Page 2 of 2 China's weakness the greater danger
By Samuel A Bleicher
This military balance against China severely limits any rational military
ambitions. China's only active military focus grows out of its adamant
opposition to Taiwan's independence, an issue that appears likely to recede as
a result of this year's elections in Taiwan. China certainly wants enough
military capability to make its threat of military action credible to Taiwan,
the US and Japan. The Chinese tradition of military strategy is built around
outwitting and outmaneuvering the enemy, not applying overwhelming brute force.
For that purpose, the appearance of strength is important, but the actual use
of force would reflect a strategic failure. Worse, any serious, long-term
military engagement could easily create just
the kind of domestic economic dislocations and shortages that, after the
initial burst of patriotic enthusiasm, would feed social and political
dissatisfaction, which the regime rightly fears most. The months-long adverse
consequences of last winter's blizzard show the true vulnerability of China's
economic structure.
Economic power?
China's economic "power" is significantly less than the often-quoted statistics
suggest. US industrial imports from China amounted to less than 3% of the US
GDP in 2006 (up from less than 0.5% of GDP in 1993). The standard statistics on
US-China trade volume vastly overstate China's economic benefit. Only about
one-third of the nominal value of China's exports reflects goods actually
manufactured in China. China is still largely an assembler, and most of the
components come from abroad. China's manufacturing is heavily dependent on
imports of components, raw materials, energy supplies, intellectual property,
and financial and other management skills, which all result in economic
outflows.
Moreover, a significant part of China's current price competitiveness has grown
out of its postponement of the costs of safe and sustainable management of its
natural and human resources. Recent indications are that some of these
postponed costs are coming due. The government is already spending billions of
yuan (directly and by ordered closures) to dismantle environmentally
unredeemable manufacturing facilities. More billions are being invested to
divert water from agricultural uses to supply the growing cities of dry
northern China.
Thus the much-discussed financial reserves China has accumulated are mostly
offset by real-world social welfare and environmental debits to repair and
maintain human and natural resources. And the value of China's international
reserves, mostly invested in declining US dollar paper assets, depends almost
entirely on the economic viability of the United States, the European Union,
and Japan. China was apparently a significant loser in the US subprime mortgage
collapse, though the actual amounts have not been revealed. This dependency
deprives China of the kind of independent economic power of Saudi Arabia or
Russia, which control substantial physical resources.
International political power is largely derived from the world's perception of
a nation's independent military and economic resources, and its willingness to
invest them - and risk them - in order to change the behavior of other nations.
Thus China's international political influence depends in significant part on
what the Chinese government says, and what we believe, about its capabilities
and intentions. Though it would like the West to believe otherwise, China
cannot afford to risk significant military or economic resources in
international political competition.
The real threat
In light of these realities, the West is overly focused on the Chinese
"emerging superpower" threat and giving far too little attention to the real
risks and foreign policy challenges that would flow from a serious breakdown in
Chinese economic, political, or social structures.
A crisis might be triggered by any number of factors. A dramatic slowdown in
the Chinese or world economy could disrupt the lives of millions of factory
workers. Serious rationing of water, food or energy, whether by dramatic price
increases or some other mechanism, could be unacceptably painful for a large
part of the population. The loss of individual savings from a stock market or
banking collapse could fuel popular discontent among the new urban elite. Even
with continuing economic progress, widening income disparities could generate
increasingly serious opposition in rural areas. A widespread farmers' strike
might cut off food to the urban centers, leaving them in a state of chaos.
Systemic crisis could then lead to an open challenge to the regime. Here are
two scenarios to consider. In one, students, factory workers and peasants
gather again in Tiananmen Square to protest against economic conditions and
perceived political non-responsiveness. When urban professionals start to join
them, the central government calls in the army. It begins a brutal campaign of
violently repressing demonstrators, arresting domestic and foreign media
representatives, and purging uncooperative members of the party and civilian
government, entirely disregarding the legal system. The demonstrations do not
stop, and various groups ask for outside help to protect foreign residents and
foreign investment and to end the wholesale disregard of human rights. Overseas
Chinese and major US banks and corporations with investments and supply lines
at stake argue that the situation is too dangerous to ignore.
In the second scenario, the central government's inability to control the
economy or cure the country's problems becomes increasingly obvious. The
educated, urbanized residents of Shanghai and the urbanized areas around Hong
Kong increase control over their regional governing systems, perhaps through
more democratized party elections, and disregard Beijing's directives. Taiwan
offers economic and technical assistance to these areas, with the aim of
creating more of a "one China, many systems" environment.
