China, The Last Superpower

After two hundred years of global ascendancy, the West is in rapid relative decline to (re)emerging Asia, which is mounting a steady “Great Reconvergence”. Likewise, the legitimacy of today’s “neoliberal internationalist” order promoted by the West is being questioned by the more statist, neo-Westphalian visions of the leaders of the Rest, the so-called BRIC’s. This has already led to the emergence of a “world without the West” – a parallel international system based on the principles of state sovereignty, hard power, and bilateral trade relations.

The most powerful and influential member of this new world is China, which has become the “workshop of the world” since its graduated opening up from the late 1970’s. Accounting for half of global steel and cement production, China has built up an enormous infrastructure of roads, railways, and ports to support its mercantile expansion. In 2009 it became the world’s largest automobile market. Furthermore, China is now advancing higher up the ladder of added-value industries by expanding into hi-tech areas such as commercial aircraft, renewable energy, and supercomputers.

One of the most important factor making China’s rise all the more significant is that it is concurrent with the accelerating decline of Pax Americana that is spurred on by the end of cheap oil, US economic weakness, and regional threats to American hegemony from the “challenger Powers” (e.g. Russia, Iran, and China itself). Should the current international order suffer a “cascading collapse” – which is not unlikely, given the brittleness of the world financial and energy system – then it is possible that China will emerge as an equal, or even superior, pole to the US superpower as soon as 2020.

The Inevitability of China’s Return to Hegemony

Critics aver that ordinary Chinese remain much poorer than Americans, but they miss the obvious fact that with its 1.3bn+ population, China needs only a Romanian level of per capita economic output to equal the US; should they reach Portugal’s level, China’s economy would be double America’s size. (Economic power underpins military power). Nor is there any reason for supposing that China’s growth will soon falter due to social and regional inequality, environmental degradation, bad loans, population aging, or social unrest (though it may well experience a Malthusian collapse along with the rest of the world by 2050). For a refutation of the major concerns, see my old post A Long Wait at the Gate of Delusions, or in summary:

