Finance, Currency, and Trade in the Conflict Between Dueling Imperialisms

On April 2, 2025 the Trump Administration announced its “Liberation Day” tariff scheme. The plan introduced a flat rate 10% tariff on foreign imports and higher retaliatory tariff on a selection of countries, especially China. In the days following the announcement, Wall Street’s excitatory Trump bubble burst, with the U.S. stock markets indexes all crashing 15-20% year to date. Within two days S & P 500 companies logged a $5-trillion loss, exceeding a two-day loss of $3.3 trillion in March 2020. As Trump announced “it’s a great time to buy!” and blamed the situation on “a little problem” in the bonds market where some got “a little out of line”, the ruling class’s Commander in Chief called for his fellow suits on Wall St. to rally and fall back in line on the march towards future super profits derived from a coordinated assault, squeezing out the competition while using manipulative market strategies & trade maneuvers backed by militaristic brigandry to maintain global financial dominance. As the liberals scream about the harm done to the “economy”, they only worry about losing their share in the loot! For the middle classes and the various parasitic appendages dependent upon the super profits of US imperialism, they see only madness as they are expropriated by the big bourgeoisie and cut out of the fascistic corporatist body like a cancer. Regardless, as more and more are forced to join the ranks of the proletariat kicking and screaming, they give sparks to the future re-energizing of the live wire of the class struggle.

Behind the tariff and the resulting stock market chaos is a larger strategy to apply economic pressure to force foreign countries into coming to the table around a future “multilateral” currency accord aimed at restructuring the international monetary order and alliance system by more directly subordinating countries within the U.S. orbit to its financial interest and militarist domination. The plan called the “Mar-a-Lago Accord”, aims at securing the domination of U.S. finance capital and reviving U.S. industrial manufacturing by devaluating the dollar while re-establishing a new crypto currency or new gold standard, tying U.S. security guarantees directly to the holding of long term U.S. debts under a more direct centralized control of the U.S. Treasury Department. Behind the plans of the so-called Mar-a-Lago-Accord is a long standing playbook of US finance capital and how it has marshalled its forces to dominate and subordinate the various sub-imperialisms within the capitalist world. The “trade war” and its tariffs are merely one tool in the larger arsenal of the United States bourgeois and its dominant financial cartel who attempt to retain their global dominance and contain the emerging rival imperialism of China. As the capitalist system across the world faces increasing stagnation, lack of an ability to grow as a result of enlarging debts with GDP’s not keeping pace, we can clearly see in these maneuvers the desperate ploys of a decaying and petrifying capitalist world order in it’s imperialist stage, whose rotten corpse will prove to be fertile grounds for the communist revolution that is inevitably to come.

The End of Bretton Woods and the Gold Standard

With the desolation of all the rival world imperialisms and the mass slaughter of the European and Japanese proletariat at the end of the second world war, U.S. financial capital and its industrial monopolies exported their vast surplus into rebuilding Europe. With the establishment of the Bretton Woods system and the creation of the International Monetary Fund, the U.S. bourgeoisie consolidated its financial domination of the world. Through Bretton Woods, the associated countries’ currencies were directly tethered to the U.S. dollar which was guaranteed by direct convertibility at a fixed rate of gold bullion set by the United States Treasury who at the time controlled two thirds of the world’s gold supply. With the U.S. as the sole industrial power and the prevailing “workshop of the world” it entered into a period of enforcing its free trade policies to obtain open markets to serve as outlets to profitably unload its exploding industrial surplus.

After the war most of the Western European and Japanese industrial monopolies’ capital were able to quickly recover. Benefited by the desolation of their respective proletarian defense organizations they quickly recovered themselves and by the 1950’s their growth surpassed pre-war levels. As the European industries and their associated imperialism began to revive, throughout the 1950s Washington’s sustained increased deficit spending to finance loans, aid, and troops for allied regimes, printing vast amounts of monies to finance it’s imperial domination eventually leading to a glut of dollars in circulation. For decades the U.S. kept the price of gold pegged at $35 an ounce; however, as the deficit spending increased, and trade grew among the other states including the development of foreign currency markets, the bourgeoisie began to recognize the dollar as overpriced. Hungry to regain their former imperial independence, the Japanese and Europeans began bucking out from under the U.S. finance by pulling their gold from the Treasury reserves. As German and Japanese industry rose to contest U.S. export supremacy by the late 1960’s the United States was no longer the totally dominant economic power it had been in the previous two decades. When the U.S. economy turned over for the first time in the post-war era from running an export surplus to a trade deficit, fears began to pulsate throughout the ranks of the U.S. industrial monopolists as they realized their status was in jeopardy. It wouldn’t be long until the slogans of “free trade” were forgotten in pursuit of protectionism to subordinate the developing German and Japanese imperialism.

To reverse the competitiveness of U.S. industries, moves to introduce protectionism began in 1962 with limits imposed on imports of cotton textiles from Japan. As part of the ‘Southern strategy’ in the 1968 presidential election campaign, Nixon promised further limits on imports of textiles that competed with domestically produced goods in the South. The Nixon administration focused heavily on export promotion as a vehicle for industrial growth and job creation. The idea that a lower foreign exchange value of the dollar could bolster domestic industries was widely discussed. In 1969, the United States negotiated export restraints with European countries to limit their exports of iron and steel products. Congress was soon overrun with proposals to limit imports even further. In fear of importing U.S. inflation, Germany “voluntarily” agreed to unhitch from the dollar and appreciate its currency in 1969; however, Japan refused. In 1970, congress imposed quotas on imported clothing and footwear from Japan. Amid this one sided trade war, the United States additionally focused on Japan and West Germany as countries whose currencies should be revalued. Not only did the United States have growing trade deficits with both countries, but Japanese exports threatened powerful domestic industries in textiles and electronics and the Germans iron and steel. A revaluation of the currency due to the manner in which trade was conducted in dollars would devastate the competitiveness of the two export economies. A dollar devaluation would also help with the growing government deficit as U.S. Treasury Debt is paid back in the USD.

