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What About China?

Well, the US has started to make some more public pronouncements about China’s military capability, and how they see it expanding in years to come.

Truly, China is shaping up to be the next Superpower. What this should mean to all of us is that we are on the cusp of another arms race with a Communist country that is bent on our destuction – or at least our assimilation. And I’ll tell you why this arms race is going to be different from anything we’ve seen before.

First, China’s economy still isn’t as large as, say, the USA’s. But it’s gaining. China manufactures just about everything you can buy these days, and their exports are booming more than anything has ever boomed before. What this leaves the Chinese with is an absolutely tremendous trade surplus, and this means money in the bank. China is expected to have more than a $300 Billion USD trade surplus in just 2007. Add this up with past gains, and China’s currency reserve (the money they have in the bank) is somewhere between $800 Billion and $1.2 Trillion US Dollars. If we split the difference of those estimates, we end up with One Trillion.

One Trillion US Dollars in cash. That’s a whole great big pile of money.

Stack this against the USA’s current deficit of $8.8 Trillion (that’s $8,800,000,000,000.00), and you can see the sort of disparity that’s building here. But why is this a bad thing?

Well, China can’t go out and sell its money, can it? It can either buy with it or keep it for later. If it buys, it must by from us, so that wouldn’t be bad.

But let’s say for a moment that China were to decide to convert its US Dollar assets into Euros. The value of the US dollar would drop like a rock, while the Euro would be strengthened. With this readjustment, US foreign debts would become more expensive to repay; meaning that the US deficit would rise even more quickly. The US Government would have no choice but to raise taxes to get the cash to cover some of that shortfall, and a rise in taxes would increase unemployment and raise interest rates.

In short, China has the power today, to wreak havoc on US financial markets merely by mentioning such a currency shift – let alone by actually doing it.

A sharp slide in the US Dollar would see other countries shift their currency reserves as well, which would only hasten the decline. It might even make OPEC move off the US Dollar per-barrel price model to one based on Euros, which would be really, really bad news for the US because they import so much oil and would suddenly be paying a lot more for it.

And that would cause prices on absolutely everything to rise, reducing buying power and increasing personal debt levels, increasing unemployment and causing pressure on government services and on we could go…

Now, that’s just saying something about the economic power of China. Now for the military option.

China has the World’s largest air force. Though it is true that many of these planes are outdated Soviet models, the Chinese are modernising their air force at an alarming rate. Combine these more modern jets with the sheer numbers they can already muster, and we surely have something to be afraid of.

China also has the World’s largest standing army. More than 2.2 million soldiers stand at the ready. Compare this to the USA’s 1.4 million and we can see a big difference. You might think that technology can make a difference here, or maybe manufacturing capacity. Well, China has the equivalent of the entire US population in citizens fit for military service. That’s one helluva punch, even if they only have sticks.

Consider that the United States is already stretched critically thin with everything it has going on right now. If China were to present a real military threat to either the USA or the West in general, I doubt we could do little other than nuke them.

What has held China back from being a real World power – even though they have nuclear-tipped ICBM‘s – is that they don’t have a Blue-water Navy. They’re working on that, and they’ve been using the money we give them for rubber dog poop to buy old aircraft carriers that they can examine. They haven’t yet been able to purchase a fully-operational model from anyone just yet, but not for lack of trying.

I think the next 10 to 20 years will bring us a new China. A strong, confident nation that’s not afraid to invade places like Iraq if it feels like it, because it will be able to project its power. The key to their success is a Carrier Battle-Group based Navy.

The key to our own survival is to make China democratic. Just how the hell we manage that is another matter entirely.

Published inPolitics

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