  1. Regional disparities. The sharp divide between the affluent coastal and poorer internal regions is not new in Chinese history. In the absence of firm central control, this has in the past led to fragmentation – coastal administrations orientating themselves to foreign commercial interests, the interior sinking beneath a morass of poverty and corruption. However, modern China is not the ailing China of the 19th century in the throes of Malthusian stagnation. It is now a proud and rising Great Power, its regional separatist movements are quelled, and it is under the firm control of the CCP. As such, the chances of a jaded Japan or declining USA successfully exploiting this divide are very slim.
  2. Income inequality. There is also a great deal of inequality between China’s urban and rural, between its new oligarchs and itinerant indigents, and between the privileged and non-privileged. However, this is entirely typical of capitalist societies at the height of the industrialization drive, and levels of inequality tend to fall once a more affluent state decides on expanding social welfare schemes to contain labor unrest. As will be covered in a later, related post on China’s internal debates, the ideological underpinnings for such a shift are already coming into place with the concept of the “Harmonious Society“.
  3. Environmental degradation. A major problem. An innovative attempt to start measuring economic performance with “Green GDP” (accounting for pollution costs) was quietly squashed when it indicated that China had almost no real growth. That said, localized pollution per se, like city smog or collapsed ecosystems, won’t bring about China’s fall just as they haven’t led to the fall of any other post-agrarian society. The same certainly cannot be said for anthropogenic climate change, whose effects will become devastating to China by the 2030’s (floods, droughts, desertification, dust storms, etc). The most ominous prospect is the melting of the Himalayan glaciers, though some point out that this may be a centuries-long process. Nonetheless, these potential disasters won’t come in time to prevent China’s assumption of its superpower mantle, which I predict for 2020.
  4. Bad loans. A valid point, but they only tend to result in – or more accurately, contribute to – long-term stagnation by the time high growth rates falters, such as when a developing society nears convergency with the rich world (e.g. Japan in the early 1990’s). South Korea got a severe economic shock in 1997 stemming from its structural weaknesses, but respectable rates of growth continued up until the 2008 economic crisis. Speaking of which, Western critics should be doubly cautious now when criticizing China for its bad loans. As recent history might have proven, investing in industrial overcapacity may be rather less useless than building suburbs with no future, printing money under euphemisms like quantitative easing, or whatever the latest bondoogles are.
  5. Will China get old before it gets rich? The concerns over aging are ridiculous because 1) China’s TFR is at a respectable 1.8 (OK, more like 1.6-1.7 if one accounts for their skewed sex ratios, but still…), 2) its labor force will continue growing until 2030, and 3) it still has massive labor armies locked up in the countryside which can be drawn into higher-added value economic sectors. The real problem cases in the aging department are Central Europe, the Mediterranean, and Japan. See Will China Grow Old Before Getting Rich? (Goldman Sachs) for a more comprehensive analysis which reaches the same basic conclusion.
  6. Excessive export dependency. Frankly, I’ve always thought the image of the heroic American consumer saving the world by kindly consuming much of what the the world produces to be somewhat ridiculous – and this image is already being revealed for the hallucination it really is, thanks largely to US fiscal profligacy, imperial overstretch and peak oil. But I digress. First, China’s export dependency is nowhere near as high as suggested by the official figures because much of its exports are merely assembled in China from parts made in and imported from Korea, Japan, etc. Whereas gross exports are near 40% of GDP, net exports are at just 7% of GDP. In 2008, China clocked up a respectable 8% GDP growth rate (albeit, one only enabled by prodigious credit infusions), even though its exports fell by 20%. Second, the main reason for Chimerica – Chinese saving / production – American dissaving / consumption – in the first place was it allowed China to acquire the foreign currency to pay for resource imports, build up its industrial base, and acquire advanced technologies, while the US got back cheaper goods to cushion its rising inequality and industrial stagnation. But China interest in this deal is flagging. It already has by far the world’s largest industrial base by volume and it has bought up, or stolen, most of the key technologies needed for advanced industrialism. From now on, growth will be slower as it is curbed by stagnant world demand, accumulating bad loans, diminishing returns, etc, – it will likely be around 5-7% a year in the 2010’s, rather than the 10% typical of the 1980’s to 2000’s. Nonetheless, growth should continue at a fast enough rate to soak up the new landless labor, ease social tensions and enable China to launch a geopolitical breakout. The inevitable transition from a centrally-weak, disbalanced and commercialized nation-state, to a more centralized, balanced, hegemonic empire will not be smooth, but China’s forward momentum is simply too large to derail its rise to superpower status.
  7. Social unrest. Unlikely to happen in a big way as long as fast economic growth continues, which it likely will for the next decade. China still has plenty of room for economic convergence, and its investments in human capital are going to be paying off handsomely in this period – “during the past decade, China has produced college and university graduates at a significantly faster pace than Korea and Japan did during their fastest-growing periods” (Goldman Sachs). Nor are resource or ecological limits to growth likely to intrude in the next ten years. Of course, this situation won’t last forever and by 2030 at the latest, China will be forced to radically reform its model to hold together, e.g. to nationalist expansionism or ecotechnic dictatorship.
  8. China’s monolithic and non-democratic nature. Though the CCP projects an image of internal unity on the world, under its placid exterior there is a flux of dynamic debates about how China should reconcile growth with environmentalism, capitalism with socialism, democracy with stability, and cultural influence with military strength. The necessity of liberal democracy for success is a figment of the Western end-of-history mentality, and will be recognized as such by the time the West realizes history doesn’t end.

In conclusion, China has the tools at its disposal to become the world’s last industrial superpower (the US and Japan are in relative decline, Russia has too few people, India is coming to the party too late). The creeping dissipation of the global financial system will remove the US from its position as the system’s intermediator, and with it will go a key pillar of neoliberal internationalism. This will clear the foundations for the emergence of a new symbiosis between the oil-exporting nations of the Middle East and a China which can provide them with cheap consumer goods and security guarantees in place of a deindustrialized, unpopular, and increasingly insular America. These trends will become the conventional wisdom by 2020.