Amid this discussion in the U.S., mounting criticism of the old imperialism against the “unfair” U.S. monetary and trade policy grew, amid fears of a U.S. default on its debts. More and more began to turn in their dollars for gold, only deepening the concerns about the treasuries ability to pay back all reserve dollars. By 1970 the U.S. held under 16% of international reserves. The first six months of 1971, assets for $22 billion fled the U.S. In May 1971, a study completed by the Treasury Department concluded that a foreign exchange crisis was inevitable as the dollar was overvalued by 10% to 15%. The Treasury stated that the U.S. should ‘take advantage of the present crisis to achieve (i) a lasting improvement in the balance-of-payments position of the United States, (ii) a more equitable sharing of the responsibilities for world security and economic progress, and (iii) a basic reform of the international monetary system’. The memo put forward ‘the following measures as negotiating leverage: (i) suspension of gold convertibility; (ii) imposition of trade restrictions; (iii) diplomatic and financial intervention to frustrate foreign activities which interfere with the attainment of our objectives; and (iv) reduction of the US military presence in Europe and Japan. It is from this exact same play book that U.S. imperialism would take notes in 1985 and again today in 2025.

We are reminded of what we said in issues 19-21 of “Il Programma Comunista” of 1971, we described the monetary crisis that had erupted at the time: “In the whirlwind of currency and faltering bourgeois idols, the collapse of the capitalist system looms on the horizon.”

In August of 1971, France sent a warship into harbor at New York, retrieving dollar reserves for gold. Days later Nixon unilaterally imposed 90-day wage and price controls, and a 10% tariff on all imports. Most significantly he officially ended the gold standard by announcing the dollars would no longer be convertible into gold, effectively ending the Bretton Woods system by effecting a U.S. default on its debts by torpedoing the currency while making away with what the rest of the world thought was it’s gold safely locked away in Fort Knox.

As a result, the U.S. dollar plummeted by a third which additionally gave rise to enormous speculation against the dollar with the Mark and Yen appreciating significantly. By January 1973 the stock market had the largest crash since the Great Depression with the DOW Jones industrial Average losing 45% of its value, the London Stock Exchange’s FT 30, which lost 73% of its value during the crash. Although West Germany’s market was the fastest to recover, returning to the original nominal level within eighteen months, it did not return to the same real level until June 1985.

The United Kingdom did not return to the same market level until May 1987, whilst the United States did not see the same level in real terms until August 1993, over twenty years after the 1973‑74 crash began. Following the 1973‑75 recession, the United States experienced a significant wave of corporate consolidation. The post-1970s era saw a stronger concentration in services, retail, and wholesale and particularly in the financial sector. A number of large banks consolidated in 1974 following the crash, forming Shearson Hayden Stone. This merger was part of a series that led to the creation of Shearson Lehman Brothers, and its transformation into the world’s fourth largest investment bank. Its collapse would later instigate the 2008 global financial crisis and the subsequent “Great Recession”.

Rise of the Petrodollar & Fortification of U.S. Finance Against the Rising Corpse of the Old Imperialisms

By the spring of 1973 all the major currencies had been unfixed from the dollar and the markets continued with high volatility. The economic situation was exacerbated with the United States backing Israel in the Yom Kippur War. The subsequent OPEC oil embargo in October led to a massive inflationary spike across the world. European countries began to run up large deficits to afford increased energy prices which ultimately resulted in the collapse of their finance markets. The 1976 Pound Sterling crisis led to the humiliation of Britain who went “cap in hand” to the IMF for a loan after the failure of their currency which had formerly been the world’s reserve currency until British imperialism had nearly bankrupted itself in the course of the World Wars. The instability of global finance after the ending of the Bretton-Woods system would begin to calm as the crashing European industries and currencies left the stronger U.S. finance and its industrial monopolies the last standing amid the bloodbath of its own creation. It’s financial domination and position as the world reserve currency further consolidated through the initiation of the petrodollar recycling system with OPEC and then enforced upon Europe though continued threats of reneging on NATO “security guarantees” and implementing tariff and currency manipulation policies, the U.S. using the fear of unleashing the Russian bear on Europe, it’s Israeli attack dog in the Middle East and the CCP under Mao on Japan to coerce submission of its protectorate “allies”.

The system was established in 1973 when Nixon sent Kissinger to negotiate a deal with the Saudis’ to end the oil embargo. Amid the U.S. menacing invasion and the Saudi threats of a salt the earth strategy to burn its own oil fields amid the ongoing Yom Kippur War. The Saudis agreed with Kissinger instead to become a dependent economic protectorate of U.S. imperialism to avoid the mutually assured destruction of their state on the one side and global oil production on the other. The deal guaranteed that the Saudis would only sell oil in U.S. dollars and in return they would receive military equipment, training and a “security guarantee” provided by the same United States military who had just threatened invasion. Critically, the deal also established that Saudi oil export surplus could only be reinvested in U.S. denominated assets, U.S. treasury bonds.

