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Thread: China's Emergence as a Superpower (till 2014)

  1. #361
    Council Member carl's Avatar
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    Mr. Jones:

    Yes, things would be very different for the Taiwanese. They probably wouldn't like it much.

    This is just a general observation, intellect without resolve, backbone if you will, only results in a failure, but one that can be rationalized very creatively.

    Now near as I can judge, your answer to my question: "...if the Red Chinese tried to take Taiwan by force, we allow them to do so and abandon the Taiwanese. Is that your position?" is, yes we should abandon them.

    Also your answer to my second question: "I take it to mean we should find out what Red China wants and give it to them. Is that correct?" has not yet been tendered. What is it?

    I have another question, if it came to it, what countries would you defend in the face of Red Chinese aggression? This is only if it came to it. You are ready to give up the Taiwanese, how about the Japanese, or the Philippines or even New Zealand, where would you draw the line?

    Oh, I just thought of another question. Does the Korean War fit into the "wow, that sucked" box?
    "We fight, get beat, rise, and fight again." Gen. Nathanael Greene

  2. #362
    Council Member carl's Avatar
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    Quote Originally Posted by AmericanPride View Post
    carl: My use of 1956 Suez Crisis is not to illustrate the military impotence of a declining imperial power. Instead, its important to acknowledge that the event (1) demonstrated British acknowledgement of its own decline and (2) illustrated the role of economic and political power in undermining military capabilities. I do not think a Taiwan conflict will see the direct engagement of US and PRC forces. Rather, the Chinese would likely deter direct US participation through economic leverage. This would mark the start of a new dynamic in international security as well as demonstrate the utter uselessness of US military power and investments.

    Alternatively, Japan's defeat of Russia in 1905 might prove to be another useful analogy in demonstrating how imperial hubris leads to total shock and failure. But, as I said, I believe direct US/PRC conflict to be very unlikely.
    The economic power and political power that removed the British and French from the Suez was American. We told them to go home and they did. I don't see how that can apply to the thing we are talking about.

    I don't think direct conflict between us and the Red Chinese is probable but I don't consider it very unlikely. How would they deter us from defending the Taiwanese if we so chose except by military force? They could refuse to buy bonds and we could counter by refusing to pay them back. In that case they would get hurt as much or even more.

    Unless human nature has changed there will never be a time when military power is utterly useless. If there were a conflict over Taiwan, what would stop them would be military power and what would stop us is the same.

    The Russo-Japanese War is a better example of how a really lousy navy is smashed by a good one. The prime lesson I believe is have a good navy rather than a lousy one.

    I rather hope all this won't ever come about. Taiwan and the mainland are pretty closely tied economically and as long as everybody is happy with the polite fiction there is no reason to fight. I worry though that all those ships the Reds are building means somebody isn't happy with the polite fiction.
    "We fight, get beat, rise, and fight again." Gen. Nathanael Greene

  3. #363
    Council Member Dayuhan's Avatar
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    Quote Originally Posted by Bob's World View Post
    Control is hard to relinquish, but at a certain point many issues long managed through control are better managed by a transition to influence.
    What exactly do we control? How do you relinquish something you haven't got?

    Quote Originally Posted by carl View Post
    If Taiwan were lost it would be a serious naval defeat. Preventing Red China from taking the island means keeping control of the Taiwan Strait and that is a naval task.
    Control of the strait is not exactly a navy vs navy issue... the US Navy's problem in that area is proximity to the mainland and land-based missiles and aircraft. For that reason, the US response to an imminent invasion - it's not like the preparations could be kept secret - would likely involve interdiction on inbound shipping (oil and other raw materials) and outbound shipping (manufactured goods bound for Europe, Africa, and the Middle East) in the Indian Ocean.

    I personally think such an invasion is so unlikely that discussing it is largely a hypothetical exercise... look at China's minimal military sealift capacity. Do you think anyone would seriously want to mount an amphibious invasion on the scale of the Normandy landings in the age of satellite surveillance and guided missiles?

    If the Chinese economy crashes (a real possibility), leading to major turmoil and the rise of a militarist government, then it's a possibility. Other than that, not likely.