China and the World: Coal, CO2, and Geopolitics

By that date, the age of scarcity industrialism will be in full bloom. Three issues will come to the forefront of all discussions about China’s global significance.

First, the impact of 1.3bn people enjoying rising levels of personal affluence on the global environment. Its electricity generation fueled almost entirely by coal, China has recently overtaken the US to become the world’s biggest CO2 emitter. Today, given the absence of any egalitarian, spiritual, or ultra-nationalist ideology keeping the country together, China requires rapid growth to prevent spiraling unemployment and social unrest. The CCP wants to remain in power, and for that it needs stability, and that needs growth, and that needs more and more coal plants every year. Hence the reason for China’s unwillingness to agree to any but the weakest CO2 emissions targets – i.e., a non-binding resolution to a 45% reduction in Co2 intensity per unit of GDP by 2020 from the levels of 2005. However, since China’s GDP is expected to treble or even quadruple from 2005 to 2020, its emissions will grow by 50-100% even if it achieves this non-binding target. Needless to say, this will be catastrophic for our efforts to contain climate change to a global temperature rise of below 2C, at which point runaway dynamics are expected to become predominant. As the last superpower, I expect China to take the lead in any global or national “final gambit” at geoengineering our way out of runaway climate change.

Second, China’s ability to generate industrial growth from its own resources is shrinking. It is already a major oil importer and its grain production is on a slowly dipping plateau, thanks to increasing urbanization and environmental damage (desertification, salination, depletion of fossil aquifers, etc). It is already restricting exports of the strategic Rare Earth Metals that constitute key components of hi-tech devices such as hard drives, wind turbines, and electric cars. This is a major problem for the world outside China, since China accounts for a stunning 95% of global REM production. It will take a decade to reopen the old mines, and in the interval the West could experience a severe “tech crunch”.

Since the bulk of Chinese electricity consumption comes from coal and its geo-economy is not structurally dependent on cheap oil on the same massive scale as the US, China will not be as hard hit by peak oil as the Anglo-Saxon world; besides, its manufacturing prowess and foreign currency reserves will allow it to outbid most competitors for the black gold. However, the downside to using coal is that it too will peak – in China’s case, perhaps within 10 to 15 years, after which it will go into a rapid decline. As such, China can be expected to “lock in” foreign energy supplies with long-term contracts, increase exploitation of unconventional fossil fuel sources such as coal seam gas, and accelerate its current attempts to force through a renewable transition. In 2009, China became the world’s largest producer of both wind turbines and PV panels; however, they have made nary a dent in its CO2 emissions, and are unlikely to do so any time soon. Coal is much cheaper and more importantly, provides the vital base load power that intermittent wind and solar flows cannot.

Third, China’s military power and neo-colonial influence is set to increase in the coming decades. After suppressing military spending from the late 1970’s to the early 2000’s in order to free up its energies for rapid economic growth, the People’s Liberation Army is now being paid back handsomely for its patience. A prescient quotation from the Economist in 1986, from the days when the magazine was still worth reading:

For China’s military men with the patience to see the economic reforms through, there is a payoff. If Mr. Deng’s plans for the economy as a whole are allowed to run their course, and the value of China’s output quadruples, as planned, between 1980 and 2000 (admittedly big ifs), then 10 to 15 years down the line the civilian economy should have picked up enough steam to haul the military sector along more rapidly. That is when China’s army, its neighbors and the big powers will really have something to think about.

That time is now. Defense spending is now rising faster than GDP, as China intensifies military modernization and acquires new capabilities in electronic, information, and anti-satellite warfare. The overall strategic balance has also changed. The dissolution of the Soviet Union meant that the old Chinese fear of a tank invasion from the north has dissipated; coupled with the growing importance of maritime trade and foreign energy supplies, this has produced a reorientation to coastal defense and broader power projection to the south and east. China’s most ambitious military project is its decision to embark on the construction of a real blue-water navy, a vital tool in the renewed “gunboat diplomacy” we are likely to see in the years ahead.