With the U.S. as the biggest purchaser of oil it created a “recycling” system whereby oil which was bought in dollars would then have its surplus reinvested into American bond debt purchases. The bonds bought with dollars would provide a stable interest return to the oil producers, while giving to the U.S. the lionshare of the actual surplus in the forms of dollars. The U.S. government could then use those dollars to fund itself, often funneling it right back into U.S. corporations hands through government contracts. So long as the U.S. continued to pay it’s interest while maintaining its protectionist racket “security guarantees” and successfully using its military to terrorize the inferior imperialisms into submission, it could continue to balloon it’s debts while delivering super-profits to U.S. corporations, thus never really having any interest in actually “paying off” it’s national debt, but every interest in defaulting periodically when possible and necessary. As the backward Arab monarchy fearing its own revolutions at home unable to stand up to U.S. military might contented themselves with their new pensions under it’s imperial umbrella, the deal was quickly followed by other OPEC countries, although they did not all get the same security guarantees as the mountain of corpses left by U.S. interventionism in the region has demonstrated. As all countries in the world imported oil from OPEC, all foreign banks now needed dollars to purchase them, this became a major pillar in preserving the status of the U.S. as the global reserve currency.

The. U.S. effort to devalue the dollar in 1971, also forced countries to make a choice: either hold dollars (which could decline in value),reinvest those dollars in U.S. assets, like bonds, which offered a set interest rate return rate or attempt to establish a currency alternative to the dollar and risk facing U.S. military aggression. When Japan began considering a shift into gold or Deutsche marks by late 1973 U.S. Treasury officials told Japan that failure to support the dollar would be seen as hostile, potentially resulting in trade retaliation or military friction. By 1978 Bundesbank in Germany wanted to stop buying dollars and let the D-mark float higher, considering potentially diversifying reserves away from dollars. The U.S. Secretary of the Treasury and President Jimmy Carter sent a memo that Germany must support the dollar or face major consequences for NATO cooperation and U.S. German trade relations. U.S. officials warned of political instability in NATO if economic coordination failed. The Bundesbank resumed dollar purchases, despite domestic opposition. During the Volcker Shock 1979‑82, the Fed raised interest rates to nearly 20% to combat inflation. Treasury Secretary Donald Regan demanded that European central banks hold onto their dollar and treasury reserves. Europe was warned that failure to cooperate could lead to U.S. disengagement from NATO commitments, trade restrictions or tariffs, currency war dynamics.

The subsequent demand for dollars to pay for energy and the stable demand for U.S. treasuries as a comparatively safe haven investment, guaranteed by the U.S. military’s constant threats to destabilize the world and thus the other countries currencies, led to a situation whereby in the year 2000, 70% of all foreign exchange reserves were held in dollars. Thus through forcing purchase of US bonds and holding of dollar reserves the U.S. was able to ensure that the sun didn’t set on the U.S. empire. With the threat of the rising industrial monopolies transforming into their own contending finance capitals supplanted by being forced into the petrodollar system, the return to an upward value of the dollar was once again more beneficial for U.S. finance capital.

Just as the new petroleum world order was taking shape, the 1972 visit between Nixon and Mao foreshadowed Nixon pulling out of Vietnam and abandoning the U.S. proxy state in South Vietnam in favor of the new friend China against the old foe of Moscow, just as they threatened to abandon the European bourgeoisie to the forces of Soviet imperialism, the Japanese bourgeoisie with no military sat in fear of Mao. Thus began the process of establishing trade relations between the U.S. and China and by the late 1980’s U.S. corporations would begin offshoring production to the cheap Chinese labor markets and by 1988 Chinese exports to the U.S. totaled $40 billion. As U.S. imperialism began to spread its tentacles into the belly of China, amid the high inflation and rising interest rates from the Fed, an all out attack was orchestrated against the American worker who for a century had enjoyed consistently rising wages and standards of living always historically large when compared to the rest of the world since colonial times. As high wage factory jobs began to disappear in the 1980’s-1990’s cheap imports from East Asia, encouraged by a strong dollar ensured standards of living remained relatively stable. As the emerging tech industries began to develop they would extract super profits from Chinese proletarians as the children of U.S. workers were flocked into colleges under the promise of obtaining high wage jobs at the costs of accruing more private debts, only today to find these jobs too disappearing, but before we investigate the so called “Mar-A-Lago” accord we must understand the Plaza Accord.

The Plaza Accord & the Financial Entombment of Japanese Industry

From 1980 to 1985, the dollar had appreciated by about 50% against the currencies of the next four biggest economies at the time. The high dollar price brought in high yields for U.S. finance but threatened its industrial monopolies who at the time were still dependent on U.S. labor for its manufacturers. By the mid-1980’s German industry continued to find difficulty in competing on international markets, much of its shipbuilding, part of its steel and most of its photographic production to cheaper competition in the United States, & Japan. However, Japanese industry began to aggressively climb out of its relative slump and moved into exports of higher production value commodities. As high quality and cheap Japanese automobiles began flooding international and domestic markets the U.S. industrial monopolies once again felt threatened.

