Thinking about China

From the Warning Signs of Alan Caruba at Facts-not-Fantasy

Know the Warning Signs from Alan Caruba

Napoleon Bonaparte purportedly said “Let China sleep, for when China wakes, she will shake the world.”

As Thomas J. Christensen, the author of his recently published “The China Challenge: Shaping the Choices of a Rising Power”, reminds us, “For millennia China was arguably the greatest civilization on the planet and for many previous centuries its most powerful empire.”

Facts-not-Fantasy

China is no longer an empire, but it remains a huge nation geographically and huge in terms of its population.

From the website worldometers.info, we learn:

The population of China is estimated at 1,393,783,836 as of July 1 2014.

China's population is equivalent to 19.24% of the total world population.

China ranks number 1 in the list of countries by population.

54% of the population is urban (756,300,115 people in 2014).

The median age in China is 35.7 years.

Christensen is a former Deputy Assistant Secretary of State for East Asian and Pacific Affairs. Currently he is the William P. Boswell Professor of World Politics and director of the China and World Program at Princeton University. After reading his book, you might well conclude that there is little about China and Asia he does not know.

We are mostly dependent on various news stories about China to have any idea what is occurring, but the fact remains that just as the U.S. has its optimists and pessimists, conservatives and liberals who influence policy the same exists for China, so a lot depends on who is being quoted. Generally, though, it is only the top leaders who are. That means we are getting the Chinese “party line” and the occasional general or admiral warning against any aggression.

China did not begin to awaken as a modern nation until after the death of Mao Zedong, the founder of the People’s Republic of China, a Communist with a capital “C.” Christensen notes that, while keeping its political ideology, the leader that followed him made a “peaceful transformation launched under CCP leader Deng Xiaopping in 1978 and the collapse of the superpower Soviet Union thirteen years later that made China appear to stand tall again among the great powers.” The transitition was to a capitalist-based economy.

These days the Chinese and the Russians are making efforts to achieve areas of cooperation and, in particular, their militaries. They hold drills together for common defense strategies.

Christensen believes that “China’s return to great power status is perhaps the most important challenges in twenty-first century American diplomacy”, but to put that in context he points out that “China’s per capita income is only one fifth that of the United States” and “though a true trade superpower, many of its exporters are controlled at least in part by foreign investors.”

“Still, the pessimists do not give enough credit to the sustainability of U.S. leadership in Asia,” says Christensen. “For example, they often underestimate the value of American’s unparalleled network of allies and security partners.” You can be sure that the Chinese leadership does not.

They also have, as one would expect, concerns about U.S. military power in their area of the world, but they feel the same about Japan and South Korea as well. “China is not currently an enemy of the United States,” says Christensen, nor is it likely to be for a long time to come.

“It does not need to be contained like the (former) Soviet Union. Nor should China become the kind of regional or global adversary that we have faced in the past, although that outcome, unfortunately, is still a distinct possibility.” That possibility depends on China’s leadership now and in the future. For now they are concentrating on their economy and are likely to do so for many years to come.

Visit Caruba's Website

“China’s economic clout is real and growing rapidly, especially since the 2008 financial crisis. China has been the main engine of growth for the world’s economy since that time and, by some measures, has become the world’s number one trading state.”

There is only one reason why the U.S. has not yet recovered from the financial crisis and his name is Barack Obama.

I suspect that Obama is held in disdain by the Chinese leadership despite all the public handshakes. For one thing, China weathered the financial crisis far better than the U.S. “One of the burdens the new Obama administration inherited in early 2009 was a China bearing a mix of cockiness and insecurity that would negatively influence its policies in 2009-2010,” says Christensen and as the U.S. foundered in Afghanistan and Iraq “American power inspired less awe.”

“Sometime in 2012, the ‘Asia pivot’” of the Obama administration “would be jettisoned in Washington for the more subtle ‘Asia rebalance.’” If you get the feeling that the Obama administration has no real China policy or one that will have little influence, you are right.

With regard to China, It likely does not matter what the Obama administration does for its remaining one and a half years in office.

Various scholars and diplomats will continue to keep a watchful eye on China and most surely many corporate leaders and U.S. entrepreneurs will do so as well given its huge population as a marketplace. It’s already a great tourist destination.

Napoleon was right.

_____________________________

Become a Truth Serum Partner Now

China! China! China!

