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Countering the Yellow Peril, Part II: The US

Peter Navarro, Trump’s trade advisor, recently stated, “We are at war with China”. He did not mean a literal shooting war, but his statement carried more meaning than that of a simple trade war. He then went on to accuse China of deliberately putting passengers infected with the coronavirus aboard flights bound for the US in the early days of the epidemic. It was an inflammatory statement. The American economy is perhaps facing shrinkage of its GDP by as much as 10% in 2020 due to its mishandling of the pandemic, while Asian economies are now almost up to full capacity, having clamped down the spread of the virus. So,why the heightened rhetoric?

Chinese trade within Asia has shot upwards since the pandemic has subsided in Asia, while economies in the West and global South are on life support. In fact, the US is not even China’s biggest export market.

Blaming China for the virus would appear to be a distraction from Washington’s own mishandling of the crisis. But there is a much wider picture here, with the virus simply being used as a convenient cover story for a Beltway strategy that has been building since the ’08 financial crisis.

Added to Navarro’s accusations, preceding, Mark Esper, US Secretary of Defense, is warning that China will use the pandemic to spread its footprint in Europe, “as a way to invest in critical industry and infrastructure, with effect on security in the long term”. If so, it is hardly surprising. The Trump administration has been no friend to Europe recently. But the real story here is given away by Esper’s statement – “the effect on security in the long term.” Whose security, we might wonder?

Broadly stated, America’s security interests relate to two areas: its economic power and its ability to control energy and outcomes to its advantage. Those cover a very broad area, and are backed up by its military, projected via its navy and the 800+ military bases it has scattered across the globe. Its economic power lies in its dominance over the SWIFT system of financial exchanges and the ties of global currencies to the US dollar. It is clear that the US is doing everything in its power, short of war, to maintain the control it has had since WWII – Pax Americana. And now China is seen as the primary threat to that, with Russia a close 2nd.

Staying with China then, since Trump came to office in 2017, what actions have we seen in the Beltway’s attempts to halt the Chinese momentum forward?

  • The introduction of tariffs on Chinese goods coming into the US (the start of the trade war)
  • The sanctioning of nations seeking to bypass dollar transactions (Iran, Venezuela, Russia, etc.) Those nations trade directly with China.
  • The withdrawal from arms treaties, which in part are an effort to draw China into nuclear arms agreements, which would mean inspection teams on Chinese soil.
  • Attempted rapprochement with North Korea, which has China as its closest friendly relation
  • The ARIA initiative, mentioned in Part I.
  • Attempts at ousting Huawei from the West, the former being the biggest threat to US competition for 5G.
  • The Hong Kong protests of 2029/2020, backed and promoted by US NGOs, with the US Congress eventually passing the Hong Kong Human Rights and Democracy Act, a direct act of meddling in Chinese internal affairs.
  • Attempts to shut Huawei out of semiconductor manufacturing that employs US tech.
  • Talk of shutting state-owned companies out of the US stock exchange, which is particularly aimed at China, but also any nation with mixed economies, such as Russia and Iran.
  • Talk among members of Congress of cancelling US debt to China as a way of ‘recouping damages’ from the pandemic

Taken collectively the preceding points suggest a concerted effort by the present administration to ramp up past policies that are aimed at setting China back at least a few years in their programs, even to the point of possibly destabilizing that nation. The Chinese are starting to push back harder after the recent allegations against them of culpability for the pandemic. We will cover those points very briefly a little later, but first we look at a little astrology for the US to see what the prevailing mood is in the nation and why the anti-China rhetoric has become so heated. This will take a little time to parse, but it will show a certain timeline for the US and why the US is in its current state of mind, astrologically speaking.

Instead of looking at a specific event set against the US chart, however, we begin by looking at two cycles – the progressed lunar phase and the transit of Saturn through the US horoscope. These show the trends in government and public opinion that have shaped American policies in the past.

There is a specific phase of the Saturn transit through any horoscope that can mark a period of decline, generally. It does not have to be so if a person (or nation) is smart about that phase. Instead of decline, that period can also be one of consolidation in preparation for another cycle of growth. That transit period is from when Saturn contacts the MC (Midheaven), which marks the high point in a person’s public life, to the Ascendant, which often indicates a crisis or smaller peak, after which it marks a turning inward.

