GOOD MORNING FROM LONDON
31 AUGUST 2026. CHINA POST #637
CHINA AND THE FOREIGN MEDIA
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In this China Post #637 – something of a change as I experiment with different forms of presentation – there is just one piece. It is written by Dr Gillian Tett, an anthropologist, who serves as the Provost of King’s College, Cambridge and is a member of the editorial board for the Financial Times. She is widely recognized for her coverage of the 2008 financial crisis and her integration of anthropology into economic analysis. She has written the following article within recent days in the Financial Times.
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“A decade ago, when then US President Barack Obama cut a deal with Iran, he knew he would face criticism for failing to stop big Chinese banks from helping Tehran. So, he ruefully admitted the obvious: such banking sanctions could be an own goal. “To [really hurt Iran] . . . we would have to cut off countries like China from the American financial system,” Obama observed. “[But] since they happen to be major purchasers of our debt, such actions could trigger severe disruptions in our own economy and . . . raise questions internationally about the dollar’s role as the world’s reserve currency.”
Quite so. In recent months, US President Donald Trump has repeatedly slammed Obama for that Iran deal. But the irony is that Treasury secretary Scott Bessent is now grappling with the strategic trap Obama highlighted — which illustrates the nature of the new world order.
After all, as economists at Stanford, Yale and Columbia universities argue in an IMF essay, the key to understanding geopolitics today is to recognise that the US and China each want to wield hegemonic power (ie bully others).
China has hegemonic power because it controls key industrial supply-chain nodes like rare earth minerals and pharmaceutical inputs, while America controls the dollar-based global financial system. Meanwhile, energy and tech hegemony, in my view, are still being contested. Right now, both sides are trying to break the others’ hegemonic power, but neither is likely to succeed soon.
Cue grinding instability as proxies, like Iran, are sucked in. This week illustrated that.
On Monday Bessent announced an “economic D-Day” against Iran, and threatened “the single greatest financial offensive ever marshalled against an adversary” with “secondary sanctions” on any entity doing money laundering for Iran, or trades in digital assets, technology, gold, aviation and shipping. Washington is doing this because it has failed to win the war by military means. But just as Bessent’s efforts to calm bond markets last week with aggressive buybacks seem to have backfired, his Iran campaign could undermine his credibility too. Yes, some economists like Robin Brooks consider this “an important step in the right direction” given that Iran is now in a state of “economic collapse”. And, yes, countries like the United Arab Emirates (hitherto a crucial trading partner and banking centre for Iran) have joined the US embargo. Turkey, another key player, may yet follow suit.
However, China is the elephant in the room: as a Congressional report notes, it is “Iran’s largest trading partner . . . despite US and multilateral sanctions on Tehran”, and has pledged $400bn of investment there. It has also been buying 90 per cent of Iran’s oil exports. And while some Hong Kong tiddlers have been targeted, no sanctions were presented against big Chinese banks — even though Congress members like Republican Darin LaHood begged for this, to “send a clear message to China”. Or as Daniel Tannebaum, Oliver Wyman partner and sanctions expert, tells me: “Unless they sanction a Chinese bank everyone has heard of, this will fall flat.”
Why the miss? Bessent probably wants to avoid derailing a planned summit between Trump and Chinese President Xi Jinping next month, which is supposed to produce trade deals. Indeed, Beijing has already threatened to “take all necessary measures” to retaliate if it is hit with anti-Iran sanctions. This means using its own hegemonic weapons, say stopping rare earth exports, which the US can ill-afford. “I don’t think China wants to help, [with Iran]” says Nicholas Burns, former US ambassador to Beijing.
Then there is the dollar. To understand this threat, it is worth watching a five-minute propaganda film released a few months ago on Chinese state TV, in animated Jianghu (martial arts) style. This is not as sharp as Iran’s “Lego” posts that mock Trump. But it is “pleasingly poetic” for Chinese viewers, says the scholar Philip Cunningham — and geopolitically significant. It features a mad “eagle” (aka Trump) that attacks a kingdom of small “cats” (Iran), which successfully fight back. Then other animals shun the “white eagle gold tickets” (dollars), leaving the eagle looking foolish, while wise camels (China) look on from a distance.
Is it just a Beijing martial arts fantasy? Bessent would argue so. After all, the dollar remains “the backbone of global finance”, accounting for 89 per cent of global foreign exchange trade, and US capital markets continue to soar, never mind geopolitics. But this dollar dominance is also quietly “eroding”, says Seb Murray of Stanford Business School. Or to cite Luke Gromen, a market analyst: “Every other weaponisation of the US dollar over the past 14 years has [driven] ever-greater volumes of trade and global trade finance into the Chinese yuan, via China’s [payment] system.”
Hence Bessent’s dilemma: events in Iran not only show the limits of Trump’s military power, but the potential limits of Washington’s financial power too. Investors and US voters should re-read Obama’s 2015 speech and watch that Chinese eagle-versus-cat film if they want to understand the grim reality of geoeconomics and geo-finance today.
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GRAHAM PERRY COMMENTS;-
Dr Tett writes;-
“Scott Bessent is now grappling with the strategic trap Obama highlighted — which illustrates the nature of the new world order.
After all, as economists at Stanford, Yale and Columbia universities argue in an IMF essay, the key to understanding geopolitics today is to recognise that the US and China each want to wield hegemonic power (ie bully others).
China has hegemonic power because it controls key industrial supply-chain nodes like rare earth minerals and pharmaceutical inputs, while America controls the dollar-based global financial system. Meanwhile, energy and tech hegemony, in my view, are still being contested. Right now, both sides are trying to break the others’ hegemonic power, but neither is likely to succeed soon.”
