GREG WILPERT: Welcome to The Real News Network. I’m Greg Wilpert in Arlington, Virginia.

Stock markets around the world took a hit in the last few days as the trade war between the U.S. and China intensified. The reason for the drop in stock market values has to do with President Trump’s statement at the NATO Summit in London on Tuesday that a U.S.-China trade deal might have to wait until next year, after the 2020 presidential election. The mood for a trade deal was further soured when the U.S. House of Representatives passed a bill on Tuesday sanctioning Chinese Politburo officials for China’s treatment of the Muslim minority group known as the Uyghurs. Western media reported that up to one million Uyghurs are detained in concentration camps where they undergo political indoctrination under harsh conditions.

China’s Foreign Ministry spokeswoman Hua Chunying drew a clear connection between the trade negotiations and the criticism of China’s human rights record in Xinjiang, where the Uyghurs are based, and in Hong Kong. Here’s what she had to say.

HUA CHUNYING: Our position on trade issues has always been consistent. We believe that only a deal based on the spirit of mutual respect and equality can result in something that is mutually beneficial and win-win for both sides. This would be a long-lasting deal that coincides with the common interests of people from both countries. As for the human rights issues and issues related to Hong Kong and Xinjiang, we have already repeated the solemn position of the Chinese government multiple times. No person should underestimate the Chinese government’s resolution and ability to defend our national sovereignty, national security, and developmental interests.

GREG WILPERT: Just how are the two issues of trade war and accusations of human rights violations connected?

Joining me to explore this issue is David Kotz. He is Professor Emeritus of Economics at the University of Massachusetts Amherst, and the author of the book The Rise and Fall of Neoliberal Capitalism. Thanks for joining us again, David.

DAVID KOTZ: Glad to be with you, Greg.

GREG WILPERT: Last month the International Consortium of Investigative Journalists revealed a cache of classified government papers known as the China Cables. Now, these documents are said to prove China’s mistreatment of the Uyghurs. Also, the Chinese government is said to have developed an app developed by DewMobile to track and arrest Uyghurs. And then just when the China Cables were released, the U.S. military issued an order banning U.S. service people from using the TikTok app because China could use it to collect data on the U.S. military. Now, would you say that the U.S.-China trade war has come to be about China’s treatment of the Uyghurs, human rights, and surveillance? Or what is it really about, would you say?

DAVID KOTZ: Well, it’s not believable that the U.S. policy toward China is focused on the treatment of the Uyghurs. After all, haven’t heard any complaints against the Saudi Arabian regimes’ treatment of its people, including its minorities, and there is not a long record of U.S. government sympathy for Muslims, unfortunately. I think really what’s going on is the trade war. That the Trump administration and other powerful groups in the U.S., including some that don’t really like the Trump administration that much, have come to see China as the main adversary of what they perceive as U.S. interests. They’re using the Uyghur issue as one more club.

GREG WILPERT: Now, last week, the Chinese government announced its intention to increase penalties on violations of intellectual property rights within China, which has been a long-standing U.S. demand actually. Now, financial publications such as Bloomberg and the Financial Times reported that this was actually a move in response to human rights accusations against China. Do you believe that the Chinese government really sees it this way? In other words, do you think that they hope that trade concessions could let them conduct domestic policies without outside interference?

DAVID KOTZ: I doubt it because outsiders can’t really affect what they do within their country. I think the concessions that they’re making are an attempt to get a trade deal. Trade with the U.S. is very important for China, and their approach is to try to make a compromise. Trump, on the other hand, has made it clear that he won’t accept a fair deal. Just the other day, he was quoted as saying he won’t accept an even deal with China. It has to be one that favors the U.S. as he sees it. So I think that’s why no deal has been forthcoming yet. Trump is determined to make China give in with unreasonable demands and to make it apparent that that’s what’s happening. He wants to show that he has succeeded in pushing down a powerful adversary as he sees it. This is not a promising approach to international economic relations.

GREG WILPERT: Well, if that’s the case, I mean, if the Chinese probably won’t accept an uneven deal, and if the U.S. only insists on an uneven deal, then what does that mean? Will there be no agreement? Will that mean trade war? And who stands to benefit and who stands to lose from this?

