xin: Xi Jinping calls for ‘new Long March’ in dramatic sign that China is preparing for protracted trade war, 21 May, 2019


(13) Yang Sheng: Xi: Another Long March begins. Trade war with US just ‘another obstacle’ on lengthy road, Global Times 2019/5/23


(14) Jun Mai: Steve Bannon says killing Huawei more important than trade deal with China, 22 May, 2019


(15) Committe on the Present Danger: China, Guiding Principles of the Committee,; see also David Skidmore: Exaggerating the Present Danger – Then and Now, May 19, 2019


(16) Global Times: Bannon promotes economic fascism, 2019/5/23


(17) Jun Mai: Don’t wait for a friendly White House, Steve Bannon tells China, 23 May, 2019


(18) Quoted in Frank Tang: Donald Trump’s trade war and Huawei ban push China to rethink economic ties with US, 22 May, 2019


(19) Graeme Maxton: What Amazon, Facebook, Google and other US tech companies are really after in China – data, not just market access, 23 May, 2019


(20) Paul Wiseman and Joe McDonald: US, China appear to brace for long haul in trade dispute, 2019-05-22


(21) Nicholas Spiro: As the US-China trade war escalates, stock markets have been shaken but not stirred, 23 May, 2019


(22) Graeme Maxton: What Amazon, Facebook, Google and other US tech companies are really after in China – data, not just market access, 23 May, 2019


(23) Christopher Bodeen: China seeks Asian neighbors’ support in trade fight with US, 2019-05-23


(24) European Commission - Press release: Commission reviews relations with China, proposes 10 actions, Brussels, 12 March 2019,


(25) Taehwa Hong: Is EU ready to confront the dragon? 2019-05-23


(26) See on this e.g. our recently published book by Michael Pröbsting: Anti-Imperialism in the Age of Great Power Rivalry. The Factors behind the Accelerating Rivalry between the U.S., China, Russia, EU and Japan. A Critique of the Left’s Analysis and an Outline of the Marxist Perspective, RCIT Books, Vienna 2019. The book can be read online or downloaded for free here: On the RCIT’s analysis of China and Russia as emerging imperialist powers see the literature mentioned in the special sub-section on our website: Concerning China, we refer readers in particular to Michael Pröbsting: The China-India Conflict: Its Causes and Consequences. What are the background and the nature of the tensions between China and India in the Sikkim border region? What should be the tactical conclusions for Socialists and Activists of the Liberation Movements? 18 August 2017, Revolutionary Communism No. 71,; Michael Pröbsting: The China Question and the Marxist Theory of Imperialism, December 2014,; Michael Pröbsting: China‘s transformation into an imperialist power. A study of the economic, political and military aspects of China as a Great Power, in: Revolutionary Communism No. 4, Concerning Russia, we refer readers in particular to Michael Pröbsting: Lenin’s Theory of Imperialism and the Rise of Russia as a Great Power. On the Understanding and Misunderstanding of Today’s Inter-Imperialist Rivalry in the Light of Lenin’s Theory of Imperialism, August 2014,; Michael Pröbsting: Russia as a Great Imperialist Power. The formation of Russian Monopoly Capital and its Empire – A Reply to our Critics, 18 March 2014, Special Issue of Revolutionary Communism No. 21 (March 2014),


(27) Michael Pröbsting: The Global Trade War has Begun. What is its Meaning and what should be the Response of Socialists? 13 July 2018,


(28) Six Points for a Platform of Revolutionary Unity Today. A Proposal from the Revolutionary Communist International Tendency (RCIT), February 2018, See also RCIT: Theses on Revolutionary Defeatism in Imperialist States, 8 September 2018,