Assuming China maintains its average of nearly 10 percent of annual growth, it would take about 30 years for it to surpass us in aggregate output, and that assumes everything goes according to plan, which it probably won't. As for the prospect of war, the only realistic scenario would be a Chinese invasion of Taiwan. But this, and any other serious military conflict is not foreseeable, because China is unlikely to accept the inevitable costs that would come with a pariah status---mostly economic. It might become more bellicose, or become involved in very limited military engagements, but nothing sustained. Invading Taiwan would be a logistical nightmare that would face fierce resistance, even if the United States decides to remain neutral. Presently, its armed forces lack the professionalism, experience, and capacity to launch such an invasion. Their best hope is aerial bombardment, but as the literature suggests, the cost of concession would have to be low for a target state to yield to coercion through air strikes, and for Taiwan, sacrificing sovereignty on China's terms would be a very high cost. Of course, if the global economy suffered a global depression that was especially cruel to China, its preferences may be altered, but the military obstacles would remain the same. If we so desired, we could neuter its Navy while only suffering minimal losses, and eliminate its strategic nuclear forces in less than 30 minutes---while only inflicting less than a million casualties, and because they have to fuel their ICBMs, long before they could launch a retaliatory response. We would only run into trouble if we attempted a ground invasion, but such has almost no chance of happening. So in sum, don't be overly fearful of China, because beneath its frightening superficial appearance, it's much weaker than it wants anyone to know.
Thanks for the most interesting and thought out reply. I don't dispute most of what you say, however I would challenge a few things. My estimates for Chinas GDP to be larger than the US's is 15 to 23 years. This is assuming a growth rate in the US of between 2.6% and 5.0% and a consistent growth rate in China of 10%. The simple fact is, China has pretty much been able to maintain uninterrupted growth of 10% for the last 30 years. It doesn't take much to boost the Chinese economy, so I doubt we will see growth of much less than 10% over the next few decades. I haven't even accounted for China's seriously undervalued currency which distorts it's real GDP figure.
The US is facing some very serious financial challenges both now and into the future. There is no real guarantee of any significant growth in the next couple of decades. I suspect that growing a developing economy is going to prove much easier than growing a fully developed one.
My expectations of war are more in line with resource wars. China might deiced that it doesn't like paying the prices Australia charges for it's iron ore, coal, gas and agricultural products, especially if it can just invade a country of 21 million and help itself. A more likely scenario is China fighting the US in proxy wars over oil and also possibly rare earth minerals. Another option you don't address is a surprise first strike (nuclear) against the US. It may not be a high probability but I don't think it can be completely discounted.
One other thing I would like to address is China's military capabilities. Given that it is still a developing nation and it's GDP just a decade ago would have been but a fraction of it's current size, it isn't doing too badly. It's military spend is going up faster than it's GDP and it is gradually improving the quality of it's forces rather than increasing their number. China is a great duplicator and you can be sure that they have taken away a lot from their stripping down of your aircraft a few years ago. There are a lot of shortcuts they can take and you can be sure that they are aware of this and making the most of it. It is amazing how much can fit on a usb drive or 2Tb plug in hard disk. The internet just makes things even easier. This is not to say that China is a high risk militarily right now, but they are fast getting there.
Warfare is also changing and the US us especially vulnerable. The US's dependence on the Internet is getting more and more ingrained and it's reliance on imported oil would also not be missed. Reliance on satellite technology also could be a weakness.
Overall, I think the biggest risk is the US being complacent, all too easy to do without even realising it. Certainly, the US likes to think that it is really on the ball with constantly updated responses, however I think it may be missing a trick or two and that may be all that is needed in the not too distant future with an assertive China.
I certainly hope that things pan out for the best, but my reading of history is that change is often a catalyst for war and we really cannot afford war with the weaponry we have these days.
China has a GDP of 4.33 trillion, and assuming that their 30 year average is sustained, which doesn't seem likely, it would require at least 25 years to surpass us
if our economy was frozen. But of course, this won't happen, and within this period, we'll probably add between $10 to 15 trillion in output. So I'm not really convinced that we'll actually be surpassed in aggregate output anywhere in the near future. And even if you account for currency revaluation, there are other internal costs that need to be accounted for in future calculations, and would likely cancel the effects of revaluation: like environmental conditions, and corruption for instance.
As for the future prospects of the United States, we have considerable comparative advantages that gives our economy staying power: human capital (measured by degree holders), household wealth, financial capital creation capacity, nearly 7 trillion in private sector investments (which doesn't consider the notional values of instruments), labor market flexibility, possessing the world's premier reserve currency, having a government that's guaranteed first place and highest confidence in capital markets, an undaunted Federal Reserve, being a global leader in research and development spending, the level of productivity per capita, etc. The dire forecasts strike me as not being objective (because our relative position isn't being properly measured), ignorant of historical precedents, and overall, alarmist (how many times have external and internal critics predicted the downfall of the United States?). China, by contrast, faces far more serious and obvious problems, and heralding its ascent to hegemony seems both premature and misguided.