    Quote Originally Posted by AmericanPride View Post
    I do not think a Taiwan conflict will see the direct engagement of US and PRC forces. Rather, the Chinese would likely deter direct US participation through economic leverage.
    What economic leverage would that be? Economic leverage is a major factor deterring such an invasion.
    “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”

    H.L. Mencken

  4. #364
    Council Member AmericanPride's Avatar
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    Quote Originally Posted by car
    The economic power and political power that removed the British and French from the Suez was American. We told them to go home and they did.
    That's the point. The US (and the other NATO allies) did not fire a shot. Yet they managed to repel a combined British, French, and Israeli invasion of Egypt. It marked very clearly the end of European adventurism in the Middle East. And it was the Europeans that were the last to find out that the game was over.

    Quote Originally Posted by carl
    How would they deter us from defending the Taiwanese if we so chose except by military force? They could refuse to buy bonds and we could counter by refusing to pay them back. In that case they would get hurt as much or even more.
    As China's economy continues to develop and modernize, its dependence on the US market lessens. The US is significantly more vulnerable and sensitive to economic shocks than China. A combination of economic threats, precision cyber attacks targeting US communications, and sea and space denial weapons could neutralize any credible US response. I do not anticipate a PRC-initiated confrontation, at least not for many more years.

    Quote Originally Posted by carl
    Unless human nature has changed there will never be a time when military power is utterly useless.
    Inability to achieve one's desired political outcomes = useless. The current US capabilities and force structure is not suited for a wide range of future threat scenarios; PRC/Taiwan included.

    Quote Originally Posted by carl
    The Russo-Japanese War is a better example of how a really lousy navy is smashed by a good one.
    It's also a great example of how misappropriated military power and imperial hubris leads to disaster. The US cannot credibly defend Taiwan from the PRC. This is the mark of America's relative decline in its ability to effectively project power. The US needs to retool its naval and air forces, enhance the security of its networks, and develop protections for its soft infrastructure.
    When I am weaker than you, I ask you for freedom because that is according to your principles; when I am stronger than you, I take away your freedom because that is according to my principles. - Louis Veuillot

  5. #365
    Council Member AmericanPride's Avatar
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    Quote Originally Posted by dayuhan
    What economic leverage would that be? Economic leverage is a major factor deterring such an invasion.
    As China's economy modernizes, the economic leverage will continue to gradually shift in its favor. Time is on the side of the PRC. I do not think the PRC will initiate any confrontation. Most likely, economic integration will eventually lead to political capitulation on the part of the ROC. Or, the PRC may find some provocation in a world of economic turmoil to exploit.
    When I am weaker than you, I ask you for freedom because that is according to your principles; when I am stronger than you, I take away your freedom because that is according to my principles. - Louis Veuillot

  6. #366
    Council Member carl's Avatar
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    Dayuhan:

    I can't disagree with much of what you say. When I said naval, I meant in the full sense of the word to include land based forces affecting control of a body of water etc., not just ship vs. ship. It would involve all kinds of things, including my favorite, naval mine warfare.
    "We fight, get beat, rise, and fight again." Gen. Nathanael Greene

  7. #367
    Council Member carl's Avatar
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    Suez involved one ally telling some other allies that they couldn't do something. I don't see how it fits at all. If, God forbid, the Red Chinese and us had a confrontation, it would not be an a disagreement between allies, but one between enemies. That is an entirely different matter.

    Quote Originally Posted by AmericanPride View Post
    As China's economy continues to develop and modernize, its dependence on the US market lessens. The US is significantly more vulnerable and sensitive to economic shocks than China. A combination of economic threats, precision cyber attacks targeting US communications, and sea and space denial weapons could neutralize any credible US response. I do not anticipate a PRC-initiated confrontation, at least not for many more years.
    Why is the US more vulnerable to economic shocks than Red China? If Red China made economic threats that might result in a trade war. That would be bad for everybody but especially for an export type economy like Red China's. They would really get hurt.

    Cyber attacks, sea and space attacks would be acts of war. Then the fight would be on. Maybe those things would neutralize US response, maybe not. The thing is a two way street. Maybe all the sluice gates for the Three Rivers Dam would malfunction.

    Quote Originally Posted by AmericanPride View Post
    Inability to achieve one's desired political outcomes = useless. The current US capabilities and force structure is not suited for a wide range of future threat scenarios; PRC/Taiwan included.
    If you can't achieve your goals, you failed. That doesn't mean the tools you used were useless, they were useful, but you lost. Perhaps they kept you from losing worse. The current US capabilities relatively speaking are pretty darn great right now, more than enough to deter any Red Chinese adventures. But even if they were not, they are not fixed forever.

