China's Emergence as a Superpower (till 2014)

[Watcher In The Middle]

The great fall of China - Revised GDP calculations show that Beijing isn't the giant we thought it was
By Walter Russell Mead; December 30, 2007

The most important story to come out of Washington recently had nothing to do with the endless presidential campaign. And although the media largely ignored it, the story changes the world.

The story's unlikely source was the staid World Bank, which published updated statistics on the economic output of 146 countries. China's economy, said the bank, is smaller than it thought.

About 40% smaller.

China, it turns out, isn't a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size. For the foreseeable future, China will have far less money to spend on its military and will face much deeper social and economic problems at home than experts previously believed.

What happened to $4 trillion in Chinese gross domestic product?

Statistics. When economists calculate a country's gross domestic product, they add up the prices of the goods and services its economy produces and get a total -- in dollars for the United States, euros for such countries as Germany and France and yuan for China. To compare countries' GDP, they typically convert each country's product into dollars.

The simplest way to do this is to use exchange rates. In 2006, the World Bank calculated that China produced 21 trillion yuan worth of goods and services. Using the market exchange rate of 7.8 yuan to the dollar, the bank pegged China's GDP at $2.7 trillion.

That number is too low. For one thing, like many countries, China artificially manipulates the value of its currency. For another, many goods in less developed economies such as China and Mexico are much cheaper than they are in countries such as the United States.

To take these factors into account, economists compare prices from one economy to another and compute an adjusted GDP figure based on "purchasing-power parity." The idea is that a country's GDP adjusted for purchasing-power parity provides a more realistic measure of relative economic strength and of living standards than the unadjusted GDP numbers.

Unfortunately, comparing hundreds and even thousands of prices in almost 150 economies all over the world is a difficult thing to do. Concerned that its purchasing-power-parity numbers were out of whack, the World Bank went back to the drawing board and, with help from such countries as India and China, reviewed the data behind its GDP adjustments.

It learned that there is less difference between China's domestic prices and those in such countries as the United States than previously thought. So the new purchasing-power-parity adjustment is smaller than the old one -- and $4 trillion in Chinese GDP melts into air.

Link

As the article (Editorial) points out, this has serious implications for a whole host of players. If the numbers are correct, there's been a whole lot of economic assumptions being made that really aren't justifiable, and could easily come back to haunt the entities making those decisions.

[JeffC]

Link

As the article (Editorial) points out, this has serious implications for a whole host of players. If the numbers are correct, there's been a whole lot of economic assumptions being made that really aren't justifiable, and could easily come back to haunt the entities making those decisions.

I disagree. Does anyone doubt that China will get there? No. So what if it's not there now. It doesn't change the fundamentals. 1.6 Billion people. Some of the best math and science minds in the world, thanks to their emphasis on science and math in education. And the second largest holder of U.S. debt in the world, after Japan. None of that has changed.

[Watcher In The Middle]

Originally posted by JeffC:

I disagree. Does anyone doubt that China will get there? No. So what if it's not there now. It doesn't change the fundamentals. 1.6 Billion people. Some of the best math and science minds in the world, thanks to their emphasis on science and math in education. And the second largest holder of U.S. debt in the world, after Japan. None of that has changed.

Not sure I'd bite on that one, because making up $4 trillion isn't pocket change. You are talking about China duplicating what looks to be at least several (3-4 years, possibly more) of continuous growth at existing levels, and the export numbers (at least anecdotial for the quarter ending September, 2007) just weren't there.

And there's a whole lot of other issues - China is experiencing all the negative environmental impacts of industrialization, and honestly, the water pollution and air pollution issues they are facing are just staggering (makes pollution issues in the old Soviet Union pale in comparison). The national government is having huge fights (ongoing, and honestly, they are being ignored) with both provincial and municipal governments who are going "full speed ahead" over expansion, regardless of the pollution issues. As a single example, look at the very latest reporting on the environmental issues coming home to roost on China's Yangtze River Three Gorges Project. They are now talking about having to literally relocate at least an additional 750,000 people from around the already completed project, because of "unanticipated" environmental issues. And they're not sure that doing that is going to solve the environmental issues.