In the short term, this has extended to China acquiring Russian weapons such as four Sovremenny-class guided missile destroyers, twelve Kilo-class diesel-electric submarines, and advanced anti-ship missiles and supercavitating torpedoes such as the Sunburn, Sizzler, and Shkval. Domestic production of naval vessels is expanding rapidly: whereas US shipbuilding is withering away, China now accounts for a third of global shipbuilding and “is in the midst of a shipbuilding and acquisition craze that will result in the People’s Liberation Army Navy having more ships than the U.S. Navy sometime in the next decade”, including four aircraft carriers by 2020. China’s military modernization has already tipped the regional balance of power. A recent RAND study indicates that China is already be able to establish air superiority over Taiwan in the event of a hot war over the straits, and on current trends it will probably be able to conquer it outright within the decade.

In tandem with its military modernization, which is mostly geared to fighting and winning possible local wars in south-east Asia (Taiwan, Spratly Islands, Vietnam), China is pursuing a far-sighted “string of pearls” strategy of naval base construction on its outlying coastal islands and friendly nations such as Myanmar, Sri Lanka, Bangladesh, and Pakistan. They will host radar stations and anti-ship batteries, and will form logistics hubs for naval operations. The underlying strategy is to reinforce China’s coast against foreign encroachment and to protect its sea lines of communication (SLOC) – especially the vital energy routes supplying it with Middle East oil.

Finally, the broadest form of China’s projection of influence is its rush to buy out mines, arable land, oil field concessions, and foreign national elites, from Australia to Brazil to Ukraine to Angola; indeed, Africa is a focal point of interest, with up to half a million Chinese already working on building up the continent’s industrial infrastructure and tapping its energy and mineral wealth. Closer to home in South-East Asia, most nations are both appreciative and fearful of China’s rise, bandwagoning with the US on security while engaging with China economically. The fact of America’s accelerating decline means that this state of affairs is not permanent. Any future “downsized” US empire will have minimal interests in East Asia, and will concentrate its energies on the Americas, Africa, and perhaps the Middle East (though it will be largely displaced by Turkey and China there).

The second greatest East Asian Power, Japan, will have neither the will to mount a serious challenge to China’s emerging hegemony, nor the strategic foundations. Japan is almost entirely reliant on foreign supplies of energy, and as soon as the PLA Navy surpasses the Japan Maritime Self-Defense Force, it will be utterly eclipsed by China. Why struggle, when Japan can instead exist as in a comfortable symbiosis with a China whose post-1978 growth it actively nourished – spats over their wartime history to the contrary? Japan is capital-rich, China is labor-rich; both share Asian values based on paternalism, state capitalism, and national sovereignty… Japan has two choices. It can try to construct an encircling alliance encompassing Russia, Korea, India, and the US to contain China, but this is a truly ambitious undertaking because 1) Russia has – and by that point the US will have – no overriding reason to confront China, 2) the “pan-Asian” appeal of China, 3) Japan has territorial disputes with Russia, whereas Russia in turn has close if suspicious relations with China through the SCO, and 4) as argued by the late Samuel Huntington, Asian societies have a tendency to bandwagon with the leading regional power – now it’s the US, in the future it will be China. The other alternative, and I would argue the likelier and more natural one, is for Japan to acknowledge Chinese regional hegemony. Once Japan takes this plunge, every other nation in in the region will follow.


It is no exaggeration to say that whither goes China goes the world. It is already the world’s greatest industrial power, at least as measured by physical throughput, energy consumption, and pollution emissions. Though still technologically backward, it is much less so than 10 years ago. China’s purchases of foreign technology, copying, and industrial espionage are rapidly closing the gap, and China’s rapidly expanding R&D workforce will be able to successfully hit the ground running once there arises the need for indigenous innovation.

The extent to which China will be able to solve its energy, minerals, food, and water problems will have major impacts domestic and international, and its success or lack of at reducing – or mitigating – its greenhouse gas emissions, is probably going to determine whether the world as a whole will be able to wriggle out of its Limits to Growth predicament. Finally, China’s cultural, economic, and neo-colonial influence is going to metastasize – in the process transforming it into an East Asian regional hegemon and primary pole in world geopolitics.