In response, the Chinese military threatens to impose military rule on Shanghai
and Hong Kong, and to recapture Taiwan. The new local leaders ask for help from
Taiwan and other nations to avoid the bloodbath, economic disruption, danger to
US and other foreign citizens, and destruction of foreign investment property
that will inevitably result if no one comes to their aid.
Responding to Chinese instability
Some American hardliners may believe that the US should encourage crisis and
regime collapse in China. However, nothing in Chinese history, or in the
history of revolutions and coups almost anywhere, gives any reason to believe
that a collapse or violent change in Chinese leadership would be followed by a
more stable, more reliable, more democratic or more cooperative international
actor than the current central government. The tragedies of the French
revolution, the Russian revolution, the post-World War II coups in Eastern
Europe and the Chinese Cultural Revolution are far better indicators of what
might come next if faltering economic progress or other stresses of
transformation become unmanageable.
In our globalized economic world, the West could not simply sit back and smile
as China disintegrates. Chaos in China is far more threatening, economically,
politically and militarily, to the United States and the world than China's
current "peaceful rise". Both for China's sake and our own, we must help the
Chinese succeed in their transition to a 21st-century economy and society.
Being better prepared for possible failures along the way is an essential
component of planning for and realizing that goal. Western leadership needs to
think now about how it would rank and balance various potentially conflicting
objectives, including protecting diplomats and foreign citizens, salvaging
Western investments, ensuring the stability of the global economy, protecting
human rights, avoiding unpredictable military action and reaction, and
maintaining civil relations with those who claim to be in power in Beijing.
The West needs to act immediately and more vigorously to help strengthen
Chinese civil institutions, recognizing the continuing imperative of the
Chinese government to show improvements in its domestic economic and social
structures.
The 2007 Party Congress was filled with rhetoric about "democracy". But real
democracy - the broad diffusion of power beyond the party and its attendant
government bureaucracies, to independent legal institutions, media and
non-governmental organizations - will only be implemented if it is seen as a
means of promoting social harmony and strengthening the authority of national
laws over local corruption and opportunism.
Arguments that China should expand individual human rights as an independent
moral objective are unlikely to motivate the central government. Rather, the
central government should be persuaded to decentralize power and create a
diverse civil society to create the social resilience, adaptability and sense
of participation that will enable it to survive through the coming storms. The
current Tibet controversy, because it is perceived by most Chinese as an
ungrateful challenge to territorial integrity, is only a shadow of what may lie
ahead.
Finally, we must also prepare for the worst. First, our foreign policy and
military planners must develop and publicly discuss contingency plans for the
consequences of a dramatic setback in Chinese economic growth and resulting
breakdowns in domestic order. Second, we need stronger mechanisms to avoid
miscommunication of military movements, lest we lurch into a World War I-like
disaster as hardline propaganda and sensationalist media lock both China and
other governments into inflexible postures. Third, if the physical entry of
national or multilateral military forces into any part of China is unthinkable
under all circumstances, we must identify other steps that might be taken to
minimize and mitigate the destruction of life, property, social order, and
global economic activity.
What leverage, if any, can the outside world bring to bear on the central
government or the military, without military intervention? Can the threat, or
imposition, of economic sanctions, embargoes, blockades, or other tools have a
significant impact in time to avoid disaster? Can the United Nations make any
difference at all in this context? Timely, coordinated response by the outside
world might make a difference; slow reactions and uncoordinated US, European
Union, and Japanese positions will almost certainly accomplish nothing.
The Chinese propaganda machine is doing its best to make us (and the Chinese
people) believe the government has everything under control and on track. We
must not take its claims of economic and military strength at face value. We
need a more realistic understanding and perspective on the nature and scope of
China's growing capacity and hidden weaknesses, learning more about its limits
as well as its strengths. And we must think seriously about how the West might
proceed to address the global interest in conditions in China if a real
breakdown occurs.
Samuel Bleicher is principal in his consulting firm, The Strategic Path
LLC. From 2001 to 2007, he served as chief strategist for new initiatives in
the Overseas Buildings Operations Bureau of the US State Department. From
August through December 2007 he taught American law in Beijing to Chinese
prosecutors, judges, lawyers and administrative officials in a joint Tsinghua
University/Temple University LLM program funded primarily by the Chinese and US
governments. He can be reached at: Bleicher@StrategicPathLLC.com
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