ATHENS – True hegemons prevail not by force but by offering hard-to-resist Faustian bargains. A prime example is the “Dark Deal,” which underpinned China’s economic miracle prior to the new cold war with the United States. That arrangement now hangs by a thread.
“Our Dark Deal,” a Chinese official once explained to me, “turns on the US trade deficit, which keeps demand for our manufactures high. In return, our capitalists invest the bulk of their dollar superprofits into America’s FIRE [finance, insurance, and real estate]. Once this process got underway, America shifted much of its industrial production to our shores.”