Also, lets remember that China has serious natural resource issues, and from here on out, everything's going to be more expensive. Plus China has a number of outstanding subsidy issues (a Gal. of regular unleaded gas in China was priced = to approx. $2.44 after government subsidies). They just increased the retail gas costs by 10%, and there were a whole lot of problems (demonstrations, etc.). They are truly walking the tightrope without a net.

China has a whole lot of issues, and those issues will certainly affect the fundamentals. And I always remember what a good friend told me: "Ain't no such thing as a sure thing".

[William F. Owen]

I wouldn't want to say China will never be a problem or peer competitor, but as I just don't get how China will ever obtain any military level of competence.

Why does everyone assume that these guys could ever perform?

Their are significant cultural limitations to Chinas ability to effectively project military power in a way that we understand. On what evidence do we all keep assuming that they have the capacity to improve?

[tequila]

Can you detail the cultural limitations that you are talking about? That descriptor is pretty vague.

[William F. Owen]

Can you detail the cultural limitations that you are talking about? That descriptor is pretty vague.

I'd equate it to those limitations to those that were very apparent in Soviet Russia. Talk star wars, but when push comes to shove, act caveman.

In the same way that I never did rate the Soviet Army in any way, except for mass, I don't see anything in the PLA that makes me think they are any better. Modernisation will get them to about where we were in the late 1980's. I don't see training and leadership as anywhere near what most NATO armies have.

[Ron Humphrey]

I'd equate it to those limitations to those that were very apparent in Soviet Russia. Talk star wars, but when push comes to shove, act caveman.

In the same way that I never did rate the Soviet Army in any way, except for mass, I don't see anything in the PLA that makes me think they are any better. Modernisation will get them to about where we were in the late 1980's. I don't see training and leadership as anywhere near what most NATO armies have.

I would tend to agree with you about the quality of the forces as a whole.
When you look at training good leaders (NCO's, Officers, Specialization of branches) they will always have problems with any real accomplishment in these areas as long as the cultural tendencies keep class, position, etc ahead of ingenuity, and capability of an individual.

Just as in any company you may train and have excellent skillsets among your workforce but hierachial thinking will keep you from taking advantages almost every time.

Not to mention throwing into the mix the efforts to play both sides of the table, (socialism / Capitalism) at the same time really does bring it's own set of challenges.

[Norfolk]

Right Sizing the People's Liberation Army: Exploring the Contours of China's Military Edited by Roy Kamphausen and Andrew Scobell

-See particularly Chapter 7 by Dennis Blasko.

"PLA Doctrine on Securing Energy Resources in Central Asia" by Martin Andrew

-Description of the reorganization of some Group Armies into pseudo-Soviet-style Operational Manoeuvre Groups.

The PLA provides only two months' basic training after each yearly induction in November. After that, it's OJT; recruits, who serve for only two years, are considered "trained" six months after their induction. Each Battalion is on a 9-10 month annual training cycle, breaking for 2-3 months starting in November each year to provide Basic Training for recruits and the NCO Course and Basic Officer Training. And some people think our 12-month training cycle is bad (it is, but not as bad as the PLA's). Many officers recruited from University now only receive 2 or 3 months basic training before receiving OJT in their Battalions, although 3/4 of these are technical specialists; most Combat Arms officers still receive a year's training. NCOs, all of whom are former recruits selected to remain in the PLA after their 2-year obligation, perform nearly all technical tasks.

There is more initiative allowed than in the Russian Army, and training is often of rather better quality. In the past, the PLA relied on rigid obedience to orders from Platoon to Battalion because of a lack of radios, but that is now changed; the Squad level has normally featured a certain allowance for initiative. But Combined-Arms operations at Unit level still seem to be somewhat shaky in areas. Infantry weapons-handling and battlecraft (except in certain elite units) appears more akin to that of the US Army circa very early 1980's, in both content and performance.

