The Dragon is in flight. China has started to flex its military muscle – it was only a matter of time. China has challenged before, lest we forget the Boxer Rebellion. But time, conditions current realities, economic and political are different.
In 2011, the US debt was a little more than 14. 3 trillion (USD) when the economic crisis hit, again. The President and the Secretary of the Treasury warned of a catastrophic economic collapse if the debt ceiling was not raised, so that credit and cash could be infused into the US economic apparatus. Along came China again, the first time was with 700 Billion (USD) assistance during the financial debacle of 2008 with an immediate infusion to shore up the US economic system. In effect the US became a debtor to China. China fundamentally saved the day by preserving a US currency that is critical to international commerce. In doing so, China also preserved its’ own international trade apparatus. The overwhelming trade on physical products – consumable or commodity by China is done on the US currency.
Based on US Treasury reporting, 68 cents for every dollar is owned by individual investors, corporations, state and local governments and foreign government that include China. In quantifiable dollar terms that comes to approximately 10 Trillion USD of debt. Based on the same reporting approximately 46% of the US debt is held by foreign governments. The largest foreign government extending credit to the United States is China. China holds about 8% of the US debt, about 1.2 trillion USD. It is the third largest debt holder to the US falling in behind the Social Security Trust Fund and the US Federal Reserve, respectively. Consider additional foreign holders of US debt, specifically Hong Kong with 122 Billion (USD) and Taiwan with 153 Billion (USD), respectively. The US citizens hold less of American debt than China. American citizens hold about 960 Billion USD of their government debt. All in all the development of such uncharted relationship development with untested long term partners that have historically not been in congruence makes for awkward diplomacy moving forward.
That said and acknowledged it places the China in a position of potency in economic terms to say the least. One might conversely argue a reverse leveraged position in the relationship that serves US interest but ultimately what we have is economic détente at least for the moment.
But the Dragon is restless, and its dynamic is multifaceted. China now is amplifying its presence in several alternative aspects, military being one. With respect to defense the US military after over a decade of operations in Iraq and Afghanistan is retracting its budget. Nonetheless, the US is still the largest global spender of in defense with a little over 4% of the national GDP committed for military expenditure. China is about half at 2% by has consistently been on the rise for the past decade. China has made here intentions clear with the development of aviation at sea by way of her aircraft carrier(s), development of stealth technology and remote defense capability (Drones) Some suggest that China has a formidable capability to wage disruption in the cyber arena.
Still China in defense technology in in catch-up mode. She might have aircraft carrier(s) but lacks blue sea capacity to support operations. Commitment and adherence to long term objectives will give her blue sea capacity – but that might still be a decade or so away.
Add to this that China has acquired significant mining and natural resource assets globally, including agro land – and the Dragon is becoming more and more a present and challenging spheres to geo-political and military interest.
We are only beginning to have a glimpse to the challenges that we will need to confront in light of the multi-dimensional components of China’s exertion of its capability in various segments. We are on the eve of a new cold war that will in no way resemble the one that concluded with the demise of the Soviet Union. We must therefore reflect on experiences to accommodate a plausible adjustment in the sphere of influence with the intent of minimizing possibilities of conflagration. No doubt national interest will be compromised in any accommodation.