An alliance of manufacturers and farmers responded with a concerted campaign requesting protection against foreign competition. Major players included grain exporters, the U.S. automotive industry, heavy American manufacturers like Caterpillar Inc., as well as high-tech companies including IBM and Motorola and by 1985, Congress began considering protectionist tariffs and import restrictions. Despite Reagan’s “free trade” policies which would begin to see U.S. manufacturing first really start to move abroad, after his inauguration he implemented various quota agreements limiting and restricting Japanese imports. The negative prospect of further trade restrictions from congress moved the White House to begin efforts to devalue the dollar relative to other currencies for the first time since Nixon. Thus the Plaza Accord began to take shape when the U.S. twisted the arm of France, West Germany, Japan, the United Kingdom, to appreciate their currencies in respect to the U.S. dollar. WIth little choice given the strong position of U.S. imperialism the countries all acquiesced to the demands. Subsequently, the dollar dropped by 50% in relation to the Yen and 40% in relation to the Mark.

The maneuver ultimately culminated in the decimation of Japanese industry which still has not recovered to this day. As the Yen appreciated, Japanese exports dramatically fell irreversibly damaging their industry which was booming off of exports to the West. The Bank of Japan attempted to resolve the crisis by reducing interest rates and injecting fiscal stimulus; however, the lower rates led to an artificial real estate and financial bubble which burst by 1994 with massive slew of bankruptcies, bank defaults and a real estate crash which resulted in what is called the “lost decade”. Thus Nikkei 225, the stock index of major Japanese companies peaked in 1994, three decades after the crash it still has not returned to the same level. During the same period of time, the US stock index returned 1,000%.

Thus with Japan cut down to size, the U.S. retained its sole hegemonic status into the 2010’s with major production and capital shifts to China only exploding in the early 2000’s relative to previous decades. It is only by the mid 2010’s that the United States began truly reappraising it’s “most preferred” trade status with China in recognition it had developed into a rival contending imperialism while capitalists willingly sacrificed the health of their... ignored the health of their industrial monopolies while racking in massive super-profits from the established world trade and financial order in the previous decades. Thus, the U.S. has been trying for years to get China to agree to another Plaza Accord and appreciate the Yuan; however, time has shown that it is unlikely that China will voluntarily appreciate their currency after the economic slaughter of Japan.

The Rise of Chinese Imperialism

Since the late 1970s the Chinese bourgeois developed itself while taking a subordinate role under world imperialism, serving as its middle man who could do the dirty work of disciplining and exploiting cheap Chinese labor while global finance capital extracted super-profits. As these manufactures continued to develop into larger industrial monopolies Chinese finance began to develop itself and transform into an export finance capital. As such, it had likewise needed an enlarging military to unload its surpluses into and to defend and guarantee its own debts that it sells to developing countries. As such China has only recently emerged as a contending rival imperialism and the prevailing trade war policies has nothing to do with returning jobs to the United Stated or “getting a fair deal” to benefit the working class, but everything to do with the rivalries of the two contending blocks of financial capital who must carve up the world between themselves to continue to accumulate or die.

China developed into the global center of low-cost industrial production after it began to open its markets in the late 1970’s to the 1990’s, exploding in the 2000’s. International corporations and financial institutions often through foreign direct investment (FDI) gained access to cheap chinese labor markets where the vast majority of the population was still trapped in the poverty of agricultural peasant life. Initially, Transnational corporations invested in Special Economic Zones, where Chinese workers toiled in sweatshop conditions, often for less than 5% of the wages of U.S. workers in similar industries. As corporations moved manufacturing to China, the value generated by hyper-exploited labor was realized in the imperialist cores by selling goods at much higher prices than they could on domestic Chinese markets. This created super profits for the big retailers and tech firms operating as commercial financiers while the small bourgeois manufacturers in China received much smaller profit shares at the lowest rates possible. Still both bourgeoisies benefited from the hyper exploitation of the Chinese workers which likewise enabled the undercutting of the leverage of western workers labor and the flatlining of wages over the next half century. State-suppressed labor organizing, with strikes and independent unions crushed by the CCP, ensured reliable returns.

Even though foreigners were not allowed to directly own majority shares of manufacturers or corporations in key industries, the surplus was still funneled back into the hands of U.S. financial capital in a number of ways. While the low end manufacturing and assembly was done in China by subcontractors, U.S. companies like Apple, Nike, and Walmart designed, marketed, and controlled the brand and retail selling it in the United States and Europe, accruing the lion’s share of the profits and forcing the numerous competing small manufactures into deals where they would only receive the smallest cut possible. Second, U.S. firms maintained monopoly control over the intellectual property, patents, software, and branding. Chinese firms that wanted access to markets or technology were often forced into joint ventures, which transferred profits upward. U.S. firms licensed the technology and captured royalties and licensing fees. The Chinese state often enforced these contracts. With the yuan undervalued for much of the period, profits repatriated to the U.S. were effectively magnified. These super profits led to the explosion of U.S. corporations such as Walmart and Apple which became the first company ever to surpass $3 trillion in market value. Additionally, the Chinese state to secure advantages for its exports also recycled its trade surpluses into U.S. Treasury securities, effectively loaning its surplus back to the U.S. government at low interest just as the OPEC countries and Europeans had.