[JeffC]

I wouldn't want to say China will never be a problem or peer competitor, but as I just don't get how China will ever obtain any military level of competence.

Why does everyone assume that these guys could ever perform?

Their are significant cultural limitations to Chinas ability to effectively project military power in a way that we understand. On what evidence do we all keep assuming that they have the capacity to improve?

Wow, that's quite an opinion. I note that you didn't provide much supporting information to it in response to Tequila's request. Perhaps you'll be more forthcoming in future posts. In the meantime, here are a few reasons why China should be regarded as a future military threat.

1. In most of it's 4,000 + year history, it has dominated Asia as a military and cultural power.

2. Sun Tzu's The Art of War is the world's oldest manual of military strategy, and his principles are still applied with success today.

3. Chinese martial arts are the origin of all Asian martial fighting forms, and have influenced those of the rest of the world, including our own.

4. The U.S. has no existing defense for implementation of an Unrestricted Warfare attack, as proposed by two Chinese Colonels in 1998, and which is being implemented in China's current cyberwarfare strategy.

5. "China continues to invest heavily in the modernization of its military, particularly in strategic weapons and capabilities to support power projection and access denial operations." Read the PREPARED STATEMENT OF
MR. RICHARD P. LAWLESS DEPUTY UNDER SECRETARY OF DEFENSE FOR ASIAN & PACIFIC SECURITY AFFAIRS BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION THURSDAY, FEBRUARY 1, 2007

[Ron Humphrey]

that China is or would be a more than effective foe.

I think the big thing I look to is the fact that most of how their society works always seemed to be based in order vs chaos. Structure vs compromise.

All or nothing in unrestricted warfare while being a very real concern doesn't really seem to be as likely as some other forms of movement from them.

Chaos tends to stem from unrestricted conflict, and isn't that somewhat counter to their philosophical and social constructs.

To look at them in the same way as say a Hitlers Germany or Soviet union
doesn't seem to be a good comparison
(Wouldn't they be the first ones to look to get maximum effect from least effort being more patient than others.) SOFT Power


This will keep them on a path of growth but their not the only ones growing and their close neighbors are on schedule to out populate them within ten years or so plus I think have even more specialization in the maths and science areas.

Just asking these are some of what my assumptions or limited knowledge is in this regard. Please disabuse me of those which are incorrect or mistaken.

[JeffC]

that China is or would be a more than effective foe.

I think the big thing I look to is the fact that most of how their society works always seemed to be based in order vs chaos. Structure vs compromise.

I think that even experts on the subject would disagree about how the evolution of Chinese government is progressing. It's certainly still a Communist regime, but not in the way that it was under Mao. If anything, I think we're observing something completely different from what China has been in the past, thanks to the success of capitalism in Hong Kong and Shanghai. I think the government is trying to find ways to embrace it's economic success with a totalitarian style of government, and will wind up with some kind of hybrid. What this conveys to me is that we pigeon-hole China to our detriment, and should try to avoid applying old dualistic concepts in our effort to understand today's People's Republic.

All or nothing in unrestricted warfare while being a very real concern doesn't really seem to be as likely as some other forms of movement from them.

UW takes a holistic approach, known in contemporary terms as a systems approach, to warfare. In this way, their educational priorities are a part of UW. Corporate espionage is a part. WMD development is a part. Energy alliances is a part. And so on. Mechanistic theory, which the West has operated on for the past 150 years, breaks things down into separate components. Systems theory looks at how each part interacts and connects with the whole. That's what UW does as well.

Chaos tends to stem from unrestricted conflict, and isn't that somewhat counter to their philosophical and social constructs.

Chaos to a westerner may not be viewed as chaotic to someone well-read in the Tao, or in Zen Buddhism. It's a different way of perceiving reality then Westerners are used to.