    Quote Originally Posted by AmericanPride View Post
    It's also a great example of how misappropriated military power and imperial hubris leads to disaster. The US cannot credibly defend Taiwan from the PRC. This is the mark of America's relative decline in its ability to effectively project power. The US needs to retool its naval and air forces, enhance the security of its networks, and develop protections for its soft infrastructure.
    We'll have to disagree on that. I think one of the main reasons the Russkis lost was a plain old fashioned Russian type lousy navy. Hubris, yea maybe, in the sense that they may have let race affect their ability to judge military capability. I don't think we would be affected so much by that. We fought them once in Korea and found out they knew what to do; besides many of our people seem to think they are 10 feet tall now.

    I think the US can credibly defend Taiwan. I think you are wrong when you say we cannot. If you are wrong your premise is gone and there is not a mark of anything.
    "We fight, get beat, rise, and fight again." Gen. Nathanael Greene

  8. #368
    Council Member Dayuhan's Avatar
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    Quote Originally Posted by AmericanPride View Post
    As China's economy continues to develop and modernize, its dependence on the US market lessens. The US is significantly more vulnerable and sensitive to economic shocks than China. A combination of economic threats, precision cyber attacks targeting US communications, and sea and space denial weapons could neutralize any credible US response. I do not anticipate a PRC-initiated confrontation, at least not for many more years.

    It's also a great example of how misappropriated military power and imperial hubris leads to disaster. The US cannot credibly defend Taiwan from the PRC. This is the mark of America's relative decline in its ability to effectively project power. The US needs to retool its naval and air forces, enhance the security of its networks, and develop protections for its soft infrastructure.
    Quote Originally Posted by AmericanPride View Post
    As China's economy modernizes, the economic leverage will continue to gradually shift in its favor. Time is on the side of the PRC.
    Why would economic leverage shift in China's favor? China is not the economic juggernaut it's portrayed as being; they have deep and severe domestic problems. I don't see how time is on the side of the PRC at all; quite the opposite. They're having their economic moment in the sun; they are not managing it particularly well and the chickens will come home to roost. What "economic" threat" can the PRC bring to bear on the US that will not have as great or greater adverse impact on them? The more China modernizes and the more they integrate with the global economy, the higher the cost of a potential dis-integrating action becomes.

    All the Taiwanese and allies need to do to defend themselves is to make the cost of aggression higher than the PRC would want to bear. Those costs are potentially very high, from both a military and an economic perspective.

    Certainly the PRC could rain missiles on Taiwan until the Taiwanese surrender (if they do). They would then have to face the possibility of oil imports and merchandise exports being cut off. The risk and potential complications of an actual physical invasion would be extremely high.
    “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”

    H.L. Mencken

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    An Indian fox for the Chinese dragon

    National Security Advisor Shiv Shankar Menon has been surprising and shocking the Chinese by refusing to be bullied.

    Menon speaks Mandarin Chinese fluently but he negotiates with Beijing in English.......

    He is a sharp and complex individual who even the Chinese find it difficult to fathom. Since the day he took over as NSA from MK Narayanan in January, the India-China bilateral equation has undergone a perceptible change......

    The fact is all NSAs, from Mishra, to JN Dixit, or to Narayanan, kept talking about drawing a boundary line between India and Tibet Autonomous Region of China. It is not that Menon is not interested in settling the border issue, but he and the UPA government have made it clear that they are not overtly eager if Chinese are not interested......

    The previous NSAs were interested in maintaining status quo on the border dispute and they thought that fending off Beijing’s claim over Arunachal Pradesh was an achievement. Menon is made of different stuff. He turned the tables on China by asking Beijing to return Indian land lost in the 1962 war if it wanted to settle the border issue. ....

    India last year cancelled an unprecedented 30,000 business visas issued during Nirupama Rao’s tenure as ambassador to China. New Delhi then raised the issue of China granting stapled visas to Kashmir and Arunachal Pradesh residents though Beijing had being doing so since 2008-2009. Beijing was flummoxed again when New Delhi suspended defence dialogue after China refused to give a visa to Lt General B S Jaswal, who was then Northern Army Commander, for a bilateral visit on the grounds that he was serving in Kashmir.....