U.S. finance capital continues to reign supreme but it has now recognized it is in an existential crisis and must quickly implement similar Nixon era and Plaza Accord like policies or go the way of English finance capital. As of 2020, 50-60% of Chinese manufactured exports continued to be tied to U.S. brands such as Apple as subcontractors; however, over the decades China has developed its own cohort of billionaires out of its manufactures who have established competing independent brands and electronic marketplaces such as TEMU who rival U.S. corporations such as Amazon in their own rights. These Chinese enterprises have begun to flood international markets with increasingly high quality, high value, commodities at cheaper prices. Within the last five years the number of such independent Chinese companies’ share of the total exports has doubled, now at 28% of total Chinese exports. Thus as the capital from Chinese manufacturing and its real estate sector has accumulated it has slowly begun to develop its own independent global enterprises, getting out from under the monopoly of U.S. finance in which its manufactures had been dependent on for access to foreign markets. Correspondingly it has begun to develop its own finance capital which has begun to increasingly export its surplus onto global markets competing with the dominant U.S. bloc, forming the basis of the present inter-imperialist rivalry between the two powers.

Over the last twenty years the Chinese finance sector has become the largest in the world. In 1995 the Chinese government passed the Commercial Banking Law which sanctioned independent banks and established the Peoples Bank of China as a national reserve. The "Big Four" state-owned commercial banks are the Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China, and the Agricultural Bank of China, all of which are among the top ten largest banks in the world as of 2018. China’s financial sector is now the largest in the world, with approximately $58 trillion in assets, equating to about 300% of GDP by the end of 2023. Measured in total assets, its size surpassed that of the US banking system in 2010, and all euro area banks combined in the last quarter of 2016. Since 2017, China has become the world’s largest official creditor, surpassing the World Bank, IMF and 22-member Paris Club combined, although the vast majority of its investments, 97% remain tied up within China itself, it has started to export a growing amount of finance capital across the world. The big four Chinese banks are publicly traded, however the Chinese government retains majority shares and a single foreign investor cannot hold more than 10% of the bank’s total equity with total foreign ownership capped at 25%.

The entrance of Chinese export financial capital as a major competitor to U.S. finance capital across the world is now seriously threatening U.S. dominance. As Chinese industry has increasingly moved into higher value products such as tech and automobiles out competing the United States in foreign markets across the world, and despite it’s large domestic finance industry that has grown out of its industrial explosion, the one area where China remains significantly behind is in regards to its competitiveness on the global financial markets. China’s share of global equity markets remains 10-12% whereas the United States retains 45-50%, pension, insurance asset managers 3-4 trillion, where as through BlackRock, Vanguard, State Street control in the U.S. control ~$20+ trillion in assets. Likewise, the Chinese stock market cap is approximately 10-12% of the world’s value whereas the United States is among 24% and 50%.

Between 2000 and 2010 Chinese finance capital’s outward Foreign Direct Investment increased from $0.9 billion to $68.8 billion, growing from only $12 billion after a rapid post 2008 crisis growth fueled by speculative investment in its real estate sector. Chinese finance capital then underwent a period of significant consolidation leading to a rapid increase in export finance capital and by 2016 it peaked at $196.1 billion including large deals in the U.S. and Europe. As of the second quarter of 2017 mainland Chinese banks’ cross-border claims amounted to $970 billion, ranking eighth overall globally and exceeding those of traditional financial centres such as Switzerland and Luxembourg, or countries hosting large international banking groups such as Spain and Italy. As the Chinese finance industry has rapidly expanded and begun pouring its surplus onto world markets China has slowly transformed into a contending rival imperialism of the United States. However, the rapid development of Chinese imperialism has also led the world capitalist system ever increasing towards cataclysm as the global overproduction crisis pushes the two blocks of financial capital into imperialist war in a desperate attempt to continue profit accumulation.

U.S. Finance and the Great Wall of Chinese Protectionism

U.S. finance capital has for years worked to break down the walls of Chinese protectionism around its emerging financial system. Historically, China has imposed restrictions on foreign equity ownership, especially in sensitive sectors like banking, telecommunications, media, and heavy industry. The U.S. government made China’s 2001 entry into the World Trade Organization contingent on ending protectionism throughout its economy, including finance. This required China to allow foreign banks to operate in China, permit joint ventures in insurance, securities, and asset management. The objective was to open the Chinese financial market to U.S. firms like JPMorgan, Citi, and Goldman Sachs under the narrative of "global integration", but with the motive of capital penetration. The U.S. China Strategic & Economic Dialogues from 2006‑16 held annually under the Bush and Obama administrations demanded greater foreign ownership rights in Chinese banks and funds, exchange rate liberalization in regards to the Yuan to the advantage of the USD. Presented as “dialogue”, but in material terms a tool of imperialist economic diplomacy to discipline and integrate China into global finance dominated by U.S. capital.

Until the late 2010s, foreign firms could generally only own up to 49% of joint ventures in key industries. Full foreign ownership was restricted to limited sectors like export manufacturing or tech outsourcing zones. By the late 2010s, U.S. firms like BlackRock, Goldman Sachs, and JPMorgan began entering China’s insurance and asset management sectors. Though still regulated, these openings were victories for U.S. finance, as they hoped to siphon Chinese household savings into Wall Street-linked products. By 2020 as a result of the growing financial challenges, China agreed to treaties with the U.S. which further opened up their finance markets. U.S. firms were allowed 100% ownership in areas like Asset management (e.g., BlackRock), Securities firms (e.g., JPMorgan), Insurance (e.g., AIG, MetLife). Today BlackRock, Goldman Sachs, and JP Morgan have gained increasing access to Chinese capital markets post-2018, managing billions in Chinese assets.