Dr Tett is inching towards a correct analysis of the New World Order. The key struggle for the rest of this Century is between the U.S. and China.
The World is always unstable and dynamic. Change is an ever-present and Stability merely a fleeting moment. In a relatively small number of years the World has moved along from the Versailles Treaty of 1919 – when three powers, the U.S. the UK and France, imposed peace terms on Germany which made inevitable a bounce-back by Germany that led to World War II principally between the U.S. the UK and France against Germany Italy and Japan. It has moved on from the post World War II eyeball-to-eyeball confrontation between the U.S and the USSR to the present-day tensions between the U.S. and China.
Here is the error – the assumption that the Existing Power of the U.S. has been copied in mindset and military might by China; that the two countries are hegemons of almost equal standing and intent.
Just as the First World War led to the Russian Revolution and the creation of the USSR so the Second World War led to the Chinese Revolution and the creation of the PRC. But since 1945 big changes have occurred. France and the UK have diminished as world powers; the USSR crumbled in 1991 and, today, the U.S. and China are the two major world powers. And this is where the West is committing a strategic error in assuming that China has simply stepped into the shoes of the USSR and become the new regional hegemon which welcomes the opportunity to displace the U.S. in order to become the new dominant world power.
China’s goal is not world dominance. It has no intention to become a superpower who uses its power to impose compliance on the surrounding countries in Asia and the distant countries in Africa, Latin America and Europe – even the U.S. The West, Japan and Australia and other countries of significance view global politics on the basis that China is just the new modern imperialist power. They see History as the rise and fall of Big Powers – Alexander the Great, Attila the Hun, Ghengis Kahn, Charlemagne, Phillip II, the East India Company, the USSR and the USA. The power of the Past leads to a conclusion about the Present which refuses to view China other than through the very same historical lens – a hegemon.
Only time will persuade the Doubters that China is Different. The prejudice against Communist Governments is deep seated and words do not change the minds of experienced governments. So why the conviction that China is different and new? Is this simply naivety and short sightedness. Even blind faith?
In the Western world, the Communist model has had a bad press. The prejudice is deep-seated but critics of Communism will say there is ample evidence to justify a negative conclusion. The Poznan Protests of 1953, the Hungarian Uprising of 1956, the Prague Spring of 1968, the Tiananmin Deaths of 1989 are often cited as evidence of the violence pursued by the USSR and the PRC – as is the repressiveness of Stalin’s pre World War II rule in the USSR. Advocates – that China is different – have an uphill struggle in the face of the cited events. No question – whilst there is a positive side to the Soviet Union/China experiment there is a negative side as well. But the challenge that China, since the return of Deng Hsiaoping, represents something quite different is the issue. The evidence is compelling to those who view China today as a positive.
Remember Tett’s assertion. Her words “China has hegemonic power because it controls key industrial supply-chain nodes like rare earth minerals and pharmaceutical inputs,” China is condemned because it controls rare earths and pharmaceutical inputs. There is no doubt that China does control rare earths – for sure. And it is also correct that China uses its control of rare earths to bring the U.S. to heel. China has real leverage where the U.S. is concerned. But does that make China a hegemon? No. There is a trade battle between the two countries. It has raged for years especially over semiconductors and the interruption of supplies to China. Rare Earths is China’s fightback weapon as Deng Hsiaoping said in 1982.
But bear in mind the differences between the U.S. and China when hegemony is viewed – as it has always been viewed by historians down the ages – in military terms. Two regularly quoted statistics;-
- The U.S. has more than 800 military bases around the world. It is testament to U.S. hegemonic power. China has just one military base and that exists to serve China’s maritime fleet.
- China is predicted – by U.S. company Travelex – to have 200 million of its people travelling to all four corners of the globe by the year 2030. Chinese tourists not China soldiers, Chinese sailors or Chinese pilots.
Additionally The Pew Research Center – self described as;
“ made up of intellectually curious people from across many fields, places and backgrounds. For decades, our expertise, best-in-class methods and commitment to high-quality, fact-based research have made us a trusted resource for leaders and everyday people around the world.
Our mission? We generate a foundation of facts that enriches public dialogue and supports sound decision-making. We are nonprofit, nonpartisan and nonadvocacy. We value independence, objectivity, accuracy, rigor, humility, transparency and innovation.”
More about Pew Research in the next China Post but for the present consideration of the hegemony issue the following are conclusions reached by Pew;-
“Across much of the world, attitudes towards China are improving as views of the United States deteriorate, with trust in American leadership, reliability and respect for freedoms all taking a hit.”
“The countries where the US-China favourability gap has reversed in recent years include Canada, Spain, Indonesia, the UK, Australia, Sweden, Italy, Greece, the Netherlands, Germany, France and Argentina”
“Perhaps the most astonishing finding was that of those surveyed, 56 per cent of respondents believed the US does not respect the personal freedoms of its people, compared with 58 per cent for China”
The big issue in world affairs today and for the next 100 years is whether or not China will continue along the path of “Socialism with Chinese Characteristics”. If it does, the world will be a very different place. The U.S. will cease to be the dominant power and China will take its place alongside Indonesia, Nigeria, Argentine, Mexico, Brazil, Saudi Arabia, Russia, Malaysia, South Africa and the United States in a world that is multi-polar and not unipolar. The elimination of hegemony will not eliminate differences between countries or even hostilities but it will move the world into a new phase of political relationships where political violence diminishes and the focus moves away from the Balance of Power and towards long-term Peace.
GRAHAM PERRY – AUGUST 2026
