Archive for the ‘China’ Category

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China to surpass US as largest economy; what does it mean?

May 1, 2014

According to new figures (and an alternate formula to typical GDP comparison) from the World Bank, China is expected to pass the United States as the world’s largest economy sometime later this year.   The World Bank is comparing Purchasing Power Partity (PPP), which is intended to standardize GDP across currencies and make direct comparisons of how economies work internally.  However, GDP is still the better measure of how economies compare in the globalized world because it takes differences in exchange rates into account.

In any case, China is going to pass the US sooner or later, but what that means remains to be seen.  In the two previous cycles of the world system, France’s GDP likely surpassed England’s in the late 18th/early 19th century and Germany surpassed the United Kingdom in the late 19th/early 20th centuries (see Angus Maddison for reconstruction of early GDP levels) , yet both still lost their challenge for hegemony.

The Six Cycles of the Modern Era copyright EnerGeoPolitics, 2010

copyright EnerGeoPolitics, 2010

Even after China becomes the world’s largest economy, it may not hold that position for very long.  China is facing a severe demographic crisis and, like Japan, will face an declining work force supporting an ever growing retiree population.  Indeed, it may fall off the demographic cliff even before the largest waves of retirees hit – last year, the working age population declined for the first time in history, a decline that will continue.  As the Financial Times notes:

Unless the country can keep lifting the labour force participation rate (for example by getting more women into the workforce or persuading older people not to retire), China will struggle to expand its labour force by even 1 per cent per year. To sustain economic growth of more than 7 per cent, productivity would need to grow by 6-7 per cent a year across the entire economy. This would be a tall order in any country. In China, where the labour-intensive services and agriculture sectors make up half the economy, it is well-nigh impossible.

Of course, a decelerating China does not mean the US will regain the top spot . . . India may well pass both nations.  And my analysis continues to be that India will be the next global hegemon, either in the next immediate cycle, or following one more term by the US.

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US Naval Institute looks at China

April 14, 2014

Proceedings is the monthly journal of the US Naval institute.  The April 2014 issue is focused primarily on the naval challenge that China presents to the US.   Several of the articles are open to the general public, but many require membership with USNI (which includes both a digital and paper subscription to Proceedings – well worth the price of membership for anyone interested in geopolitics).  This issue does a good job of covering many different possible approaches to dealing with China in the Western Pacific.  James R. Holmes argues for a very forward strategy of fortifying and patrolling the First Island Chain, while Milan Vego argues for the less aggressive approach of a distant blockade of Chinese shipping  as it transits from the Indian to Pacific Oceans.

The First and Second Island Chains

The First and Second Island Chains

I strongly recommend reading the entire issue, but these two pieces in particular.  I also read with particular interest the Navy’s dormant plans for transforming Guam into a forward base capable of hosting aircraft carriers.  This would make Guam a clear and early target for preemptive attack . . . which is actually another reason why I believe that Guam should be made a state.  An aggressor would be far more reticent about attacking a US state than it would a territory, IMO.

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How the US Lost the Naval War of 2015

April 9, 2014

That is the title of a 2010 journal article by James Kraska:

By 2015, U.S. command of the global commons could no longer be taken for granted. The oceans and the airspace above them had been the exclusive domain of the U.S. Navy and the nation’s edifice of military power for seventy-five years. During the age of U.S. supremacy, the Navy used the oceans as the world’s largest maneuver space to outflank its enemies. Maritime mobility on the surface of the ocean, in the air and under the water was the cornerstone of U.S. military power. The United States was able to utilize its maritime dominance to envelop and topple rogue regimes, as it demonstrated in Grenada and Panama, and use the maritime commons to ferry huge ground armies to the other side of the world and sustain them indefinitely, as it did in Vietnam and twice in Iraq. The unique capability to project decisive power rapidly in any corner of the world gave the United States deterrent power and unrivalled military influence.