Today, China’s banks are still grappling with the prolonged turmoil in the property sector. In a bid to stabilize wobbly regional banks, Chinese provinces injected a record $31bn of capital last year through special-purpose bonds. Several other signs suggest the potential for a banking crisis in China. According to Bloomberg “China’s first bank loan contraction in nearly two decades has fanned fears the world’s No. 2 economy is careening toward a “balance sheet recession” as Japan did decades ago. A plunge in new corporate borrowing combined with households preferring to repay debt saw bank loans shrink last month for the first time since July 2005. That deepened China’s years-long battle with weak credit demand, as a property slump spurs caution on buying homes and expanding investment. Determination among consumers and businesses to pay down debt following real estate collapse is seen as a hallmark of Japan’s stumble into decades of deflation in the 1990s.”

Further evidence of Chinese desperation is seen with the 16 January 2025, the People’s Bank of China and four other major regulators in China jointly issued an opinion outlining 20 new policies to further open up the financial sector creating designated pilot free trade zones mostly completely open to U.S. finance in major cities and provinces. Whilst there are still considerable uncertainties about the details and implementation timeframe, the opinion accelerates China’s protectionist walls around its finance sector getting battered down by the still dominant position of U.S. finance capital.

The End of the Era of the Petro‑Dollar

By the mid 2010’s the dominant position of U.S. finance capital and its industrial monopolies began to come under threat for a number of reasons. The shift of the United States from the world’s largest importer of oil to a net oil exporter weakened the economic ties between it and the Saudis, combined with the rise of China as the largest importer of Middle Eastern oil, the break of Russia, one of the leading oil producing nations in the world with the international finance system dominated by the U.S. jeopardized the hegemony of the petrodollar system as new international finance systems began to be constructed.

After the 2014 Russian invasion of Crimea and subsequent U.S. sanctions, Russia began for the first time shifting away from the sale of oil in dollars. Large oil contracts were denominated in Yuan or Euros. Subsequently Russia began developing systems to bypass Western-controlled financial networks. SPFS (System for Transfer of Financial Messages): A domestic alternative to SWIFT, launched by the Central Bank of Russia in 2014. MIR Card System: A domestic payment card system to replace Visa and Mastercard, in case of sanctions. Russia signed currency swap lines with key trading partners, China that same year Ruble-yuan swap worth $24.5 billion, Turkey, India, and others followed. These allowed energy and commodity trade to bypass the dollar.

Despite U.S. financial sanctions that were believed would crush the Russian economy, the Russian’s chugged along by selling oil to India and China, switching its reserves to Euro, Yuan and Gold, reducing its holdings of U.S. Treasuries to near zero by 2020. By April 2024 Russia announced that its trade with China had almost completely moved away from using the U.S. dollar. The International Monetary Fund found that in 125 economies, the median usage of renminbi in cross-border payments with China increased from 0% in 2014 to 20% in 2021; for a quarter of these economies, renminbi (petroyuan) usage has risen to 70%. In 2023, one-fifth of global oil trade was settled in non-dollar currencies. And Saudi Arabia’s deepening energy ties with China have led to long-term oil-trading contracts denominated in renminbi. In 2022, the dollar’s share of global reserves fell ten times faster than over the previous two decades, to 58%, from 73% in 2001.

Thus the movements began to signal a major challenge to the passive dollar recycling system and a move to multi currency maneuvering with Chinese finance imperialism leading the charge of the rebellious sub-imperialisms peeling off of the U.S. orbit. The first export of Saudi oil conducted in Yuan to China in 2018 ended the decades long international agreements to only conduct the sale of oil in dollars, as Iran soon disallowed all sales of oil in dollars. If more countries were to conduct purchases of oil in other currencies it risks dollar dominance over the long term. This reality, combined with the meteoric rise of Chinese export finance capital by 2016 facilitated some of the first skirmishes between Chinese finance and the U.S. for global dominance.

The collapse of the petrodollar system combined with the creation of a competitive U.S. oil monopoly directly under the control of U.S. finance and not dependent on an Arab sub-imperialism has significantly shifted the strategic position of U.S. finance capital as it now positions to contain and snuff out the emerging imperialist bloc centered around China through a complex set of maneuvers of divide and conquer. Nonetheless the tools utilized by U.S. imperialism today are no different from those it has employed over nearly a century of its imperial hegemony.

The 2020 Financial Crisis and the First Trade War

With the progressive decline of the petrodollar system which underwrote U.S. financial domination, the United States would begin to implement its trade war strategies in 2018 in a repeat of the same methods of the past. Enlarging debts which are critical for imperialism and its profit accumulation face the wall of declining GDP. Eventually more interest is taken on to keep selling debts which only worsens the GDP problem, leading to inevitable default and potential explosion of war. Thus, the U.S. and China both prepare for war as they prepare for financial defaults.

The methods by which China and the United States were forced to rescue themselves from the 2008 financial crisis, after the collapse of the subprime mortgage markets and the investment banking firm Lehman Brothers, would make another worldwide financial crisis inevitable. After 2008 there was a large increase in global corporate debt which rose from 84% of gross world product in 2009 to 92% in 2019. By 2019, global debt was 50% higher than during the 2008 financial crisis. This created a situation where any significant economic downturn would make it so that companies with high levels of debt ran the risk of default. The overaccumulation of capital led to bubbles in real estate, tech, and corporate bonds with no profitable outlet. By 2017 global growth was said to have peaked when the following year industrial output experienced a sustained decline, leading the IMF to state that by 2019 the world economy was already going through a “synchronized slow down” despite low interest rates, raising fears of a “debt bomb” whenever the next economic crisis inevitably flared up. Thus all the signs of a major economic crisis were already there.