    India resumed the defence dialogue only after a Major General level officer serving in Kashmir was permitted to go to Beijing this year and China stopped issuing stapled visas. The next point of friction was India’s ONGC tying up with the Vietnamese to explore hydrocarbons in South China Sea, which China has claims comes under its sovereignty. China vehemently objected to Indian presence in South China Sea, but New Delhi quietly responded by saying that it was going as per international laws. The latest and strongest Indian move was India’s cancellation of the SR dialogue last November. China wanted New Delhi to cancel a Buddhist Conference, which was to be addressed by Dalai Lama, during the same period but India refused to bend. It is evident from all these events that New Delhi has decided not to diplomatically molly coddle the Chinese any longer but are prepared to deal with them on the same plane.

    More at:

    http://blogs.hindustantimes.com/insi...hinese-dragon/
    The latest trend in the India China equation that impacts the Region.

  10. #370
    Council Member AmericanPride's Avatar
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    Quote Originally Posted by carl
    Suez involved one ally telling some other allies that they couldn't do something. I don't see how it fits at all. If, God forbid, the Red Chinese and us had a confrontation, it would not be an a disagreement between allies, but one between enemies. That is an entirely different matter.
    As I have previously stated, that is not the part of the analogy on which I am focused. Feel free to address the aspects of the analogy that I have claimed to be relevant.

    Quote Originally Posted by carl
    Why is the US more vulnerable to economic shocks than Red China? If Red China made economic threats that might result in a trade war. That would be bad for everybody but especially for an export type economy like Red China's. They would really get hurt.
    Quote Originally Posted by Dayuhan
    Why would economic leverage shift in China's favor? China is not the economic juggernaut it's portrayed as being; they have deep and severe domestic problems. I don't see how time is on the side of the PRC at all; quite the opposite. They're having their economic moment in the sun; they are not managing it particularly well and the chickens will come home to roost.
    China's economy will not forever be a export-oriented economy. With a huge population, it has long-term advantage in market potential, labor resources and costs, as well as general advantages in market stability, governance, and planning. The urbanization of China and capitalization on investments and trade returns will produce a post-industrial economy not unlike that of the United States that but co-exists simultaneously with China's industrial economy, given the expansiveness of the country's market. China is vulnerable to a trade war in the near-term, which is one reason why I have repeatedly stated that the PRC will not initiate a confrontation in the near future.

    Quote Originally Posted by carl
    If you can't achieve your goals, you failed. That doesn't mean the tools you used were useless, they were useful, but you lost.
    There is no substitute for victory. If you lost, your resources and strategies were useless for the given scenario.

    Quote Originally Posted by dayuhan
    All the Taiwanese and allies need to do to defend themselves is to make the cost of aggression higher than the PRC would want to bear.
    The ROC is incapable of doing that in the long-term.

    Quote Originally Posted by dayuhan
    The more China modernizes and the more they integrate with the global economy, the higher the cost of a potential dis-integrating action becomes.
    That assumes of course that the international community would actually protest in an meaningful manner a PRC annexation of Taiwan. As I said previously, I think the most likely outcome will be continued economic integration that will lead to the political compromise and eventual capitulation of the ROC. At some point, this process may be disrupted by nationalist protest or defiance, which may or may not spark military confrontation.

    Quote Originally Posted by dayuhan
    It might approach accuracy to say that while the US is not an empire by any accepted or reasonably arguable definition of empire, the perception of imperial presence and design is widespread and does affect people's decisions and actions, and therefore must be taken into account. Since that perception will prevail no matter what the US says or does, there's little point in trying to reverse it, but its impact on reactions and decisions must be taken into account in planning.
    The US is not an empire. It is the only the richest, most powerful subject in a universal financial empire interconnected through a web of powerful individuals, families, and corporations (specifically banks and financial institutions). What has occurred is a de-territorialization of 'empire' through a deconstruction of controls and accountability of financial transactions. Finance capitalism has experienced runaway growth since the 1970s and has outpaced every other economic sector around the world. Consequently, it has an undue and overwhelming influence on policies, politics, and security. In the US in particular, it has resulted in the largest transfer of wealth in the history of mankind, and not by force of arms, but by the weight of the law and companies "too big to fail". But the US public pays for it through income taxes (due to the collapse of tax revenues in capital gains and corporate taxes), the elimination or privatization of social services under the guise of efficiency and arbitrary minimal government, and the appropriation of private and public property. This not only has compromised the integrity of the political system, but also guts the capabilities of a defense economy already cumbersome by its own inefficiencies.
    When I am weaker than you, I ask you for freedom because that is according to your principles; when I am stronger than you, I take away your freedom because that is according to my principles. - Louis Veuillot

