It is interesting to observe how public opinion can change in short order.
Twenty or so years ago China was viewed as an ideal market for American goods as it began an economic liberalization away from state-controlled communism toward a somewhat freer market system. The thought was that the purchasing power of its peasant population would rise with this economic liberalization.
Now China is viewed by many as an existential threat to our well-being.
What changed?
My Socratic discussion group took up this topic at our August monthly meeting. As in past months, we found that we disagreed on several points, but always collegially in tone and intentional in our resolution to find a common answer.
One of our disagreements was over the potential danger in the amount of U. S. debt held by China. One of our group pointed out that this debt is not held by the Chinese government but by wealthy Chinese individuals who see the U. S. economy as a safe harbor for their wealth. The assumption is that these investors will serve as a brake on China’s communist leadership’s antagonism. Let’s hope that this belief comes from realistic insight and not unrealistic optimism.
Related to the debt issue is the trade imbalance which heavily favors China. The net result of this ongoing imbalance is nearly a trillion American dollars in Chinese hands. On the plus side, this puts China under a constraint to protect the strength of its dollar holdings. Is it any wonder that so many of these dollars have found their way back to the States invested in American assets? Our group tended to think this was a good thing rather than a threat.
But we did have a few naysayers around the table. China’s saber rattling is unsettling. Its occupation of islands in the South China Sea is a direct provocation to its neighbors, many of which are American allies through SEATO, the Pacific version of NATO. Taiwan, a nation we are treaty-bound to protect, lives in constant dread of an invasion from the mainland. The belt and road initiative, an economic scheme to tie other nations to China through investment in trade infrastructure, has had an effect but it is becoming clear that China may have overextended itself financially.
Current Chinese leadership has put the nation on a rearward path back to the communism of Mao’s time. It can be argued that this has caused the economic slowdown and exacerbated China’s other domestic threats. It’s one child policy has led to serious depopulation, especially given that the one child allowed was supposed to be male. Fewer women, fewer births. It’s not just a declining population; Chinese people are fleeing the countryside for the cities in a mass migration that makes the U. S. southern border look like an orderly Boy Scout hike. As the economy slows, these migrants have problems finding jobs.
The economics can’t be denied. Chinese inflation is rising and its internal debt is twice its GDP, a higher percentage than in the U. S. Its growth rate has slowed, straining government revenues. The most recent Chinese budget reduced subsidies to local governments and restricted borrowing by these local and regional entities.
So far the economic situation, what about the military one?
China has invested heavily in modernizing its armed forces, particularly its navy with dreams of challenging American naval superiority in the western Pacific. Its problem is that these modern weapons are not battle tested and they are being deployed by inexperienced personnel. Does that mean China must resort to the attritional tactics of its past wars in the next one? The one thing China has in surplus is foot soldiers.
This thought brought our discussion back to the main question: Is China an existential threat to the United States? We concluded that the answer to that question lies within us rather than them. Can the United States demonstrate the resolve to prevent Chinese aggression against our allies and, by extension, us? Are we able to exert the national will to stand as the leader of the free world as we did in World War II and throughout the Cold War? Will the next president act like Churchill or Chamberlain?
The most depressing statement made by one of our group was to indict America as an unserious nation in a serious world.
The simple fact is that we can’t really be sure what Chinese leader Xi Jinping will do to address a weakened situation at home while pursuing an expansive posture in East Asia. And probably that is the way the Chinese want things — obscure and unpredictable to everyone else. Yet Xi has warned his lieutenants against an American “black swan” move, that is, one which is unpredictable and with dire consequences.
Maybe it is America that should be on alert for a Chinese black swan.
Mark Franke, M.B.A., an adjunct scholar of the Indiana Policy Review and its book reviewer, is formerly an associate vice-chancellor at Indiana University-Purdue University Fort Wayne. Send comments to [email protected].
