Chinese Hegemony?

An opinion piece written in the Wall Street Journal by Mark Helprin on Tuesday, May 13 2008 urges Americans to not take our military superiority for granted. He sites a number of statistics regarding China’s rapid GDP growth and its ability to spend significant resources on military hardware in the coming years. His solution is for the United States to roughly quadruple our military capabilities including aircraft carriers, other combat ships and F-22 aircraft. While Mr. Helprin is no doubt more knowledgeable than Your Humble Blogger, this Boulder Refugee feels compelled to disagree with his pining for the launch of a new Cold War. The reasons are numerous.

The Chinese GDP growth rate is unsustainable – While some economists predict that Chinese GDP will equal the US by 2026, John M. Berry of Bloomberg News makes a pretty good case that this is highly unlikely. With China’s current GDP at $1.93 trillion and a growth trend of 11% (9% real, 2% inflation) and the US GDP at $11.73 trillion and a historic growth rate at 5.5% (3.5% real, 2% inflation), it would take 35 years for the math to add up. However, as Berry points out, sustaining 11% average growth over 35 years is almost impossible. At some point, the economy is so large that it is impossible to increase productivity that much. As we learned from the Soviet “experiment,” foreigners trying to keep up with the General Jones’s will go bankrupt.

The world is still MAD – “Mutually Assured Destruction” still defines traditional military clashes between titans. Unlike some crazy mullahs, the Chinese have no death-wish. While the US may still have significant technological superiority, we’re not spoiling for a fight with the Chinese, nor are they interested in a direct military entanglement. Even if one accepts the straight-line projection of military power that Helprin submits, it will be an unimaginably long time before they had such overwhelming force such that we would simply give up without a fight.

We’re not in it alone – As the recent Japanese consideration of starting a nuclear weapons program demonstrates, the Japanese would never allow a Chinese hegemony. They would join the arms race. So, it is not just our GDP that China must eclipse. Tally Japan to our side… and South Korea… and Taiwan… and Australia… and India.

Chinese range of motion – China’s desire for influence seems largely confined to Asia (although this is an opinion from the Refugee’s very limited perspective). Although China could cause trouble in the region and enable rogues around the world, it’s hard to imagine that China would risk a direct confrontation with the US over Thailand or even South Korea. Taiwan maybe, but the Chinese know the price would be huge. (Side note: an Obama administration might change Chinese calculus vis-à-vis Taiwan. They know Obama would never go to war over the ROC.)

Inevitable social change – Chinese society cannot remain unchanged as the economy skyrockets. The Chinese have historically been strong entrepreneurs. As the middle class grows and demands more freedom, the communist government cannot keep the freedom genie in the bottle forever. Once out, it’s out for good. The emergence of a middle class also lessens China’s advantage of cheap, abundant labor.

One must also remember that Mao unified a regionalized China with different languages and customs. A Balkanized China is not an unthinkable scenario. Internal evolution, or even revolution, is a far greater threat to the central government than US military intervention.

Finally, China is an ecological disaster in progress. Those chickens will come home to roost within the next two decades in the form of social discontent and costly clean-up.

Central planning – No government planners can ever keep up with market changes the way a more capitalistic system can. Despite the efforts of our government to implement ever more onerous regulations that hamstring American business, we are still light-years ahead of China. China has figured out how to steal secrets and mass-produce cheap knock-offs, but has yet to prove that it can create even a modicum of innovation.

Does anyone remember MITI, the Japanese Ministry of International Trade and Industry? In the 1980’s, pundits and politicians alike shouted that the US needed such an agency to facilitate similar financial-manufacturing partnerships and long-range planning. Japanese-style 25 year plans were all the rage. (This Refugee even bought into the hype and took a Japanese language class.) Although Japan has some notable successes (e.g., Toyota), This Refugee believes that is more a result of our execution problems (e.g., the auto industry) than the success of MITI. Contrary to projections at the time, the cumbersome Japanese model could not keep up. (Similar argument applies Germany.)

This Refugee won’t dispute that China will become an even more significant power in Asia and maybe even another super power. However, there is no need to panic and quadruple our defense spending now; we would only be creating soon-to-be-obsolete weapons at a time when we are not threatened. Chinese culture is famous for having a patient perspective that encompasses generations while westerners reputedly can’t think past the next news cycle. Ironically, time is on our side. This is one case where we can out-wait them.

China Posted by Boulder Refugee at May 14, 2008 10:56 PM