All that changed in 2015, when the nuclear-powered aircraft carrier USS George Washington, forward-deployed to Yokosuka, Japan, sunk to the bottom of the East China Sea. More than 4,000 sailors and airmen died and the Navy lost eighty aircraft. A ship that would take seven years and $ 9 billion to replace slipped into the waves. The incident upset not just the balance of naval power in Asia, but ushered in a new epoch of international order in which Beijing emerged to displace the United States.

If you have never read Kraska’s article, read it now.  If you have, read it again.  And ponder it while listening to senior US and Chinese officials trade tough talk over maritime disputes in the Western Pacific.

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China seeks to secure food supply

March 5, 2014

China remains heavily dependent on grain imports to feed its population.  Chinese leaders often complain about being at the mercy of international commodities traders and worry about price manipulation and gouging.  The official monopoly China National Cereals, Oil and Foodstuffs Corp (Cofco) is now making moves to take control of the nation’s access to food imports.  The Financial Times reports (registration required) that Cofco has purchased a near-century old trading house as the first objective in a 5 year plan of mergers, joint ventures and acquisitions to create a global commodity broker to rival the largest in the West.  Cofco, however, will not arbitrage price differences to earn profits – it will focus on securing a food supply for its home territory.

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For all of its advantages at the beginning of the 20th century, China has a few key disadvantages.  It is short on both energy and food, and must import vast quantities of both from distant locations.  It has long and vulnerable sea lines of communication, and it does not have the navy to secure them.   For all the basic power games that China (and Russia) like to play in recent years, the US remains the only nation that commands the seas and China, in particular, is highly vulnerable there.

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India-China Relations

February 10, 2014

While India and China have been technically at odds for half a century over their long shared border, the reality is that they have spent most of that time in a mostly cooperative relationship.  However, that relationship might be changing.  India sees China as its primary strategic threat, and Chinese geopolitical moves are becoming increasingly unpopular  in India.  This long piece in The National Interest examines the quickening erosion of Indo-China relations and the role the US is playing in India’s strategic future.  Read the whole thing.

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China’s fleet advancing more quickly than anticipated

February 6, 2014

According to a new assessment, China is developing the ability to project naval power far away from its shores much more rapidly than earlier intelligence analysis had projected.

The Office of Naval Intelligence issued an assessment on the Chinese navy as part of testimony to the U.S. China Economic and Security Review. ONI leaders found that China’s navy has evolved from a littoral force to one that is capable of meeting a wide range of missions to include being “increasingly capable of striking targets hundreds of miles from the Chinese mainland.” . . .The report explains that more than 50 naval ships were “laid down, launched or commissioned” in 2013 and a similar number is planned for 2014.

Among the newer ships in the the People’s Liberation Army-Navy (PLAN) are a number of nuclear armed subs that will be able to hit either Alaska or Hawaii from Chinese home waters.  Should they sortie into the western Pacific, they would be able to hit the Western US mainland.  This capability will be operational this year.

Ranges for JL2 missiles from various launch points

Ranges for JL2 missiles from various launch points

Earlier this week, US National Intelligence Director James Clapper said that China’s military build up and assertive foreign policy is driven by a “sense of destiny” and that Chinese leaders believe that their claims over nearly the whole of the South and East China Seas are historically based.   Clapper did not say, but we can easily infer, that China has no intention of backing down from these claims and its military buildup will be used to enforce them, either by force or by intimidation.

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USAF’s current analysis of Chinese airpower capabilities

February 3, 2014

Lee Fuell is the Technical Director for Force Modernization and Employment, National Air and Space Intelligence Center (NASIC) at Wright-Patterson AFB.  He recently made a presentation to policy makers about the status of Chinese efforts to modernize their air force and related capabilities.  In short, Fuell sees Chinese air power narrowing the gap with the US steadily, but they remain far from being a peer players.  However, in their own minds, they may have achieved regional parity, as their public documents no longer stress the need for a pre-emptive attack on US forces should conflict become unavoidable.

Air Force Magazine links to Fuell’s full testimony here (link opens pdf).