Craig Eisele on …..

February 28, 2012

We Have Seen the Enemy and it is China…. or Not.. or Maybe So

Filed under: Uncategorized — Mr. Craig @ 3:30 pm

I have just been sent a copy of Amitai Etzioni’s essay “China: Making an Adversary” published in International Politics. It has been out for a while but is new to me and will not have been seen by most Telegraph readers.

As you all know, Washington (and the West) is deeply split over how to handle China’s spectacular renaissance. This is by far the most important issue in 21st-century geopolitics. It is not one we can afford to get wrong, and errors made today may prove irreversible.

The new term “China hedge” has been coined, used by those who think that the country’s growing economic and military might – combined with a new “truculent attitude” – is potentially so menacing that the US must rearm and reorganise its global alliance structure as an insurance policy.

These “containment” hawks cite the following reasons:

• China’s defence budget grew at 12.9pc a year from 1996 to 2008, while GDP grew at 9.6pc. A State Department task force report concluded that “it is proceeding at a rate to be of concern even with the most benign interpretation of China’s motivation”.

• The US military has been in rapid decline. The US navy has been cut from 780 ships in 1989 to 280 ships today, the smallest fleet since 1916. The US military faces a “train wreck” (Hadley and Perry, 2010).

• China is developing “asymmetric” capabilities, specifically targeted at countering the US. They cite the A2/AD area denial systems, such as anti-ship ballistic missiles designed to deny the US access to allies in the Pacific theatre. This could force US aircraft carrier battle groups to retreat deep into mid-ocean, leaving the US impotent in a crisis or forced to engage in dangerous escalation of mainland bombing.

• China has been throwing its weight around the South China Sea, declaring much of it an Exclusive Economic Zone and harassing fishing boats to make their point. “Once it becomes clear, a few years or a decade hence, that the US cannot credibly defend Taiwan, China will be able to direct its naval energies beyond the first island chain in the Pacific to the second island chain (Guam) and in the opposite direction to the Indian Ocean,” wrote Robert Kaplan. (Personally, I think such arguments fail to understand the neuralgic significance of Taiwan in the Chinese psyche, especially since the Kuomintang set up their “white” base there. To see the island as a forward post for expansion is a leap of imagination.)

• Some would add that China’s sudden restriction of rare earth metal exports used in hi-tech industry shows the country’s true colours and unwillingness to abide by basic trading rules (though I would put this episode down to cock-up rather that conspiracy).

Against this, the “engagers” say such claims are all inflated, or fundamentally wrong:

• The US Defence Dept overstates the Chinese military budget at $150bn. The Military Expenditure Database of the Stockholm Peace Institute puts it at $100bn. China’s defence spending as a share of GDP has been constant, growing at 8pc in line with the economy.

• China’s nuclear submarines are a flop, supposedly so noisy they are “sitting ducks”. Its nuclear armed bomber fleet is obsolete. Its new stealth fighter won’t be operational for years. It has 186 nuclear warheads compared to 1550 deployed in the US.

• China is largely isolated in military terms. The US has allies of varying kinds in Japan, South Korea, Singapore, Malaysia, The Philippines, Indonesia, Thailand, India, and even now Vietnam.

• The country has made a big push to boost co-operative ties with neighbours through ASEAN. It has already settled 17 of its 23 territorial disputes in the region, largely on moderate terms.

• The prevailing view in the Chinese Communist Party is that the Soviet Union bankrupted itself with a ruinous arms race against the US.

• China has not used its estimated $2 trillion holdings of US debt as a lever of power (though it cannot do so without forcing up the yuan, since the reserves are the flip side of its mercantilist currency policy).

I might add that China has the most rapidly ageing society in the world. The one-child policy has created a nation of single sons, and families will not sacrifice them lightly for military adventures. Thrusting powers almost invariably emerge from a recent past of big families.

The country has no modern history of territorial aggrandisement (leaving aside the complex story of Tibet… under Chinese suzerainty for eight hundred years until China fell apart in the 19th Century, and the Brits later became entangled during the Great Game).

Professor Etzioni’s view is that the US and the West have plenty of time to pursue the “Beijing hedge”: to work from the assumption that the rise of China is largely benign and make all efforts to draw China into the global system as a full stakeholder. Only if that fails should the West then go back to the drawing board.

By treating China as an enemy, the hawks risk bringing it about. Such a policy reinforces the hardliners in the Chinese power struggle. It is self-fulfilling.

I have in the past invoked the mishandling of Wilhelmine Germany before World War One as warning of what can go wrong if the status quo powers (then Britain) play their hand badly. The containment policy fed the Kaiser’s encirclement paranoia.

There are certainly superficial parallels – China’s steel and industrial output have been exploding at the same rate as in Germany from 1880 to 1910 – but the more I think about it, the less useful it is. Germany was fast matching the UK in technology and per capita income, and was starting to challenge the Royal Navy in absolute terms.

But the comparison is unfair to China, anyway. The Kaiser intended to upset the European order. His general staff had drawn the Schlieffen Plan to attack France and Russia in minute detail – and did in fact activate the plan once Sarajevo provided the pretext (“the gift from Mars” as famously revealed in the general staff archives).

China remains poor, with a per capita income of just $7,000. It faces the classic “middle income trap” in a few years time when the low-hanging fruit of catch-up growth is exhausted. The country will soon have to make the switch from copying technology to cutting-edge invention, the challenge that has defeated so many economies over the years and made a mockery of so many extrapolation curves.

As the World Bank warns in its latest report (out Monday), China risks coming down to earth with a thud unless it breaks the state stranglehold on investment.

My own guess is that China will go through a nasty little hangover as it purges toxins from the great credit boom of the last five years, before settling down to more pedestrian growth rates. It will be a big economic power, but not so vast it upturns the whole global system. It risks becoming old before it is rich.

So I am broadly in the Etzioni camp, as are Barack Obama and David Cameron by and large. Those pushing for hardline containment are frankly dangerous, nourishing a paranoid streak in Chinese culture that is for now largely dormant.

Let us stick to appeasement, in the old-fashioned sense.

Please berate me if I am wrong, and posts from Chinese readers are welcome.

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