Overestimating Chinese Power, And The State Of Sino-American Relations

by Pejman Yousefzadeh on November 18, 2009

A number of news sources–this is but one–are telling us that the Obama Administration has no standing to bring up Chinese human rights abuses, or complaints regarding currency issues, because China views America as a declining power, and will not take lectures from the United States seriously anymore. As a consequence of this view, the Obama Administration is soft-pedaling its traditional points of contention and dispute with the Chinese.

I understand that this view of China as the rising power, and the United States as the declining one is fashionable. It is also mistaken. Just as mistaken is the Obama Administration’s unwillingness to press forward on issues relating to American interests and values in the course of dealing with the Chinese.

While China’s power is certainly augmented vis-à-vis its position in the past, it is not even close to being a serious competitor to the power of the United States. I recognize that after the Cold War, and the years of unipolarity in which the United States was the sole superpower, the emergence of a new power could easily be confused with a commensurate American decline, but the situation is a lot more complicated than that. Contrary to popular belief, China is beset by a host of serious weaknesses, many of which are outlined in this article:

George Friedman holds up a recent Fortune magazine, his face a portrait of incredulity. The cover declares that China is buying everything, much as the Japanese were doing nearly two decades ago. The inside story is titled “It’s China’s world. (We just live in it.)”

“If China is so healthy, why is everyone there not investing in China?” he asks.

“The obvious question is: Why are they doing this? Fortune doesn’t remember that we saw this before. It’s called capital flight.”

Friedman, the founder and prime mover at Stratfor, goes on to point out some basic facts about the size of the U.S. economy relative to China’s.

Although we bemoan the loss of industrial capacity in the United States, for instance, we still manufacture more than China and Japan combined. And the United States still produces 25 percent of the world’s output. And our output is larger than the combined gross domestic products of the next three largest economies, Japan, China and Germany.

We simply don’t know our own strength.

“If we grow at 2.5 percent a year, China would have to grow at 8.2 percent just to keep the absolute gap steady. It will take generations for the Chinese to catch up,” he says.

Nor do we understand the deep poverty of China. He points out that China has a population of 1.3 billion people. Of that number, 600 million have an income under $1,000 a year. Another 440 million have incomes of $1,000 to $2,000 a year.

Only 60 million people have incomes of $20,000 a year or more.

[. . .]

China is not the threat it is made out to be. It has an Achilles’ heel of bad debt. Both its employment and output depend on external demand.

What’s worse, China has the same kind of demographic issues Japan has. The difference is that whereas Japan is experiencing its population decline now, China will see its population decline later.

If people want to be concerned about something related to China, they can be concerned about the fact that the younger generation of Chinese are relentlessly nationalistic–much more so than their elders–and that once that younger generation takes power, assuming that it has not lost its nationalistic zeal, we could see an unbounded China throw Asia into some turmoil. But while China may have the ability to wreak havoc, it does not have the ability to realistically achieve superpower status on par with the United States. The conditions are just not there for China to be able to put itself on the world stage as an equal to America.

How does all of this relate to the Obama visit to China? Well, once we see that the Chinese are not all that and a bag of chips, it behooves us to ask why it is that the Obama Administration is–well, I won’t say “kowtowing”–walking on eggshells to ensure that it does not upset the Chinese. Because there may be a war between China and the United States? No one seriously thinks that such a conflict is in the offing, and to the extent that there are concerns, those concerns are likely assuaged by some cold hard facts informing us that–surprise!–China is no match for the United States militarily:

. . . experts say China is still decades away from challenging U.S. military’s preeminence. Its ground forces field 1980s vintage armor and suffer from significant shortcomings in command and control, air defense, logistics, and communications. Its air force, too, lags behind those of Western powers, though China flies about one hundred top-end Russian Su-27 warplanes and has contracted to purchase newer Su-33s, which are capable of carrier-based operations. China plans to build aircraft carriers domestically, but currently has none under construction.

We certainly shouldn’t be apathetic concerning the degree to which China poses a military/security threat to the United States, but many of the worries on this score are seriously overblown.

Are there concerns because the Chinese hold our debt? You know what they say: “When you owe the bank a million dollars, the bank owns you. But when you owe the bank a billion dollars, you own the bank.” Much as people like to think that the Chinese hold us hostage over our debt situation, the fact of the matter is that the Chinese cannot do anything damaging to the American economy without utterly annihilating their own economic prospects. It is not China that has power over the United States. Rather, it is the United States that has power over China.

We see, therefore, that despite the hype, China is not a peer competitor to the United States. If the Obama Administration were smart, it would have found a way to diplomatically make it clear to the Chinese that the latter are in no position to challenge American global hegemony, and that China’s prospects for future success and prosperity are dependent on its willingness to conform to American demands concerning economic and human rights issues. We won’t get everything we want out of the Chinese, but we would get significantly more compliance from them on policy issues that matter to us by emphasizing the gap between rhetoric and reality concerning the issue of China’s power.

Instead, the Administration acts as though it believes the hype concerning China’s rise as a global hegemon, and America’s commensurate decline. If the President and his team continue to find themselves mesmerized and bedazzled by the myths regarding Chinese and American power, they will run the risk of causing other important actors throughout the world to believe those myths, and to act accordingly. “The perception of power is power,” as the saying goes. By actually paying attention to, and propagating the facts concerning American and Chinese power, the Obama Administration could help bring about a fundamental reevaluation of the conventional wisdom regarding China’s and America’s respective prospects for global hegemony. Similarly, by buying into that conventional wisdom–without cause–the Administration will help foster perceptions of America’s rise and China’s decline, which could have deleterious prospects for America’s ability to influence events in the near and long term.

  • william_Grant

    You are right that Chinese is not a peer competitor to American yet. What the world concerned about is that American's power is declining and in deep trouble, while Chinese seems to keep growing and have ability to take other countries out of such trouble, including USA.

    It is not absolute comparison that matters. It is the hope or perception that matters.

    Just like in stock markets, people would rater buy growth stocks, rather than boring ones.

  • chicagotim

    I think it's better to overestimate our global competitors rather than underestimate. We over estimated the Soviets and it brought out the absolute best in our nation. Had we underestimated them and felt overly secure in our power I'm not sure we would have made it to the moon. So I will keep overestimating the Chinese until proven wrong.

    Additionally some of your assumptions are wrong. Yes if valued in dollars we manufacture more. However, in terms of sheer output (number of cars produced, steel output, new construction etc.) they have already passed us.

    Again it will serve the nation better to overestimate them rather than underestimate.

  • zezorro

    so its is clear. say hello to Bananamerica.

  • chicagotim

    I think it's better to overestimate our global competitors rather than underestimate. We over estimated the Soviets and it brought out the absolute best in our nation. Had we underestimated them and felt overly secure in our power I'm not sure we would have made it to the moon. So I will keep overestimating the Chinese until proven wrong.

    Additionally some of your assumptions are wrong. Yes if valued in dollars we manufacture more. However, in terms of sheer output (number of cars produced, steel output, new construction etc.) they have already passed us.

    Again it will serve the nation better to overestimate them rather than underestimate.

  • zezorro

    so its is clear. say hello to Bananamerica.

Previous post:

Next post: