Kevin M. Wilson Blog | China Will Collapse From Economic Wasting Disease Long Before We Are Caught In “Thucydides’s Trap” | Talkmarkets - Page 2
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Kevin was the CEO and founder of Blue Water Capital Advisors, which he retired from in late 2017. He is now semi-retired, working part-time for Great Waters Financial, LLC (which is part of the AdvisorNet RIA) as a consultant.  He has been in the financial advisory business since 1992. ... more

China Will Collapse From Economic Wasting Disease Long Before We Are Caught In “Thucydides’s Trap”

Date: Monday, September 11, 2017 3:03 AM EDT

Indeed, China’s search for status in global trade (i.e., WTO membership) and within the global currency apparatus (i.e., as part of the IMF’s SDR basket), and its thirst for recognition of its economic prowess (e.g., as a leader in GDP growth; also as the builder of the new Silk Road, or “OBOR;” also as the founder of the “AIIB”), and finally its touting of its regional military dominance (e.g., its new bases in the South China Sea; also its new aircraft carriers) are recurrent themes in the foreign policy community; hence Kagan’s historical analysis into the causes of war appears to apply to the current facts better than Allison’s metaphor.  The US may be a threat to Chinese dominance in the Pacific and on the margins of Asia, but it does not pose a direct threat to China’s security, at least not intentionally.  The US Navy has actively defended freedom of navigation around the world for 200 years, so its active resistance to China’s somewhat wild claims in the South China Sea (Chart 1) is neither unique, nor any kind of causus belli that drops neatly into the Thucidides’s Trap metaphor, and the US has pushed back against many other countries on this particular problem (Mo Shengkai & Chen Yue, 2016).  Trade between China and the US is still massive, although not as important as it was before 2008, and major US corporations (e.g., AAPL; WMT) have based their huge supply chains in China.  Thus there is considerable interdependence between China and the US that was simply not present in the Athens/Sparta rivalry, nor really in any of the previous pairs of combatants mentioned by Allison in his analysis of the Thucidides Trap metaphor.

Chart 1: China’s Wild Claims in the South China Sea

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So it seems a bit over the top to claim that war might be inevitable in the region, simply because of the challenge China poses to US hegemony.  Indeed, that challenge is widely overstated.  Famous intelligence expert George Friedman (2016; reprinted by Zero Hedge) has suggested that geography alone makes China’s projection of power somewhat limited (Charts 2, 3, 4, 5), and its military buildup reflects its relatively weak position, not its strength.  China is in reality (for purposes of military strategy) a long, narrow country with its wealth concentrated along its coastal regions.  Those regions face an array of US allies that essentially surround China’s maritime borders.  So it is perhaps understandable that China seeks to build a defensive perimeter in the South China Sea.  So far that perimeter, including all the new military outposts on man-made islands, is truly defensive in nature.  Although that could easily change, there is not presently any reason for the US to come to blows with China over the existence of such a perimeter.  China has objected strenuously (in diatribes meant for local consumption) to the Freedom of Navigation cruises of the US Navy, but nothing untoward has happened so far.  Even China’s confrontations with Japanese, Vietnamese, and Philippine navy ships involve little more than water fights with big hoses.

Chart 2: East Asia at Night, Indicating the Concentration of Chinese Wealth Along Its Coastline

 

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Chart 3: Mainly Coastal Concentration of GDP Per Capita in China

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Chart 4: From China’s Point of View, It’s Coastal Waters Are Surrounded by US Allies, Leaving It with Little Control Over Its Sea Lanes

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Chart 5: Half of China Is Desert, Pushing Economic Development and Population Towards the Coast

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Indeed, Friedman has repeatedly pointed out (2017) that China’s military situation is obviously one of inherent weakness, not challenging strength, for a variety of reasons.  For example, China’s navy is no match at all (currently) for the US Navy, and its air force does not compare favorably, in terms of training or experience, with the US Air Force either.  Nor could China win in a war against Japan (especially with the US backing it), and therefore it is Japan that is the real regional hegemon in East Asia.  Indeed, the case can be made that it is Japan that is the target of China’s strategy, not the US, for richly historical reasons (Gideon Rachman, 2017).  Furthermore, although China’s army is admittedly huge, it is not very well equipped, it is still quite unable to project power, and it lacks the extensive combat experience of the US Army and Marines.  China’s extensive military buildup in the South China Sea thus has the effect of making China look scarier than it actually is (George Friedman, Xander Snyder, & Cheyenne Ligon, 2017)

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