China’s greatest challenges lie in geopolitics (how to manage its own rise?), coal (how to power growth?), and CO2 (how to grow, or just stay still, sustainably?). The answers to these questions will determine its future political, social, and economic trajectory. It is therefore vital to to find out how its elites are planning to stand up to this panoply of perils and opportunities, which will be the subject of my next post on China.

Anatoly Karlin is a transhumanist interested in psychometrics, life extension, UBI, crypto/network states, X risks, and ushering in the Biosingularity.


Inventor of Idiot’s Limbo, the Katechon Hypothesis, and Elite Human Capital.


Apart from writing booksreviewstravel writing, and sundry blogging, I Tweet at @powerfultakes and run a Substack newsletter.


  1. Social unrest. Unlikely to happen in a big way as long as fast economic growth continues, which it likely will for the next decade. China still has plenty of room for economic convergence, and its investments in human capital are going to be paying off handsomely in this period – “during the past decade, China has produced college and university graduates at a significantly faster pace than Korea and Japan did during their fastest-growing periods” (Goldman Sachs).

    This is quite optimistic since it is China’s urban centered rapid economic growth that has caused much of its rural social unrest. (Oh, the dialectic!) I also seriously doubt that China is going to create enough college graduates to augment social unrest, especially considering most of the unrest is coming from the “college graduate” class, but from the mostly peasant-migrant worker countryside.

    On another note, you might be interested in this:


    Have you checked out Giovanni Arrighi’s Adam Smith in Beijing? You also might want to look at the New Left Review, which has been doing a lot of stuff on China. Like, for example, Ho-fung Hung, “America’s Head Servant?” (, which does some comparison with South Korea and Japan. If you can’t access this article, and want it, email me and I’ll send it.

    • Sorry, I didn’t express myself clearly enough. My comment about China’s rapid progress in education was meant as support for the notion that its rapid growth will continue for another decade or so, because high levels of human capital allow much easier assimilation of industrial-technological “best practice” (Education as the Elixir of Growth), and hence convergence to the “leader” nations can proceed rapidly. That rapid growth in turn will prevent social unrest from spiraling out of hand.

      I agree with you that China’s problem is basically the “sans-culottes problem” – the 100mn migrant-workers with next-to-no labor rights. This is certainly an inherent structural weakness of China’s model, but it only becomes a real problem (i.e. a political one) when growth dips below the c.6-8% needed to maintain the Chinese industrial labor force at decent levels of employment. If growth falls below that figure, unemployment rises and the sans-culottes are the first to take the hit, fomenting instability and bringing a host of other grievances to the table. This ties in with one of my basic points, which is that China is essentially a speeding airplane: it is unlikely to stall barring some freak sequence of events, but likewise if it does stall, it will start plummeting out of the sky. China’s social welfare and safety net are the landing gear, but they’ve been neglected since the 1970’s; reconstructing them anew is an urgent priority, and the CCP seems to have realized this.


      Thanks for the articles. I really like the first – elegantly written, lots of insights. “Ornamentally Confucian and functionally Legalist” – beautiful. In particular:

      Yet we also need to be aware that ‘the Chinese regard themselves as superior to the rest of the human race,’ inheriting a Middle Kingdom mentality that has always been more or less racist, and traditions of tributary statecraft that may have been conducive to stability, but were always based on hierarchy and inequality… The book, in other words, disowns its own title, confected purely to increase sales.

      Totally agreed. China pays lip-service to “multilateralism”, “soft power”, etc, as long as it perceives itself to be a nation-state suborned to Pax Americana. As it dissolves and China becomes ascendant, I think it will not feel any urge urge to believe in something it never really did. Then, it will revert to being a nation-civilization, something along the lines of what it could have become if Cheng Ho’s expeditions hadn’t been stopped and Ming China had constructed a global empire.

      Liked the reviews of the second and third books too. “Dereliction in the rustbelt, super-exploitation in the sunbelt: the treatment of labour is pitiless in either zone.”… but not totally so, in order to forestall unrest. Good point.