When Saturn has crossed the US Ascendant it has always indicated a kind of crisis or shift in American thinking, often with a coinciding recognition that perhaps the nation is not so exceptional after all. It has also marked periods where illusions about the States have been at their most magnified, shortly to come crashing down. Here are the years where that has happened, along with the associated events:

  • 2016: The 2016 presidential election, increasing financial instability, ‘Russia-gate’, the DNC scandal, a rigged election, the rise of Russia and China in international affairs, wide disparities in wealth for the populace
  • 1987: Iran-Contra, ‘Reaganomics’, Black Monday, the beginning of the end of the Cold War, the firming in place of neoliberal economic policy
  • 1957: Sputnik, beginning the Space Race. Prelude to the Civil Rights Movement. Troubles brewing in the Caribbean.
  • 1928: The bull market of 1928/29, prelude to the Great Depression. Prohibition and the rise of organized crime. Post WWI liberalism. The last years of the Roaring ‘20s.
  • 1898: Followed the Panic of 1893. The Spanish-American War, with further expansion of American territorial control
  • 1868: Post-Civil War, the start of the Reconstruction. The impeachment of Andrew Johnson, who was Lincoln’s VP.
  • 1839: Following the Panic of 1837. The US was in a depression, at the same time expanding westwards. There were riots, bank failures and closures and increased police powers.
  • 1810: The Napoleonic wars in Europe, which led to Europeans seizing American shipping. The War of 1812. 1810 was in a period of increasing tensions with England.
  • 1780: The Revolutionary War, still raging, leading to the Articles of Confederation

There is a common feature with almost all of those years: They roughly coincided with economic downturns and financial instability. These contacts of Saturn with the US Ascendant all followed on the transit roughly 6 years before with the transit of Saturn over the US Midheaven and should have marked the end process of consolidation. That was indeed the case for certain of those years.

Most recently, Saturn contacted the MC of the US chart at the end of 2009. That should have marked a recognition in the Beltway that the apex had been reached and that a consolidation of gains should be engaged instead of further expansion. That was the height of the world financial crisis, as well as Obama’s Pivot to Asia, which was preceded by the largest stock market bubble in US history at the time, related to the housing market. The major message there was that all was not well with the US economy and that it was uneasy about other rising economies.

In one sense, that 2009 transit marked a high point, if one looks solely at the markets. But there was something else going on at the time as well – the ballooning public debt, shown by the direction of Jupiter to the US Moon (ruling the 8th house, ruling debt). Instead of investing in the public and infrastructure then, Obama and Co. bailed out the banks and corporations.

The progressed Moon at that time was in the 9th house, just past its progressed full moon phase, where it had been from the year before, the 9th house highlighting exports and foreign trade. Bringing this back to China, from the first years in this century China’s trade imbalance with the US began to balloon, reaching its highest point in 2018, when the US trade deficit with China was almost $350 billion. It has gone down slightly since. Here is a quick glance at what the US imports from China and the outer reason as to why that trade deficit is so large:

  • The top import categories (2-digit HS) in 2018 were: electrical machinery ($152 billion), machinery ($117 billion), furniture and bedding ($35 billion), toys and sports equipment ($27 billion), and plastics ($19 billion).
  • U.S. total imports of agricultural products from China totaled $4.9 billion in 2018, our 3rd largest supplier of agricultural imports. Leading categories include: processed fruit & vegetables ($1.2 billion), fruit & vegetable juices ($393 million), snack foods ($222 million), spices ($167 million), and fresh vegetables ($160 million).

Electrical machinery and general machinery – those two categories alone represent around 75% of all imports from China. A detailed look at their machinery output makes for quite interesting reading and is rather eye-opening for people who would view China as a backwards or ill-skilled nation. Having worked on Chinese machine tools for much of my working life, among those of many other nationalities, I can say without hesitation it is world-class equipment. Their general machinery, one might imagine, is quite similar in quality. And because the labor market in China is cheaper than that of the US, the Chinese machinery and electricals are very competitive in pricing. What does this mean for the US, then?

There are three main reasons why that trade imbalance ballooned since the turn of the century. Firstly, Chinese manufacturing and engineering had reached a point where it equalled that of other developed nations. Those goods exported from China were cheaper due to labor costs and no tariffs than those same goods manufactured in the West. The second reason is not as easy to see, but it relates to manufacturing methods.

Most imports from China to the US are goods wherein the raw materials are sent to China from the US, then assembled in China, thereafter shipped back to the US. The third reason for the trade imbalance is economic. To keep export prices low, China buys a large volume of US Treasuries (debt certificates), meaning it is a lender nation to the US. China is the 2nd-largest holder of US debt after Japan. That last point is what has some think tanks and banking interests in the US particularly worried, because in doing so the Chinese have a direct effect on interest rates in the US. With good relations, those interest rates remain low. Then, there is the problem of education.

It is very difficult to find products these days that are not assembled in China or other Eastern nations. The reason is precisely due to education and a motivated workforce. China graduates over eight times more students in STEM subjects (science, tech, engineering and math) than the US and in increasing numbers, many of them educated in the US and other Western nations, who then generally go back to China and contribute to Chinese industry. American engineering and technical education in the meantime has fallen behind.