China will flex its muscles on matters related natural resources, but it can't afford a trade war. Just in the last recession, the special economic zones of Shenzen and Guangzhou alone suffered over 600,000 business closings. When you factor in Hong Kong and other cities, the problem is much worse, and I don't think there has been a serious assay of the extent of the actual damage. In the months following the onset of the global contraction, for example, federal spending was responsible for 87% of the growth in output, and it still remains disturbingly high in spite of a return to previous levels of growth. As the economies of export destinations tighten their belts, China still faces a very painful future of losses and adjustments. In the meantime, though, they have to deal with pervasive poverty, and if the state's very optimistic and incorrect estimate is to be trusted (and it most definitely shouldn't), they face a population of 150 million people living on less than $2/day---but as I stated earlier, it's likely far, far, worse. When combined with social unrest, inflationary pressures, a weak social safety net, high household savings rates, micro environmental costs, and a weakening civil government, you have the basic ingredients for a fairly serious disaster. If China dares to attempt to manipulate states with its debt and currency holdings, and share of the rare Earth mineral market, it's likely to face a stunning response. Like for example, what would happen with new tariffs, sanctions against its private sector, a restriction of their access to financial markets, and general restrictions on the market entry for China's private sector? Foreign trade is very important for our economy, but we wouldn't die a qucik death if our trade position with China radically changed. China, by contrast, has built an economy that either sinks or swims based on the volume of trade. So we have the upper hand, and they're quite aware of this reality, so whatever intransigence we encounter is without foundation, but just simply posturing to maintain a facade.
Returning to the matter of resources, China doesn't have the luxury of being choosy, or throwing a fit over prices, because current levels of demand greatly exceed supply. Although they might harass Australian nationals over failed investments like Rio Tinto, they have no choice but to accept the current situation, because where are there reliable alternatives for supply? As for energy resources, there might be some light military exchanges, but nothing amounting to actual war. For them, convincing other states that they face a prospect of war is the desired outcome, not war itself, which would be tantamount to national suicide. China, as you suggest, could seriously try to invade Australia, but it would be a very short and pathetic war---and everyone in the military knows this. War with the United States would also be quickly resolved, even if they had the audacity to launch a nuclear first strike. Because here's the deal, we know the exact locations of their strategic nuclear forces, which much to our advantage, they keep isolated and away from densely populated centers. Additionally, these sites are under constant surveillance, and for them to launch a strike, they would have to mobilize the missiles, fuel them, and hope that we don't strike first---but we probably would. They only have 30 ICBMs capable of
hopefully reaching the states, and all of them are liquid fueled---a process that takes hours. They are at such a disadvantage, that an analysis by Scott Sagan---from MIT---concluded that we would be able destroy all of their strategic nuclear forces in less than an hour---but closer to 30 minutes---while only inflicting less than a million civilian casualties. So the decision for United States to strike first would certainly be contemplatable.
China's military spending is indeed growing at a rate faster than the United States and its neighbors----120% since 2000. But a distinction must be made between quantity and quality. They still depend on Russia for much of their military hardware, their projection capacity is extremely limited, most of their equipment is very outdated (in spite of upgrades), and the professionalism of military personnel is very much lacking. So interstate war is completely out of the question---even with Taiwan, which I imagine would be an exceedingly humbling experience. To be clear, professionalism has improved, but it improved from a very dreadful position, and will never come close to achieving parity with the United States---which isn't a goal anyway. To compensate, they'll attempt to upgrade their cyber warfare capabilities, but don't listen to glorified idiots like Richard Clarke----instead, look at Hersh's recent New Yorker piece, which places their capabilities and intentions in perspective:
http://www.newyorker...01fa_fact_hersh----at the end of the day, our Cyber Command would still kick the shit out of theirs. So in sum, don't worry about China burgeoning military, because it will never constitute a real challenge----beyond fueling hysteria---and is driven by very modest ambitions---domestic order, protecting overseas investments, reputation building, and creating fear.
As for the level of imported oil, that's an interesting subject. But domestic sources still provide about 40% of our needs, and our foreign sources are becoming increasingly diversified. When you combine this reality with public and private sector investments in alternative energy, the problem becomes much less frightening. Peak oil would only be a problem if technological improvements flat-lined---which will never happen. And because the market share OPEC dropped alarmingly (for them) by the early 90s, and due to a decade of low prices leading to a near death experience---expect them to be much more pliant, and not hawkish on prices. Saudi Arabia should be showered with praise for its role in ensuring a stability in oil prices, which affects price levels across the spectrum, which hurts the poor the most when there is a spike. Rather than worrying about our dependence, we should instead be concerned by the the failure of most oil producing economies to diversify their economies, spend their proceeds wisely, and with the amount of federal revenues that are derived from the production of oil---mostly between 80% and 90%. Considering the brand of politics and the amount of religious fervor in some of the major producer countries, I'm much more concerned about the costs of de-linking.
Finally, a distinction needs to be made between complacency----which no policymaker in the United States is guilty of---and mass hysteria, which places our country in greater peril. I'm confident about the future of the United States, but not blindly confident like some of the jingoists. Rather, my confidence has a basis in quantitative and qualitative data, not patriotic sentiment---which because of my cosmopolitanism, I usually consider noxious anyway.
Edited by Rol82, 15 November 2010 - 02:37 AM.