      I’m not convinced by the second article, which granted I’ve only skimmed through. It buys too much into the myth of China’s export dependency (the likes of Japan, Taiwan, and Korea are actually worse off in this regard), I think the urban-rural divide has accelerated China’s industrialization even at the cost of social tensions (by squeezing surplus from the peasantry to make more resources available for industrialization), and I certainly don’t subscribe to their take that elements of the Chinese state have been subverted by narrow coastal interests beholden to the US which is their explanation for said urban-rural skew (the more rapid development enabled by such a skew is a more plausible explanation).

  2. PS. One more interesting tidbit: China’s hawks demand cold war on the US. A cold war with China is certainly not something ailing Pax Americana needs at this late juncture. Also, in particular:

    “… And a PLA strategist, Colonel Meng Xianging, said China would “qualitatively upgrade” its military over the next 10 years to force a showdown “when we’re strong enough for a hand-to-hand fight with the US”.

    The 10-year figure is interesting since it tallies with my own estimates for when China will attain regional superiority over the US military (probably by then the PLAN will be bigger than the USN, China will have 5th-gen fighters coming online, and will be much more advanced than in 2010 overall).

  3. If the positions expressed by AK, Anderson, and Martin Jacques are well-founded, then I am interested in how this “Chinese future” will play out in practical terms. From Anderson’s article:

    “The soft power of its sporting prowess, its martial arts, its costly painters, its multitudinous language, its ancient medicine, and not least the delights of its cuisine, will spread China’s radiance far and wide”

    My direct knowledge of Chinese culture is pretty much limited to food, Hong Kong gangster flicks, and a dubious translation of the “Tao Te Ching,” so nothing I say should be taken seriously; however, I think some questions are worth asking. To what extent is Chinese culture exportable beyond a superficial level? Do they even consider it something that should be shared with foreigners, or are they possessive of it a la the Japanese? Do Karlin, Anderson, and Jacques really think that we Westerners will all be reading Chinese books and implementing Chinese ideas in our daily lives?

    Let’s bear in mind that even when China was a dirt poor isolated Maoist state, the food and the martial arts were just as popular as they are now.

    On another note, Martin Jacques has been peddling “Sinomania” for years in the Guardian and other venues. As Anderson notes, he is a onetime Communist and tends to get seduced by concepts of historical inevitability. For this reason alone I am tempted to be skeptical of his claims.

    (sorry if this post is kind of rambling; I’m just thinking out loud)

    • Perry Andersen is, IMO, pretty much spot-on in his important point that civilizational values are… civilization-specific, and hence much less exportable than ideologies.

      Alas, there is a logical difficulty in this wistful hope, which is insuperable. Alternative modernities, so conceived, are cultural, not structural: they differentiate not social systems, but sets of values – typically, a distinctive combination of morality and sensibility, making up a certain national ‘style’ of life. But just because this is what is most specific to any given culture, it is typically what is least transferable to any other – that is, impossible to universalise… Moreover, projections of a Chinese modernity that will eventually become hegemonic not only forget the inherently self-limiting character of any strongly defined national culture, they further ignore the especially intense Chinese insistence, familiar to anyone who has been in the country, on the uniqueness of China.

      I don’t see Chinese culture becoming anywhere near as “universalized” as Western, except to the extent that foreigners will find it prudent to learn more about its language and culture to function better in a world where it is fast becoming the predominant Power. (Like myself, in fact – I hope to take a intensified Chinese language summer session next year).

      Re-the critique from Sinomania… well, even a broken clock is right twice a day. I believe we’re in such a time now. 😉

  4. Just a thought: it would be interesting to do a comparative study of China’s relations with its extensive diaspora and Russia’s relations with its own extensive diaspora. Which country gets more value from its diaspora? Gotta be China, right?

    • You’re correct, certainly China.
      I am not sure that the Russian diaspora even has a positive net worth to Russia.

  5. A few thoughts-

    *I suggest you read Matshiro Matsuma’s Brookings Institute report, “The Japanese State Identity as a Grand Strategic Imperative.” It contains some useful insights as to how the Japanese strategic machinery works, particularly when it comes to balancing.

