"Do not interrupt your enemy when he is making a mistake!" is the very first axiom of Chinese strategy and sure enough Xi Jinping was masterful in the art this week. No major breakthroughs were made, but conversely the exercise of this visit was fraught with dangers and pitfalls which were avoided on both sides allowing a general sight of relief.
Trump as usual came to China for a, mostly, business trip and was welcome as such, allowing China the luxury to not engage in sensitive discussions, keeping mum on strategic issues which Trump interpreted as acceptation of his leadership role. How mistaken!
The fact that Trump has no patience for the intricacies of strategic thinking doesn't mean that the US "Deep State" doesn't have a strategy. Only that it is being implemented without much discussion with either partners or competitors. Contrary to what many people may be thinking, the war with Iran is not about Israel. The balkanization of most Middle East countries may be beneficial for Israel but it can only be a secondary goal, most certainly not comparable to the main objective which is to rebuild the post-war petro-dollar American hegemony on a new, stronger base of total control of all fossil resources (oil and gas) around the Globe. That is the clear and obvious strategy of the US which is being implemented whatever the current administration may be, by blowing the Nordstream pipeline (controlling the supply of gas to Europe), taking over Venezuelan oil, or closing down the Hormuz Strait. (Which in itself is only a plan B compared to the initial goal of controlling directly Iranian oil.)
But then, what about China? All this is of course crystal clear to the Chinese so why not confront directly the Americans and their blatant imperial run? Xi Jimping actually gave us a very strong hint when he casually commented that the US was a declining power and conversely implied that China was a rising one. Obviously, energy must be at the very core of any power, rising or declining, so why this quiet and almost nonchalant answer to the gauntlet thrown by Trump? Could it be because the Chinese now believe they are on their way to building a post-oil economy and consequently find it unnecessary to directly confront Trump on this subject?
This to my opinion is a very shaky ground to base a strategy since it implies that not only China will be first to develop new technologies (very likely) but that these new technologies will actually be competitive with oil and gas. Definitively not a done deal at this stage. So what could be the source of this Chinese self confidence?
It must be a complex mix based on the combination of different factors which together must give a significant edge to China. First, even if oil and gas remain the most dense and economic energy sources available over the coming years, the Chinese have proved that with a judicious energy mix (Nuclear, wind, solar, hydro, gas and oil) they can effectively insulate an economy which from now on will become less energy dependent to generate output. Second, although the US as a major oil and gas producer is immune to an energy crisis, it is not immune to an economic crisis since the country cannot disconnect its economy from the world economy since this would immediately crash the petro-dollar. And finally, would such a global crisis take place, the damage would be greater for the US and its partners than for China which therefore would find itself in an even better strategic position to finally negotiate the reorganization of the post Bretton Woods financial ordering of the world.
This I believe is the context which allowed Trump to return home with a short term tactical victory (a status quo) while China was slowly moving its 'Go" pieces on the world checker board, ensuring a future positive outcome.
So what can we conclude from this analysis? In the short term, nothing has changed. The pressure will keep rising and the pain with or without war will grow, faster with a war, more slowly without. India which was especially dependent of Middle Eastern oil is already showing signs of acute stress. The rest of Asia will follow soon and Europe finally in June. By July, the signs of the coming recession will be obvious. Good luck for November, Mr Trump!
But then, what about the Middle East? As discussed in the video below, the stakes for the Middle East could not be higher. An unlikely return to the previous balance could help the monarchies survive another day. Conversely, both the rise of Iran or anarchy in the Gulf could spell doom for them with the old prediction of Saudi Arabia King Faisal: "From camels to gold back to camels in a hundred years!" becoming a reality. The dices are rolling. The Chinese didn't throw them but are trying hard to be on the winning side wherever they land. Trump meanwhile is jumping from one tactical move to the next, making money for himself on the way, which is more or less what he has done his whole life! He is also running against the clock which is less and less his friend at this stage.
The Middle East's Next War After Iran

