You might have missed the news: China is now No. 3.
Statisticians have finally crunched the 2007 numbers and discovered that China surpassed Germany that year to become the third-largest economy in the world. With its gross domestic product (GDP) at $3.32 trillion, the Chinese economy is now poised to overtake No. 2 Japan at $4.38 trillion. The global economic crisis is bringing down Chinese growth figures -- probably to around 8% for 2009 -- but that's still way better than the anemic growth or even contraction that the major industrialized countries will experience.
As a Merrill Lynch economist in Hong Kong put it: "In 2007, the gap between the growth rates of China and other big countries was huge. Actually in 2009 the gap between will be even bigger."
Whether China still qualifies as a poor country given its per-capita GDP of only $2,500, whether it can sustain its growth and contain domestic unrest, whether the global downturn in consumer spending will eventually drag down China's export industries, whether China will surpass the United States to become the largest economy in the next decade: These are interesting questions. But they're not the questions that interest me at the moment. I'm concerned about another figure -- China's military spending -- and what it will mean for the region, for the United States, and for the global military industrial complex.
China increased its military spending about 18% last year. Given the still considerable economic growth projected for 2009, it'll probably do the same this year as well. The modernization of China's military is mirrored by similar transformations in Japan, South Korea, and Taiwan. Even though the global recession will hurt these three countries, they are still moving ahead with expanding their air, sea, and land power -- in part to balance China.
The United States, too, is eyeing China's military spending. The Pentagon has routinely identified China as the only viable competitor on the horizon. China's ability to weather the current economic storm and overtake Japan in the near future as No. 2 will only serve to narrow the Pentagon's focus.
Like the state of Kansas Thomas Frank wrote about -- soon to be a movie -- China isn't acting in its own interest. By building up its military, Beijing is diverting precious resources that could go to equitable economic growth or, as Foreign Policy In Focus (FPIF) contributor Eugene Coyle writes in Postcard from Beijing, sustainable energy projects. China is setting into motion a regional arms race. It's handing the Pentagon an easy argument for budget increases of its own. There are, as in Kansas, some non-rational factors at work, such as Chinese nationalism. Still, when will China wake to the realization that such military spending is, in the end, self-defeating?
China isn't, of course, the only reason for military budget increases among its neighbors and competitors. In all of these countries, at a time when a peace dividend should augment a stimulus package, a new military Keynesianism has instead emerged. This belief that the defense sector can pull the economy out of the recession is particularly evident here in the United States, even though numerous studies have shown that civilian sector investments produce more jobs.
As I write in The Risk of Military Keynesianism, "Defense contractors are scrambling to prove that they play an essential role in keeping factories running and workers employed. Lockheed Martin recently ran a full-page ad in The Washington Post that linked its F-22 Raptor -- an expensive weapon of dubious utility in today's strategic context to 95,000 jobs in 44 states. Not to be outdone, the shipbuilding industry lobbied Congress to send a letter to Obama arguing for a doubling of the rate of naval shipbuilding -- to preserve 400,000 jobs in 47 states. With the U.S. economy shedding nearly 600,000 jobs in January, these arguments find a receptive audience on Capitol Hill."
Beware of that other dodge of military Keynesianism: selling arms abroad to help defense contractors at home maintain production. "In 2008, as in each of the previous seven years, the United States led the world in arms sales at $32 billion," writes FPIF contributor James Carter in Obama: Cut Arms Exports. "In 2006-2007, the U.S. sold weapons to more than 170 nations, up from 123 at the start of the Bush administration." One of the big deals, announced last October, was a $6.5 billion arms package for Taiwan.
Which brings us back to China. Secretary of State Hillary Clinton will be in Asia next week on her first foreign tour. Her recent predecessors in the position, going back to Cyrus Vance, all went to Europe or the Middle East on their first overseas ventures. The trip sends a signal that despite the wars in Iraq and Afghanistan, Asia is still important to the White House.
Although Clinton will have a busy schedule, what with exploring a new "comprehensive dialogue" with China and firming up alliances with Japan and South Korea, one issue that she hasn't so far included on the agenda will be the pernicious impact of all this military spending. The five countries negotiating the end of North Korea's nuclear program -- the United States, China, Japan, Russia, and South Korea -- are responsible for 65% of global military spending (with the United States alone accounting for nearly 50%). Indeed, when it comes to our allies in the region, Washington wants more military spending and more burden-sharing.
I devoted an earlier World Beat to this Asian arms race. Now, however, there's something we can do about it.
Activists in the United States and Asia have launched the Pacific Freeze campaign to freeze and then reduce the military budgets of the countries in the Six Party Talks. As our campaign's Call to Action states, "A freeze on military spending is just the start. Reducing military budgets -- as well as freezing arms exports and imports to the region, stopping the construction of new military bases, and halting the construction of new weapons systems -- will also be critical components of a collective peace and security system for the region. As the leading military spender, the United States must lead the way with military reductions. We recommend that a portion of the savings go into an Asian Green Fund to help countries in the region address global warming."
As FPIF contributor Wade Huntley writes in The Promise of the Six-Party Process, the Pacific Freeze's "goal of freezing military spending by all Asia-Pacific governments takes seriously all facets of the security dynamics of the region. At the same time, the focus on spending on military capabilities itself, rather than on just the uses for which these capabilities are employed, is a distinct step away from viewing regional security needs through a strictly sovereign state lens."
Read the call; sign the petition; join the new campaign. Also, consider attending the upcoming conference on U.S. bases, Security Without Empire, here in Washington at the end of this month. The problem isn't just with China. Even after the election of Barack Obama, many are left wondering: What's the matter with us?
Crossposted from Foreign Policy In Focus.
To subscribe to FPIF's World Beat, click here.