    *Huntington’s argument concerning Asian bandwagoning is bogus, IMHO. There is no reason to use cultural arguments when standard IR ones work just as well — when is the last time Asia actually had two great powers at one time? The region bandwagons because the history of East Asia is a history of a giant walking midst several dozen midgets.

    *But lets say Japan plays this game and jumps into China’s lap, and all of East Asia follows the Japs in. End of story? I doubt so. You forget of the Elephant in the room – India. I seriously doubt India takes Chinese appeals of Pan-Asian unity very seriously. India’s absence from you strategic equation is thus disconcerting. Do you think they will play no role in the region when year 2010 rolls around?

    *Another suggested reading is a piece from another well written blog, China Financial Markets. Money quote:

    China’s foreign reserves are certainly huge. They add up to an amount equal to about 5-6 % of global gross domestic product.

    But they are not unprecedented. Twice before in history a country has, under similar circumstances, run up foreign reserves of the same magnitude.

    The first time occurred in the late 1920s when, after a decade of record-beating trade and capital account surpluses, the United States had accumulated what John Maynard Keynes worriedly described as “all the bullion in the world”. At the time, total reserves accumulated by the US were more than 5-6% of global GDP. My back-of-the-envelope calculations suggest that this was probably the greatest hoard of central bank reserves ever accumulated as a share of global GDP, but please check before you accept this claim.

    The second time occurred in the late 1980s, when it was Japan’s turn to combine huge trade surpluses, along with more moderate surpluses on the capital account, to accumulate a stockpile of foreign reserves only a little less than the equivalent of 5-6% of global GDP. By the late 1980s, Japan’s accumulation of reserves drew the sort of same breathless description – much of it incorrect, of course – that China’s does today.

    Needless to say, and in sharp rebuttal to Friedman, both previous cases turned out badly for long investors and brilliantly for anyone dumb enough to have gone short.

    *I would not get too cocky talking ’bout Chinese military superiority. I suspect that they will rapidly construct a military force able to rival anything produced in the 20th century. Problem is, the 20th century is over. Aircraft carriers are the Bismark of the 21rst Century — there is little evidence that a modern war would not blow them out of the water. (See here for my reasoning) In fact, since you concern yourself with futuristics, put that blog on your reading list.) So what happens if China commits itself to a naval regime that works in the now but doesn’t do **** in 2020?

    *Another aspect left relatively untouched – you talk of China’s efforts to secure supplies for its growing energy needs — how about its food needs? Most Chinese, the ones below the Romanian level, eat 3 meals of rice a day. What happens when they reach the Portugal level, and start eating beef? Combine this sharp increase in demand for food with the predicted collapse of the neoliberal order and the existing crisis in land use, and the CCP is left with a horrendous crisis on its hands.

    *Final note- The internal dynamics of the CCP deserve a shout out. If China is going to have instability, it will be on this front. The Chinese don’t like to show it, but their upper ranks are divided. Some want, as you mentioned in an earlier comment, a new cold war. Others see that as paramount to disaster. What happens when these folk clash?

    • Thanks for the comment – always good to get a comprehensive, well-argued critique.

      Re-India’s role. I suggested that an alliance between Japan, India, Korea, and perhaps Russian, would be enough to block China from reaching regional hegemony. Attempts to form such a grouping will probably take place, they already are on some level, and the prospect is discomforting to China. But will it succeed, or are the interests of these nations simply too divergent and better served by cooperating with China?

      Re-military modernization. First, yes I’ve heard about the waning of the aircraft carrier (War Nerd, David Crane, etc). However, there are two major caveats. First, along with amphibious forces, they will still remain an unparalleled tool of power projection, highly effective against all countries that can’t effectively do naval area denial (still the majority). Second, ship defenses are improving rapidly. While the current carrier group’s AEGIS system can be saturated and kills achieved given enough firepower, as the critics say, this will be much harder to do once naval DEW’s and railguns start coming online by the 2020’s. Second, and more generally, the “China being left behind” theory assumes that military technology 1) gets locked in at a certain point in time in China by 2020 – say, at the US level of 2005, while 2) military innovation accelerates in the US. I don’t see either as being very likely.