It is also worth noting that per capita, both Russia and Iran produce more STEM graduates than the US, and we see the results in their military equipment, for instance. Per capita, Russia, Iran and India each produce roughly twice the number of STEM graduates than either the United States or Japan. In China’s case that represents a huge pool of know-how, and we see it in their infrastructure, emerging tech and R&D. American infrastructure and research instead has been defunded progressively over the past decades and privatized, and as a result has stagnated.

Then we turn to the progressed lunar phase. From this year through 2024 the US progressed moon will be in its balsamic phase, often known as a darker period emotionally, where issues do not seem to move or resolve. At the same time Saturn will still be in the first three houses of the US chart, which is also generally a time when plans seem difficult of attainment. The general tone for the US for the next years, then, is to be one of soul-searching, introspection and drawing inward. As always, though, these periods need to be seen in the context of the times. In that regard, we can look back at previous periods in American history when these same factors were in place.

The same period of balsamic progressed moon and Saturn through the 1st three houses was in the first half of the 1990s, during the period where Washington and Wall Street were busy ‘bringing democracy’ and US-style capitalism (neoliberal) to the Russian Federation – the Yeltsin years. The Beltway think tanks were thinking they had the world at their fingertips, or under their thumbs. China was the world’s factory and not yet a financial powerhouse and the Soviets were gone. Life was good, they thought. Those were heady days in the Beltway. Little did they know what lay in wait around the corner with Putin, the emerging tech bubble and China’s quiet miracle taking place.

PNAC was also being formulated in the early ‘90s, the neocons were rising in power and Eastern Europe was being assimilated into the NATO. What was unrecognized in those days was the fact later to emerge that some very poor policy decisions were being put in place that would eventually lead to the 2008 financial collapse and the turning of Russia away from US influence. 9/11 would also result, and with it two of America’s ‘endless wars’. In hindsight, those years through the ‘90s were not well-spent, wasted in hubris and exceptionalism and were short-sighted with respect to the future.

It is helpful to keep in mind that the balsamic phase of each progressed lunar cycle takes place in a succeeding sign, roughly. And for the US, the previous balsamic and new moon phase took place in the US 2nd house, with its resulting neoliberal economics and its ‘liberal’ social order. In the same vein, the period before the early ‘90s balsamic progressed phase was in the first half of the ‘60s – the Cold War with the Soviets, the Cuban missile crisis, the Kennedy assassination, the escalation of Vietnam, the rising Civil Rights movement and so forth. It was again a time of soul-searching for America.

The previous balsamic period to the early ‘60s was the Great Depression. Saturn was transiting through the first three houses of the US chart again – more soul-searching, but then the rise of Roosevelt and the New Deal. Before that was the early 1900s, the Progressive Era, the aftermath of the Spanish-American War, all of which saw widespread changes in the American political landscape. What we take away from all these periods, then, is that they are important moments triggering developmental periods for the US and often periods accompanied by inner turmoil and experimentation.

The US enters its next balsamic progressed lunar phase just after the 2020 election, if the election takes place, on the 12 Nov 2020. Saturn will be transiting across the US Pluto. The Plutocracy in the US will be brought fully to the forefront of American consciousness. Every time Saturn transits over that Pluto there is some aspect of American corporate and plutocratic tendency that comes up for examination, along with its banking system, Pluto being in the American 2nd house (economics and banking).

Saturn has already contacted the US Pluto once this year already, in January, with the Saturn/Pluto conjunction, this time in Capricorn on 23 February. The Saturn/Pluto conjunction by transit was the period when the coronavirus had just been identified and the Trump administration was in denial that it was any sort of threat. China locked down Wuhan three days later. The Western world was aghast, seeing the move as authoritarian, but soon to follow the example when their own health care systems began to be overrun with COVID-19 cases.

On 23 February the US stock market crashed. Two weeks later Italy locked down, the first European nation to do so. From the 23rd, China already had their epidemic under control. The US had yet to declare a national emergency, which it finally did on 13 March. From the start, the US response to the virus was late, chaotic and resulted in unnecessary deaths and economic hardship for the average American.

To deflect attention from the incompetence of the government (remembering Truman’s, “The buck stops here”), Trump – amidst a tanking economy and criticism at home and abroad for mishandling the crisis – points the finger of blame at China for the American part of the crisis, widely seen as an attempt to deflect blame during a campaign year, ‘China’ being one of his favorite talking points in the last campaign. But that is not the whole story. It is also being pushed by other interests in the US. And, the crisis has vividly highlighted the weakness of American supply chain thinking, going back to what America imports from China.

