What To Do About China--And The Rest Of The World?
By Pejman Yousefzadeh Posted in China | Foreign Affairs | International Economy | Military Competition — Comments (11) / Email this page » / Leave a comment »
Standard predictions have stated that in a little over 4 years, China would overcome the United States as the world's largest economy.
Those predictions were wrong:
China, it turns out, isn't a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size. For the foreseeable future, China will have far less money to spend on its military and will face much deeper social and economic problems at home than experts previously believed.
What all of this means is that the United States will remain unchallenged as the world's top economy for years and years and years to come. There is no threat whatsoever that the Chinese will surpass us and as Walter Russell Mead, the author of the article, points out, a less prosperous China also means a China that has less money to spend on defense, so even there, we are going to be just fine.
But this also means that China is a lot poorer than we thought, which does not bode well for American exports overseas. The world, as a whole, is a lot poorer also, as Mead writes. In calibrating policy, the fact that China's economy is 40% smaller than ours would tend to reinforce my longstanding argument that it would be a mistake to push the Chinese too hard to revalue their currency, since currency revaluation would only serve to make it harder for the Chinese to buy our products since currency revaluation would make Chinese goods more expensive for Americans, thus further impoverishing China (of course, we should note anew that Americans benefit from Chinese goods being cheap). On the defense side, of course, we will have to continue to spend lots of money, especially with the wars in Iraq and Afghanistan continuing and the War on Terror being a fact of life for the foreseeable future. At the same time, the fact that China's economy is smaller will remove a lot of pressure on the American military establishment to work harder to keep up with the Chinese in defense spending and in maintaining the quality of our armed forces.
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What To Do About China--And The Rest Of The World? 11 Comments (0 topical, 11 editorial, 0 hidden) Post a comment »
The problem here is that the choice is quite likely between their economy crashing hard if they were to unpeg now, versus crashing even harder when they eventually have to do so. The crash is inevitable, the question is whether or not the crash can be guided at all for a survivable landing.
In my analysis, things are going to be very dire in China within a few years, and I doubt seriously things will go as smoothly as they did when the USSR broke up.
I like seeing Japan get in the game http://money.cnn.com/news/newsfeeds/articles/prnewswire/NETU00218122007-... . Also, with Sarkozy, maybe Europe will chip in at least a bit more for defense. And it does not hurt that Austalia and even Canada are doing well economically because of the demand for resources. I tend to think things are pretty much ok. I fear Putin's Russia more than China at this point.
I am not so sure about China not mattering economically. They are flush with cash and can use that for education and developing value added products as well as building domestic demand.
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Molon Labe!
Let's see how China weathers the olympics this summer. They seem to think they will be able to control what happens. I think that's not going to happen and how they handle it will determine their future.
Actually, this new news doesn't surprise me. I've always thought that China was overrated - and that's based on some on-the-ground-there experience as well.
Let's not forgotten a couple of cataclysmic problems that China will soon be facing....
o Within the next decade, China will go into one of the worst demographic collapses in history. The one-child policy has worked too well and China is heading for a Russian-like population contraction (along with a "graying" crisis). You can put on top of that the odd sideline of the one-child policy that among the younger population, the male-female ratio is now skewed at almost 1.2:1 - that's not a good recipe for social stability.
o It's easy to forget that "China" is actually a descendant of what amounted to a Chinese Empire - much as the Soviet Union basically was the follow-on to the maximal Tsarist empire. We all know about Tibet, but there's also Xinjiang in the northwest - a.k.a. "Eastern Turkistan." If China really opens up, it's quite likely that it will come apart much as the old Soviet Union did. (BTW, the last time I saw a Chinese banknote, it had four language scripts on it - Chinese characters, Sanskrit-like Tibetan, Latin-charactered Turkic, and.... Arabic (!!)).
I'll put on top of that that China has got to do something about its grossly inadequate notions of "intellectual property" or it will remain forever a cheap-labor supplier to WalMart and nothing more....
(N.b. - I think I mentioned this once before, but what the heck. Given the demographic problems of both China and Russia (particularly Russia), one of the great unexpected problems on the international stage in the 21st century could be the literal vacuum in (resource-rich) Siberia.)
a less prosperous China also means a China that has less money to spend on defense, so even there, we are going to be just fine.
They would simply take the NORKO approach; i.e. cut funding to other aspects of society and funnel it to the military.
Also, keep in mind China would have a backbone of steel during a conventional war.
They would crush their enemy, with their public and state media support.
Unlike the US, who counts every casualty and errant missile.
The US is almost impotent, the Left has drained our will.
Before we underestimate the capabilities of China, you might consider this link:
http://weeklystandard.com/Content/Public/Articles/000/000/014/532ftzqs.a...
While China lags behind us (defense spending), there are some ominous developments in asymetrical warfare that balance the field (even if we set aside quantity of convential forces, the possesion of nukes, etc). The article goes into issues like denying US tech advantages through the use of anti sattelite tech, as well as battle space denial through the use of a large fleet of quiet subs that can deter or delay a carrier group from the US from Taiwan.
I accept your underlying notions regarding economics, but militarily China is no joke.
"Greater is an army of sheep led by a lion, than an army of lions led by a sheep" - Defoe
Directly, because a lot of it is manufactured hardware. They have a piece of all of that.
Indirectly because they "acquire" (Alan Greenspan's euphemism for steal) our military technology as soon as we develop it.
China is not interested in attacking us militarily, and they have no strategic rationale for doing so. However, they are very interested in removing our ability to attack them. They don't need a lot of military spending to do that.
On the other hand, there is one military arena in which China has a direct strategic interest: naval power, which is required to control trade routes. That's where they're putting a lot of their military spending.
I've long believed that conventional military capability is no longer a net plus for the US, on a fully-dimensional analysis (which considers the economic value created by global political stability).
While I don't see China attacking us directly (though they still have a nuke arsenal), I see three threat areas.
One is Taiwan (and that would be a naval issue).
Two is Korea.
And three (long term) is the rise of India. I don't think China wants a growing democracy on their border (growing in terms of ties with the US, tech, and economicaly).
A fourth wildcard is Russia. While we should give a poop about either Russia or China, it wouldn't be in our interests for them to go at it (and not in their interests either, but it's a remote possibility).
"Greater is an army of sheep led by a lion, than an army of lions led by a sheep" - Defoe
I doubt this is enough to change the minds of the military establishment towards China. China as the next "near peer" is widely engrained in the military/intel community. It will take several similar studies to see some noticable change in toward China.