      Re-food. I kind of marginally touched on it with my comments about grain production being on a plateau, its acquisition of foreign arable land, its growing food imports. I think that in a world facing declining food per capita, China will not be particularly badly-off, even taking into account its agricultural problems, because it has the trade surpluses (people want its goods) and political foresight (buying up on foreign farmland) to outsource the food production elsewhere.

      Re-internal divisions. As I understand, the CCP is riven by different factions: New Right and New Left, internationalists and “neo-comms”, etc (going from Mark Leonard’s book What Does China Think?), but as far as I can see and as you yourself note, they all have a shared interest in keeping their squabbles under the carpet. But such elite divisions are the rule almost everywhere, so I don’t see why we should be overly concerned about any “clash”.

      I won’t dispute your remark re-Huntington that Asian bandwagoning may just be the result of the “a history of a giant walking midst several dozen midgets”; certainly Huntington’s theory has drawn quite a lot of flak over the years, so perhaps there really is nothing particularly Asian about bandwagoning. Though of course the implications of China reassuming its mantle as a “giant” would be obvious.

      I’ll try to comment on Japan and reserves later once I’ve read your links. An immediate response one could make to the quoted text re-foreign reserves is that late 1920’s USA and late 1980’s Japan were both already highly-developed nations, whereas China still has plenty of room for convergence-derived economic growth by further productivity improvements and unlocking of its consumer potential. Given this fundamental difference, I don’t think there’s any real grounds for expecting a Chinese Great Depression or even “lost decade”.

    • I agree that Huntington reflects racism and not observation.
      Traditionally, Japan has been the independent neighbour of China with good or bad relations, but it was too populous and too much island to be a dependency like Korea or Vietnam. Current support for China might be one way to get rid of the American grip on Japanese affairs. The result might be rather something like the special relationship between Britain and the USA. Or more ironic, a real Coprosperity Sphere.
      Concerning the navy and aircraft carriers, I think, there are some errors which are constantly made. Supercarriers are large, but 3dimensional objects, so compared to the capabilities they contain, they have little surface to defend. However, they might be spotted more easily. That’s the big question can the supercarrier defend himself against a full blown assault after detection or not? I don’t know and war will show, I mean, heck there are still lots of navies with biggunships around and some officers arguing for them in the US navy. Still, some things about the future seem clear, you need sea control to maintain a naval supply with ressources (most of world trade is naval) and you need triphibic abilities to hit your enemy on land. The USA has more ships and more squadrons suited to these tasks than super-duper-carriers. So they have the essential abilities and the big carriers are very suitable to support these small squadrons with overwhelming long range force as a backup. This means the big fish stay quite far out at sea and if you look at the LC idea there are small carriers envisioned to operate close to shore where enemy detection and missiles are far more threatening. I don’t want to say that small carriers with guided missile cruisers aren’t possibly the more cost effective solution to naval warfare. Rather that a weapon seems bad is due to employment. The often quoted battleships in WWII and later would have done a lot better with friendly aircraft over their heads and the problem is here like everywhere an unbalanced employment of ressources under disadvantagous conditions.
      Sure, China tries to secure themselves ressources and these will be especially endangered the moment they start military aggression against the US or threaten the supply of nations that have lots of experience with installing friendly regimes.
      The often mentioned peak oil and the resulting economic catastrophe due to lack of fuel and global warming, well, China seems to be of the opinion that they can handle it and it is more advantegous to steer straight into the storm.
      A clash within the CCP is possibly the most threatening scenario and one way out of such conflicts has traditionally been war, hot war.

  6. Maybe of interest – a highly detailed, skeptical review of Martin Jacques’ book:

  7. Sinotibetan says

    Read your interesting post. I am Chinese but unfortunately(or fortunately?) part of the diaspora in South East Asia rather than China. Will share my thoughts about China and Chinese psyche/culture in the future. Not today…I’m in a rush 😉


  8. As a new reader here since it was posted 4 years ago, I would say AK’s analysis is remarkably rational and correct!
    As a Chinese, I am shocked that AK has rather deep understanding about China.
    Personally, I’d like to see more articles posted in 2014 about China and the world.