There has been talk recently by many commentators about the need to bring back manufacturing to the US, to decouple China’s economy from that of the US and to ‘counter China’s rise’, militarily if need be. Just how realistic is that, though? As it turns out, not very, and for very good reasons:

  • From a foreign policy standpoint, an immediate decoupling from China would be an unmitigated disaster for the US, because it would force China to more aggressively promote its influence in its immediate neighbourhood, including Russia, and extending into Africa, Eastern Europe and South America – areas where the US is increasingly seen as being unreliable.
  • To bring manufacturing back to the US would mean higher prices for consumer goods and American isolationism/protectionism for a time, and would take a generation. Realistically, ‘returning manufacturing to the US’ means massive infrastructure projects, new start-ups, and rebuilding anew from the bottom up, ideas toward which Congress has been quite resistant in the past.
  • Any moves toward trying to extract a price from China will be met forcefully by the Chinese, with deleterious effects for the world economy, not just those of China and the US. China will retaliate against any such measures and has many means of doing so, which by and large would hurt the most vulnerable in American society.
  • American industry currently in China would not relocate to American shores, but instead to other lower-waged areas, like Vietnam, Thailand or Mexico, unless it were legislated that those American companies had to come back to the US. That is a highly unlikely scenario, given corporate lobbying in Congress. No large corporation is willingly going to relocate their factories back to the US because it would be costly and the labor costs in the US would adversely affect the bottom lines of stockholders and CEOs, even with tax cuts.
  • Decoupling from China, in the long run, would mean the end of the US dollar as the world’s reserve currency. China holds over a trillion dollars of US debt. China would have no qualms in settling its debts with other nations in the other nations’ currencies. It already does so with Russia. And either reneging on the US debt China holds, as some members of Congress are advocating, or China calling selling it off, would spike US interest rates.

Then there is the talk of war with China, which while possible, is highly unlikely. When Steve Bannon was Trump’s chief advisor we heard talk about a ‘Thucydides trap’, in which a rising power challenging a hegemon would end up in war as the hegemon sought to hang on to its power, referring to China as the rising power. China has already surpassed the US in several measures. And any talk of a war between the US and China would appear to be just that – talk – the reasons being several and important.

We won’t go into the possible war scenario here, except to say the public of the US has no stomach for war, its military is unprepared for such a large war and China’s capabilities in defense have advanced too far for the US to risk it. There is also the factor of the ability of the Chinese to out-manufacture the US and the Russia-China cooperation agreements. Russia would not allow China to fall. Added to that is the great reluctance of any US ally to engage in such a notion. What we will see instead is quite a lot of bloviating out of Washington and attempts at hybrid warfare, as it is called, but to no real effect on China in the long term. Lastly, the single biggest reason there will be no war with China is because the US is too interdependent with China now for too many of its goods.

All of the preceding goes to show that the US is undergoing a period of contraction, of internal crises, of reassessment of its goals and one of its deepest, if not the deepest, financial crises in its history. If history is any indicator, a complete overhaul of the financial order is in the cards, or we should say, in the stars. Either that, or the problems extant in the US will be made all the worse, to come to a head and a harder crisis in the not-too-distant future. That story will be told when Saturn crosses the 4th house cusp early in 2026, when it will be conjunct transiting Neptune.

This administration came in as Saturn crossed the US Ascendant. It should have/could have marked a high point for the States. Instead, we have seen one misstep after another, something on the order of a 5th term of “W”. In short, the US has painted itself into a corner. The US is now drowning in problems, of its own making. And it only seems to be doubling down on the rhetoric, the questionable decisions and the hubris, almost as if it wishes to provoke its own global demise through antagonizing other nations. Here are a few recent examples:

And these are just a few points. There are many more. Relatively speaking, Pax Americana is disappearing quickly, and the coronavirus has shown up all the weaknesses of the West. The Asian century has begun, as one commentator put it. It would appear so, but these are still early days.

In closing, many Americans saw Nixon’s rapprochement with China as a sell-out of American troops who were fighting in Vietnam, supposedly in the name of fighting communism. Nixon landed in Beijing at 11:30 AM Beijing time on 21 Feb 1972. (chart below, bigger) It is of particular interest to note that his trip then has echoes today, in that transiting Pluto was on the US Midheaven then, and today we see Pluto on the American Midheaven by solar arc.

The question thus arises: If Pluto on the MC was or is a sell-out, who is selling out whom? From another angle, was/is it even a sell-out, or simply an administration having to face realities and the shadows that have dogged it at a time of great financial and social stresses? It is a point that will be debated for years to come, no doubt. For now, though, China is focused forward. And though it might be held back for a short time by US shenanigans, there is little chance that the US, with all its chest-beating and posturing, will stop the Asian century from proceeding.

Featured pic from AICoin

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