  11. #371
    Council Member carl's Avatar
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    Quote Originally Posted by AmericanPride View Post
    As I have previously stated, that is not the part of the analogy on which I am focused. Feel free to address the aspects of the analogy that I have claimed to be relevant.
    I would address it if I could figure out what it was. That is the trouble with historical analogies, everybody gets confused about what they mean and how they apply, especially me.

    Quote Originally Posted by AmericanPride View Post
    China's economy will not forever be a export-oriented economy. With a huge population, it has long-term advantage in market potential, labor resources and costs, as well as general advantages in market stability, governance, and planning. The urbanization of China and capitalization on investments and trade returns will produce a post-industrial economy not unlike that of the United States that but co-exists simultaneously with China's industrial economy, given the expansiveness of the country's market. China is vulnerable to a trade war in the near-term, which is one reason why I have repeatedly stated that the PRC will not initiate a confrontation in the near future.
    The key as you say is long term. When that long term comes there will be less potential for conflict I hope. Our problem is how to dissuade them from adventures in the short term and in the short term they have a lot of disadvantages that will help do that.

    Just as an aside, I would say the only long term advantage they have over anybody is market size and labor resources, nothing else. I think they have a marked disadvantage in governance, all repressive police states do, in the long run of course. Central planning hasn't worked to well either.

    Quote Originally Posted by AmericanPride View Post
    There is no substitute for victory. If you lost, your resources and strategies were useless for the given scenario.
    Risking you getting mad at me, "no substitute for victory" is a platitude. For example, all that the Confederate States did was not useless even though they lost. They fought so hard they were able to maintain a form of slavery, more or less, for nearly 100 years after the war ended. They fought so hard that the northern states weren't inclined to make the effort to stop them from doing so. So all their resources and strategies weren't useless after all. Even in defeat they were able to establish and maintain a close approximation to the pernicious system they fought for.

    A smaller example would be the Glowworm's fight with the Hipper. She lost and the Hipper completed her mission. But the Glowworm's resources weren't useless. They enabled her to fight and that fight had an effect on what the RN thought of itself and what the German navy thought of the RN. That is important.

    Quote Originally Posted by AmericanPride View Post
    The ROC is incapable of doing that in the long-term.
    Perhaps. But the short term is the problem. In the long term the hope is Red China will grow up a bit and not risk any adventuring. That long term inevitability of inferiority may be very long term. A wealthy island can make an invasion extremely expensive for the attackers.

    Whoops. That was Dayuhan's to answer. I'll stop now
    Last edited by carl; 12-22-2011 at 04:22 PM.
    "We fight, get beat, rise, and fight again." Gen. Nathanael Greene

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    Council Member Dayuhan's Avatar
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    Quote Originally Posted by AmericanPride View Post
    China's economy will not forever be a export-oriented economy. With a huge population, it has long-term advantage in market potential, labor resources and costs, as well as general advantages in market stability, governance, and planning. The urbanization of China and capitalization on investments and trade returns will produce a post-industrial economy not unlike that of the United States that but co-exists simultaneously with China's industrial economy, given the expansiveness of the country's market.
    That's an extraordinarily optimistic view of China's economic prospects, and one that fails to acknowledge the enormous obstacles, constraints, and problems that China is coming up against.

