The coming clash with China

Then Secretary of State Hillary Clinton in the fall of 2011 used the buzz word “:pivot” three times to announce a major shift in the Obama foreign policy, putting major emphasis on South and East Asia Asia. But the reality – as detailed in a report from the Center for Strategic and International Studies commissioned by Congress – is that the Administration’s rebalance effort may be insufficient” to secure American interests. Clinton herself, in her campaign for president, has reversed her stand on the Trans-Pacific Partnership trade pact, one of the major diplomatic and economic initiatives after spending years working on it.

Whether or not Clinton makes it to the presidency, what is becoming increasingly clear is that China, itself, is headed for a crash which will not only threaten her Communist regime but the U.S. – and its allies – ability to deal with it.

A similar breakdown of the Chinese state occurred in the 19th Century. But in the heyday of European colonialism and American expansion into the Western Pacific, it came piecemeal. And however catastrophic for the Chinese people, its effects largely were relegated to the sidelines of world history.

But in the 21st century, as China and its 1.3 billion people again appear likely to crash, a failed state with all its new and intimate trade and political relation ships to the rest of the world will also be catastrophic for its partners.

The signs of the approaching crisis are not that hard to discern. But precisely because they carry such weight, they are being studiously ignored in Washington’s political corridors in favor of much more publicized domestic and international events.

The evidence for a prediction of a Chinese crash is stark:

Xi Jinping, China’s Communist Party head and chief of state and government, is failing in his attempt to make himself an all-powerful reincarnation of Chairman Mao Tse-tung. His increasing repression, despite the new environment of the digital revolution with its pervasive social media, been Maoist in its aspirations. But a recent conference on China’s growing economic, political and social problems sponsored by Xi’s Prime Minister Li Keqiang dramatically excluded Xi’s participation. It was immediately seen that contrary to a general perception abroad, the struggle within the Party for control continues, to the detriment of governance in a time of rising economic and political crisis.

That crisis arises from the fact the raison d’etre of the regime stripped of its Marxist ideology in all but name, has been sensational economic growth, is under siege. The increasingly suspect Chinese statistics claim its gross national product is still growing at 6.7 percent, a long way from 2003 to 2008, when annual growth averaged more than 11 percent,

But this growth is at the cost of a rapidly escalating debt. Beijing borrowed its way out of the 2007-8 world financial crisis with a massive stimulus program. The ratio of such continued borrowing is rising rapidly. This year it has taken six yuan for every yuan of growth. China’s money supply is now 73 percent higher than in the United States, an economy about 60 percent larger. Furthermore, that debt is being incurred disproportionately by the giant inefficient state enterprises through their Party allegiance rather than the small but entrepreneurial semi-private sector. China’s export oriented economy is not as virtually all informed observers suggest ranging toward domestic consumption, and the political season makes it almost certain the U.S.] new administration, whichever candidate wins, will move toward curbing Beijing’s violations of fair trade.

Meanwhile, whether as a result of its growing influence on government or as an attempt to detract from domestic issues, Beijing is pursuing a more and more aggressive foreign policy. Sensing the Obama Administration’s attempt to reduce overseas American committeemen’s, it has ploughed ahead with flimsy claims to shoals in the South China Sea thousand miles from its Mainland. By militarizing them at a rapid rate, it has openly challenged that most hallowed of I.S. foreign policies, freedom of the seas, straddling athwart one of the world’s most important waterways.

It appears unlikely that either of these three trends will be reversed in the near term. Not only do they threaten U.S. interests, but those of China’s neighbors – whether a rearming Japan, or the more vulnerable Southeast Asians whom Beijing attempts to dominate one by one. Again, whether by direction or at their own initiative, Chinese naval and air units are challenging the U.S.in international waters. The likelihood of a clash, perhaps one that cannot be managed short of war, appear likely in the offing.

sws-07-24-16