DAVID KOTZ: Well, most interest groups in the U.S. are being harmed by the trade war. I mean, farmers, most of U.S. industry that is tied into global networks, global production chains in which China plays a major role, they’re not supportive of this. American big business in general has been critical of the government’s tariff war. But it’s complicated because while big business interests in the U.S. don’t agree with the tariff war and with the right-wing nationalism of Trump, they do see increasingly China as a problem for them because the days when China was exporting toys, clothing, participating in the low-tech end of global production chains, those days are gone.

The early period of the U.S.-China economic relationship after the reform and opening in China in 1978, the early period was very favorable for U.S. big business. But increasingly, China is moving toward the more high-tech ends of the production chain, and now they see China as a rival, and U.S. big business is determined to remain dominant in the world economy. I think that’s what’s producing the clash.

GREG WILPERT: Well, that’s actually something that I kind of want to turn to now. Last time we spoke to you, you mentioned that China has an industrial policy, but the United States really doesn’t, at least in terms of on the level of the government. Now, when we’re talking about products such as phone applications, though, it’s difficult to separate industrial policy from politics and public relations. What is the Chinese government’s strategy, would you say, for expanding into markets of countries that have a free corporate media culture and where overt mass surveillance and overt political indoctrination are rejected when those are actually kind of the problems that others, outsiders are pointing to when dealing with China?

DAVID KOTZ: Well, companies based in China–I mean Chinese companies–seem to be happy to participate in Western democracies. They don’t seem to have a problem with that. And many American companies also seem to be willing to bend to the rules that they face in China, although they don’t like them. To respond to your earlier question, which I didn’t really respond to, is there any resolution in sight in the trade war, I think the key fact is that the U.S. government does not have the power to force the major changes in China’s model that they’re aiming for.

I mean, the core demands that are being made are for China to give up its industrial policy, to stop assisting its state-owned enterprises, to get rid of the plans that they’ve made for aiming to reach the world technological frontier in key industries. China is not going to give those up, and the U.S. government doesn’t have the power to force them to. So I think at some point, there will be an agreement. If we can avoid an armed conflict on the path to it, I think at some point the U.S. negotiators will have to accept an agreement. Trump may decide at some point that his election prospects require a deal, and he’ll back down. That’s possible. Or a deal might not happen until there’s a new administration.

GREG WILPERT: Lastly, David, what would you say are the main driving factors in this ongoing China-U.S. trade war?

DAVID KOTZ: It’s a complicated relationship, and I think there are actually three main factors that are driving it. There is, first of all, President Trump’s right-wing nationalist politics, which sees every other country as an adversary and wants to force trade agreements on other countries that he sees as advantageous for the U.S. at the expense of the other country. He thinks trade is a zero-sum relationship, the U.S. can benefit only by harming other countries. American big business does not subscribe to that politics. They support neoliberalism. They want relatively free trade.

But something new has emerged in the last decade or so that makes U.S. big business uneasy about the relationship with China. And that is that it has gone from being a subordinate economy to approaching economic and technological equality with the U.S. And there’s a long history of the dominant capitalist power in the world fearing the rise of an equal, and American big business wants to remain dominant in the global economy, and they see China approaching parity. They can’t imagine a world of equals in the era of imperialism.

But there’s still another factor. This fear of a rising power is not the same as, say, the U.S. government and U.S. business facing competition from Japan in the 1970s and ’80s. There’s another factor, and that is China has a different system from that of the U.S. While they have a significant capitalist sector of their economy, they have a ruling Communist Party, they have a state that’s much more interventionist in the economy than any normal capitalist country.

And I think there’s an element of system conflict here that we haven’t seen in the world before. It’s not like the old U.S.-Soviet conflict, which was political and military. It was not essentially an economic conflict. Here, there is a new aspect of this conflict, which is one between two different social systems that are going to be relatively equal economically in the near future. And I think U.S. big business and the government which follows their interests is fearful of that.

GREG WILPERT: I was speaking to David Kotz, Professor Emeritus of Economics at the University of Massachusetts Amherst. Thanks again, David, for having joined us today.

DAVID KOTZ: Thanks for speaking with me.

GREG WILPERT: And thank you for joining The Real News Network.