    Quote Originally Posted by AmericanPride View Post
    The US is not an empire. It is the only the richest, most powerful subject in a universal financial empire interconnected through a web of powerful individuals, families, and corporations (specifically banks and financial institutions).
    I commented before on the appealing principle of "malevolent design", and its impact on conspiracy theories around the world.
    “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”

    H.L. Mencken

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    Council Member davidbfpo's Avatar
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    Default Defending Taiwan

    Moderator's Note

    The issues around this subject Defending Taiwan / Republic of China / RoC re-appeared in the discussion of 'Is the US running an empire?' and for continuity some thirty posts have been copied to this thread. Hopefully reading them will make sense, or refer to the 'empire' thread for context please:http://council.smallwarsjournal.com/...ad.php?t=14742
    davidbfpo

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    Maybe that war with China isn't so far off

    China, as it approaches a leadership transition, wants to avoid friction. However, the United States appears to welcome it and, in the election year, might even incite it.

    The US, under the Obama administration and thanks in large part to Secretary of State Hillary Clinton's team at the State Department, has been quite adept in putting China at a geopolitical disadvantage in Europe, Africa and Asia.........

    The Obama administration jumped into the South China Sea issue - an insoluble tangle of disputes between the nations bordering the sea and the People's Republic of China (PRC) - with the argument that the US has a national interest in freedom of the navigation in the South China Sea.

    This posture usually involves an invocation of the critical economic importance of the South China Sea, citing the fact that 25% of the world's crude and half the world's merchant tonnage currently pass through its waters.

    As a look at a map and a passing acquaintance with patterns of maritime traffic reveals, the vital nature of this waterway is something of a canard. It is a big ocean out there. There are big ships out there as well, ships that are too big to pass through the Strait of Malacca that feeds into the South China Sea - they are called "post Malaccamax".....

    Smaller nations bordering the South China Sea welcome the US as a counterweight to China in their sometimes bloody but low level conflicts over fishing and energy development issues.

    Any US attempt to lord it over the Lombok Strait in a similar fashion would presumably not be welcomed by Indonesia, which exercises full, unquestioned sovereignty over the waterway.

    Also, if traffic shifted to the Lombok Strait, the Malacca Strait - that romantic but shallow, narrow, and increasingly problematic passageway to the South China Sea - would be superseded, a rather bad thing for faithful and indefatigable US ally Singapore and its massive port facilities at the east end of the strait......

    Perhaps biggest wake-up call for China was not downtrodden and put-upon Myanmar opening to the West, or the eternal flirtation between Pyongyang and Washington. As long as the terms of engagement remain civil and economic, contributing to an economic order with Beijing at its center, China can cautiously welcome a flow of investment into the rickety economies of the two authoritarian satellites........

    Thankfully, the Obama administration, unlike the George W Bush administration, has its hands on a variety of diplomatic and economic levers to advance its agenda, not just the military option......

    There is a danger that China will draw the lesson that the US believes that snubbing China is cost-free: that China is too dependent on global trade and too weak militarily to be taken seriously as an antagonist.

    Perhaps, resentful Chinese leaders will decide that the PRC, despite its reliance on a peaceful, trade-friendly international environment, needs to push back in a more overt way than simply bullying Vietnamese fishing boats in the South China Sea.

    That would be a risky decision, given that the US has announced that Asia is a key US national interest - presumably, an interest it is prepared to defend with the full range of options available to it. Or, as Secretary Clinton put it: "Harnessing Asia's growth and dynamism is central to American economic and strategic interests ... "

    America possesses the doctrine, the means, and the motivation to make mischief for the PRC. All that is lacking, for the time being, is a suitable opportunity - or a fatal miscalculation by either side.

    2012 promises to be an anxious and unpleasant year in US-China relations.
    http://www.atimes.com/atimes/China/ML22Ad06.html

  15. #375
    Council Member Dayuhan's Avatar
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    A look at what's going on inside China... and at the tip of an economic iceberg:

    http://tinyurl.com/7u6xqr8
    “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”

    H.L. Mencken

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    Council Member davidbfpo's Avatar
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    Dayuhan,

    Good article, even if economics is not my forte. This paragraph struck me:
    The craze for vacant real estate is due in large part to a lack of attractive alternatives. Strict controls on capital outflows prevent most Chinese citizens from investing any real money abroad. Chinese bank deposits earn very low interest rates -- lower, for the past year now, than the rate of consumer inflation. The public sees the country's domestic stock exchanges, which have endured volatile ups and downs over the last few years, as little more than high-risk casinos. In contrast, real estate, which has not seen a sustained downturn since China first converted to private homeownership in the 1990s, has long looked like a sure bet.
    How would the world economy and international banking react to Chinese individual private investors appearing en masse? Let alone the Chinese state's reaction to a perceived need for the free flow of information.
    davidbfpo

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    Council Member Dayuhan's Avatar
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    Chinese individual investors are already a presence, particularly in global real estate markets, but I wouldn't say they're appearing en masse. Places as disparate as Vancouver and Singapore have seen property driven up by Chinese buying, partly as investment and partly (I suspect) as pre-flight capital. How these trend plays out remains to be seen; it will depend largely on what happens on the mainland in the next couple of years.