To look at them in the same way as say a Hitlers Germany or Soviet union
doesn't seem to be a good comparison

I agree, and that reminds me of Max Boot's flawed advice on exporting Democracy to the Middle East from the barrel of a gun. "We did it in Germany and Japan. Why not Iraq and Iran?"

This will keep them on a path of growth but their not the only ones growing and their close neighbors are on schedule to out populate them within ten years or so plus I think have even more specialization in the maths and science areas.

Speaking as someone whose employer has engineers from both countries, and operations in both countries, China is ahead of India in technology-based R&D. That's just my observation, not the result of an independent study.

But more importantly, China is aggressively pursuing building strategic relationships with lots of other countries, including India. It's not operating in a vacuum.

[William F. Owen]

In the meantime, here are a few reasons why China should be regarded as a future military threat.

1. In most of it's 4,000 + year history, it has dominated Asia as a military and cultural power.

2. Sun Tzu's The Art of War is the world's oldest manual of military strategy, and his principles are still applied with success today.

3. Chinese martial arts are the origin of all Asian martial fighting forms, and have influenced those of the rest of the world, including our own.

4. The U.S. has no existing defense for implementation of an Unrestricted Warfare attack, as proposed by two Chinese Colonels in 1998, and which is being implemented in China's current cyberwarfare strategy.

5. "China continues to invest heavily in the modernization of its military, particularly in strategic weapons and capabilities to support power projection and access denial operations." Read the PREPARED STATEMENT OF
MR. RICHARD P. LAWLESS DEPUTY UNDER SECRETARY OF DEFENSE FOR ASIAN & PACIFIC SECURITY AFFAIRS BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION THURSDAY, FEBRUARY 1, 2007

1. I think Japan managed to dominate Asia, far more than China in recent history. Modern China is a product of an adaptive form of Communism, not it's 4,000 years of culture. They got their asses handed to them on a plate by the Vietnamese in 1979.

2. Sun Tzu's art of War/Strategy is not highly regarded by the Chinese military, at least not the former PLA members I have talked to. Even Mao came unstuck when they tried to export "On Guerilla Warfare" to non-Confucian based cultures.

3. Martial Arts is nothing to do with warfare.

4. The two Chinese Colonels are no better informed than anyone else. It's a typical product of Chinese military thought, that sounds clever, but that probably falls short in performance.

5. So they say. The Chinese military budget is smoke and mirrors of the worst order.

NOW - I am not saying the Chinese are not a threat, but I work in the Far East, I have worked with the Chinese, and they are no more skilled, cunning or clever than we are. They just don't have democracy to hold back ambition, but they are severely constrained by things like status, face and image.

Why would we assume them to be more capable than the Russians?

[tequila]

I think the "Japanese moment" in Asian history is over. Japan, because of its cultural cohesiveness resulting from its position as a mountainous island, has always been able to embrace massive and radical change more quickly than most other countries. It did it during its rise as a unified state during the Nara period, when it embraced a massive infusion of cultural and governmental innovation from China and Korea, and it did it during the Industrial Revolution. However it cannot compete as a local power against a strong China.

If China in the modern age was going to be held back by things like ancient cultural traits, China could never have accomplished the economic transformation that has occurred over the past 35 years. The changes that have occurred in a single generation have gone directly against so many of the fundamental classical traditions of Chinese history as to constitute a genuine revolution, more so even than in 1948.

Culture matters, but cultures are not fixed constants. They undergo constant change to adapt to the underlying fundamentals of the societies they inhabit, and no more so than when the economic superstructure has changed as radically and completely as it has in China in the past generation. Old assumptions need to be revisited.

[JeffC]

5. So they say. The Chinese military budget is smoke and mirrors of the worst order.

I was going to spend more time on this, but when I read your above reply to my point of Lawless's report, I decided against it. I'm happy to debate facts, but there's no debating a refusal to consider facts.