In 2018 the first Trump administration would announce its first round of tariffs and trade barriers on China. The tariffs disproportionately targeted sectors aligned with the CCP’s Made in China 2025 industrial policy: semiconductors, robotics, aerospace, biotech, etc. The goal was not fair trade but strategic suppression of Chinese development in high-value production. Despite nationalist rhetoric, U.S. imperialism used tariffs as leverage to force China to open its markets to give greater access for U.S. finance to continue its extraction of super profits and beat back the developing strength of Chinese finance. It aimed at loosening restrictions on foreign ownership of banks and insurance firms & strengthening IP enforcement to protect U.S. monopolies. The tariffs helped create a manufactured crisis to justify industrial subsidies such as Biden’s CHIPS Act, national security-based export bans (on semiconductors, AI), and direct state intervention in capital flows and supply chains. The tariffs hastened a slowdown in global trade and manufacturing. Slower trade reduced industrial profits and choked off demand for investment. Capital increasingly flowed into speculative and fictitious forms (real estate, stocks, corporate bonds) leading to asset bubbles and unstable financial structures.

The Repo market panic in September 2019 would be the first tremor as the U.S. interbank lending system seized up, forcing the Federal Reserve to inject hundreds of billions in liquidity months before COVID. The pandemic did not cause the crisis in any fundamental sense; rather, it served as a catalyst and smokescreen, allowing the ruling class to shift blame, justify running up massive debts and finance the further consolidation of the large corporate financial monopolies, all while pacifying working-class mobilization through fear, confusion, and emergency politics. The 2020 crash would be the worst since the Great Depression with major indices dropping 20 to 30% in late February and March. Following the crash, global stock markets plummeted, demand collapsed, and millions of small businesses and workers were devastated. Yet, almost immediately, the largest corporations bounced back with some reaching record profits by the end of the same year. This wasn’t a recovery driven by production, innovation, or rising demand, it was a state-engineered transfer of wealth and power to monopoly capital with the tech giants, Amazon, Apple, Google, Microsoft, Facebook (Meta) becoming even more dominant in every sector, Tens of thousands of small and medium-sized retailers closed permanently with Walmart, Target, Home Depot, and others expanded market share, Asset managers like BlackRock and Vanguard expanded ownership stakes in virtually every major firm.

The injection of hundreds of billions of dollars, combined with Trump’s tariffs would work to crash the value of the dollar in 2020 by 10-20% and ultimately setting the stage for the current Chinese financial and housing crisis, just as was done against Japan in 1985. As Nixon had waited for the crisis situation to develop in the 1970’s to force their policies on their haughty European and Japanese protectorates, the U.S. bourgeois would do the same even if their hand may had been forced to apply some measures of capital injection to prevent a run on the banks, COVID served as a convenient cover for a dollar devaluation + tariff strategy. Within a few days of the crash in March the Federal Reserve dropped interest rates to zero while initiating a $700 billion quantitative easing. The influx of cash led to a heating up economy and eventually a large-scale inflation which likewise led to an uptick in workers’ leverage and thus a proliferation of strikes. Stocks began to recover their prices and the GDP for most major economies had either returned to or exceeded pre-pandemic levels by April.

China’s lockdown policy also allowed more state intervention in the organization of the supply chain to mitigate the impacts of the financial crisis. By the second quarter of 2020, Chinese factories were largely back online while U.S. and European industries remained shuttered and higher demand for medical supplies ensured that large profits continued to float into the country. Strict Chinese lockdown rules allowed capital to redirect output to global markets without overheating domestic demand and maintain increased labor discipline under the guise of pandemic management, reducing labor militancy and wage pressure in the short term.

By 2020, China’s GDP contracted by 6.8% year-over-year, the first officially reported decline since 1976. Industrial production fell by 13.5%, and retail sales dropped by 20.5%, as lockdowns paralyzed the domestic economy. The state turned to its default stimulus mechanism: infrastructure spending and construction. As Western economies locked down, global demand for Chinese medical goods surged. China’s trade surplus hit a record high, fueling a recovery in industrial output. As capital fled the U.S. dollar and flooded into China’s relatively stable financial system, the renminbi appreciated by over 6% against the dollar by the end of 2020. The People’s Bank of China intervened in FX markets, cutting reserve requirements and indirectly purchasing dollars to stem the rise, utilizing the same methods used by Japan in the 1970’s and 1980’s to combat their currency appreciation. The massive credit expansion to developers post-2020 planted the seeds of the Evergrande crisis in 2021‑23, when the firm defaulted on $300 billion in liabilities. As prices and sales collapsed in 2021‑23, the effects rippled into banking, household wealth, and local governments. The stimulus created overcapacity in housing, infrastructure, and industrial capital, a classical feature of capitalist crisis.

The collapse of Evergrande in 2021 triggered a liquidity crisis, leading to defaults by over 50 developers and causing a sharp decline in property sales. Newly built home sales fell by 6% in 2023, reverting to levels not seen since 2016. Home prices have plunged about 30%, resulting in the destruction of approximately $18 trillion in household wealth. Foreign direct investment into China has seen a significant decline, with a 94% drop in the second quarter of 2023 compared to the same period in 2021. It’s unclear where indebted local governments can obtain funding, beyond the relatively small amounts the People’s Bank of China can funnel in via state banks. Chinese cities have already racked up about $15 trillion in debt, much of it hidden in housing, having borrowed heavily in recent years to cover the cost of pandemic-related spending and infrastructure projects. This means that China is increasingly desperate for foreign capital to stave off it’s growing debt crisis which risks to collapse its’ finance and banking industry. Thus we can understand that the current trade war policies are intend to increase pressure on Chinese capital by damaging it’s industrial profits, further exasperating the current crisis to force a further opening up of Chinese finance to U.S. capitals penetration.