    It does look like a collapse in the Chinese residential construction industry is underway, and there could be serious implications. The construction and building materials industries are major employers, and a breakdown will leave a whole bunch of unemployed males without a lot of options... that can easily translate to disorder. Add that to the people in the middle class and above who have poured life's savings and borrowed money into properties that have plunged in value and in some cases may no longer be salable at all, and you could have trouble.
    Last edited by Dayuhan; 12-26-2011 at 12:38 AM.
    “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”

    H.L. Mencken

  18. #378
    Council Member davidbfpo's Avatar
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    Default Back to Defending Taiwan

    Cheers Robert H. who in his SWJ Blog column has commented upon 'Has the Air Force already lost the battle for Taiwan?':http://smallwarsjournal.com/blog/thi...ext-korean-war

    He cites a RAND study:
    A recent detailed study concludes that the Chinese air force will badly outgun the U.S. Air Force in the skies over Taiwan and that the only hope for preventing Chinese air superiority over the island during a conflict is through the threat of heavy bombardment of the mainland, with all of the danger that implies. The study also demonstrates that the Air Force and Navy lack some of the proper tools for fighting in the Pacific's vast expanses.
    Link:http://www.rand.org/pubs/rgs_dissertations/RGSD267.html
    davidbfpo

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    Council Member Firn's Avatar
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    Quote Originally Posted by davidbfpo View Post
    Dayuhan,
    How would the world economy and international banking react to Chinese individual private investors appearing en masse? Let alone the Chinese state's reaction to a perceived need for the free flow of information.
    The already existent capital controls make it hard for private investors to shift capital outside of China. If there is heavy investment by Chinese investors it might be facilitated by the large amount of ethnic Chinese using various ways and channels to allow for some outflow of capital. A Chinese company buying a Western one won't have, of course, generally that kind of problem.

    The control of capital by the state is of course connected with the policy of the state to acquire large amounts of foreign currency (or equivalents) to keep the Renminbi 'artificially' low thus facilitating the export So this control regime is very unlikey to change.

    An if such a massive bubble bursts the party will try everything to keep the money inside China, and will use monetary and fiscal policies as well as other tools like regulation changes to avoid low growth, a recession or even worse. [That they allowed this sector to run as red hot as it is, shows unsurprisingly that even the wise Chinese technocratic communists can make errors just as we simple democratic Westerners did and do. ]

    All that makes it unlikey that we will see private Chinese investors appearing on masse on the international markets.
    Last edited by Firn; 12-26-2011 at 09:17 PM.

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    A prominent Chinese military commander has lambasted the Chinese political system in a recent interview and predicted a political transformation toward democracy within the next ten years.
    Lieutenant General Liu Yazhou is the Political Commissar of the People’s Liberation Army (PLA) University for National Defense. He is also the son-in-law of former Chinese President, Li Xiannian. His public statements make him the first senior active-duty military officer to publicly criticize the Chinese Communist Party’s (CCP’s) policies without backlash from the regime.

    In a recent interview with Hong Kong’s Phoenix Weekly, Liu said, “A system that does not allow its citizens to breathe freely, nor to maximally unleash their creativity, nor puts those who can best represent the people in leadership positions, is doomed.”
    He further pointed out that the former Soviet Union also used to stress [social] stability above all else and regarded it as the ultimate goal.

    “Stressing stability as a principle of overriding importance, and moneymaking as the only way to settle everything, will only lead to contradictions being aggravated, and everything will come against you.”

    Liu also predicted that a political transformation from authoritarianism to democracy will inevitably take place within ten years.

    Expressing reprehension for the “money diplomacy” and “economic powerhouse” concepts embraced by the CCP, Liu said “having more money does not mean having more soft power.”

    http://www.theepochtimes.com/n2/chin...ccp-41543.html

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