China! China! China! from the Warning Signs by Alan Caruba at Facts-not-Fantasy

Know Caruba Warning Signs

For two days there was the usual news and analysis about President Obama’s summit meeting with Chinese President Xi Jinping. We are going to hear that China will bump the U.S. from first place among the great economies of the world, challenge us in Asia, and will be the next great global power.

Secretary of State John Kerry recently said that “the U.S.-China relationship is the most consequential in the world today and it will do much to determine the shape of the 21st century.” When a nation has 1.35 billion people it is going to get a fair amount of attention, but that does not mean the current predictions will come true. The reason? Those 1.35 billion people.

There is no denying that China’s rise to become the largest exporter over the past three decades has been impressive. It is expected to become the largest economy and militarily powerful as well, but Peter Zeihan is a geopolitical consultant and author of “The Accidental Superpower” (the U.S., not China) reminds us that the “China mythos is ingrained nowhere more deeply than in the American psyche—the same psyche that was recently convinced of the ‘obvious and inevitable’ rise of the Soviet Union and Japan.”

Both the former Soviet Union—now the Russian Federation—and Japan are in decline for a variety of reasons, but demography, the age of their population, plays a major role. When a nation’s population becomes top heavy with elderly people, but does not have an expanding younger generation, its economy begins to shrink for lack of a labor force.

The other factor that determines a nation’s success is its geography. Zeihan reminds us that “China is a land of failed empires and shattered hopes” and part of its problems stem from the fact that it is really three very distinct geographies in the north, the central region, and the south. They could be separate nations in themselves.

I have always thought that the supreme irony of China is that it adopted a capitalist economic system while remaining politically communist. Why? Because communism doesn’t work and the collapse of the former Soviet Union will be China’s fate as well.

As President Obama meets with President Jinping, both will be doing so with significant domestic problems. Obama’s include the midterm elections that returned power in the Senate, along with the House, to the Republican Party. It is widely interpreted as a massive rejection of the U.S. President, leaving him weakened in the eyes of the world.

As for President Jinping, Zeihan notes that “Even once a Chinese leader succeeds in rising to the top of his local heap—or even commanding the entirety of China—he then must begin the even longer and more painful slop of purging all those who have visions that clash with his own.”

A look at the map and a thought about its huge population would make anyone think it was an economic colossus immune to problems, but the numbers tell another story. “The real surprise of China is that the north, central and south account for just half of China’s 1.35 billion people. North, center, and south are China’s lowland and coastal regions; the rest of the Chinese actually live in the interior.”

Its two major rivers, the Yangtze and the Yellow, though lengthy are only navigable for short stretches in terms of any ocean-going vessel. The result is that historically the Chinese have been “remarkably non-naval.”

As Zeihan describes it, “northern China is the stable-as-glass political core, central China (is) the nationally disinterested economic core, and southern China (is) the potentially secessionist territory and the interior being largely ignored—holds to the present day.”

“Even contemporary China’s political system reflects it: all of the critical military branches of government are headquartered in the north, the north and central regions trade off the premiership every decade in order to balance security and trade interests, while the south is not even represented on the Politburo.”

Compare that to the national unity of the United States whose economy not only serves all its population’s needs, but exports extensively to the world. As for that world, the U.S. is its financial center, the safest place in which to invest and safe-keep one’s funds. By contrast, China’s banking system is in under the control of its government and it limits what citizens can do with their savings. “Private savings are instead funneled to state goals.”

Since China’s goal is maximum possible employment its banks make “loans available for everything” and the “result is an ever-rising mountain of loans gone bad and ever less efficient firms, held together by nothing more than the system’s bottomless supply of cheap labor and cheap credit.” That’s a recipe for a financial disaster because “total financing (is) at around $5 trillion for an economy only worth about $8 trillion.”

And then there is demography. “China is aging far more quickly than it is getting rich.” Specifically, “simple aging has already reduced China’s pool of young, mobile workers by 40 million during the past decade. And because of the baby bust, that decline is about to accelerate greatly.”

As Zeihan points out, “The burden of having to financially support their elderly has a catastrophic impact on young workers’ professional and financial development, reducing educational opportunities, gutting consumption, and all but making savings impossible.”

Despite its efforts to intimidate its neighbor nations, China is at a military disadvantage to them. “They all have air forces and cruise missile assets that in many cases could destroy Chinese maritime assets that get too close.” In general, China’s behavior has created neighbors that are broadly hostile to it.

China is big, but its size and population are its biggest problem.

________________________________________________________

Click Here - Become a Truth Serum Partner Now