The Mar-A-Lago Accord and the Gold Rush

The Mar-A-Lago Accord is a proposed policy document outlining the broader strategy for U.S. imperialism to follow over the coming years created by Stephen Miran who is the current White House chair of the Council of Economic Advisers & supported by Scott Bessent the current Secretary of the Treasury. The plan in essence builds from the previous tactics of U.S. imperialism implemented since the end of Bretton Woods. It is a strategic move on the part of U.S. capital to do to Chinese industry what it had done to German and Japanese in the late 20th century; however, given the relative power of the U.S. it will no longer be able to coerce these governments into acquiescing to such a “voluntary agreement” without a fight as it had in the previous century. Thus as it works to penetrate the Chinese finance industry it is leveraging towards a nuclear option, which if not executed properly risks devastating the U.S. bourgeois, it outlines a desperate gambit to hold on to global economic hegemony which is to unfold in stages broadly correspond to the opening moves of the current administration, which takes periodic economic crashes as necessary collateral damage.

The Mar-A-Lago Accord calls for a world wide devaluation of the dollar via the appreciation of other world currencies, as occurred under Nixon when he removed the U.S. off the Gold Standard and then again under the 1985 Plaza Accord, only this time it would involve the U.S. dollar repinning itself to gold or cryptocurrency while also controlling which countries would be allowed and not allowed to hold USD as reserves thanks to the assistance of new electronic surveillance technologies. The aim is simple, to further crash Chinese finance and industry which is still dependent on U.S. exports and thirsty for equity to avoid a cataclysmic banking crisis. By threatening to orchestrate a global blockade on their goods by cutting China completely out of accessing dollars, while preserving its status as the global medium of trade. For the conquest of the increasingly indebted Chinese imperialism by increasingly indebted U.S. imperialism they must once again essentially default on their loans, while leveraging military might to force the other world imperialism to go along with deepening financial subordination as the U.S. financial conglomerates continue their consolidation and gobbling up of the world.

Despite the movement toward de-dollarization in Russia, the process has only actually made initial inroads in the rest of the world and even within the bloc of Chinese imperialisms dependents. The US still comprises about 50-60% of global foreign reserves, no other currency currently is a viable replacement; however, talks in the BRICS of an alternate currency has U.S. imperialism scared. In recognition of the growing challenge to the dollar as the world reserve currency as a result of the decline of the petrodollar recycling system the plan seeks to retain the dominant role of the dollar U.S. financial capital by leveraging U.S. military power to move countries onto untradable 100 year bonds to essentially buy U.S. military protection. To gain leverage and force other countries to accept this arrangement, the plan calls for the rolling out of a period of harsh tariffs combined with high interest rates to taper inflation. Likewise, it also calls on the Treasury secretary to begin charging a minimum 1% tax on interest payouts to foreign governments who hold existing U.S. treasurers to be varied punitively based on the country’s compliance with U.S. policies. This combined with threats of removal of U.S. security forces across the world are to be leveraged to gain agreement on currency revaluations and “voluntary” bond exchanges to the 100 year bonds alongside negotiations for a return to lower tariffs.

With the death of the petrodollar system, the U.S. bourgeois’s look back to leveraging its gold assets to first devalue the currency to its advantage and at a turn of a coin maintain its staying power as a global reserve currency. A revaluation of the price of gold by the U.S. Treasury Department which maintains it pegged to Bretton Woods era levels, would help it undermine the developing turn to other currency systems. BRICS nations taken as a whole officially hold 5,700 tonnes of gold reserves which is 16% of the globally mined gold reserves and have drastically increased the gold reserves over the last few years. Goldman Sachs has reported that China has apparently bought 10X more gold than officially declared. Assuming the BRICS countries declare a gold-backed digital currency, with lower transaction cost and exchange issues it could generate billions of dollars of profits for the BRICS bourgeoisie. To add to this China holds 80% of the world’s rare earth minerals like Germanium, Gallium, Lithium etc and Russia is the warehouse of commodities from metals to fossil fuel to agriculture. However the balance of gold power is still skewed in favour of the G7 countries, which together hold 17,500 tonnes or 49% of the total global reserves. The revaluation of American gold reserves to market levels could also substantially increase the value of gold internationally thereby closing the window of opportunity for BRICS countries to build their gold reserves which they were able to do at suppressed prices until recently.

Thus we are seeing a global scramble in the classic imperialist style for direct control of raw minerals and gold as the financial blocs hurriedly build their reserve hordes to ensure their monetary systems dominance over global trade, amid an intensifying arms race and active war between the sub-imperialisms of the two states already breaking out all over the world. For U.S. finance they continue to seek the full domination of the world under Trump, even if he claimed just like Nixon to be executing his policies in the name of ending the empire and averting world war. For the clever bourgeoisie who seek to manipulate the various levers of the economy apply more and less leverage here and there to get the desired outcome their economic system continues to steam forward in one cataclysmic direction.