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The Challenge of China

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I remember more than half a century ago when a high school classmate of mine traveled to Moscow. He came back with an incredible tale. The people there were surprised to learn that they were a threat to world peace. They primarily were afraid that the USA would attack them! Having explored China on several occasions, while I don't think the possibility of an American invasion is much of a concern, I can believe that the leaders of this country might think there is a world conspiracy to derail their progress.

Propaganda is a useful tool to keep the masses correctly educated, from the leadership point of view. There is no doubt in my mind that the military-industrial complex (MIC) feeds juicy stories to the media (maybe not as much as in China) to maximize future funding. Until the end of the Cold War, the Soviet Union served as the spur to increase spending on war (some call it defense). On November 9, 1989 communism collapsed, and the world became safe from mutually assured destruction, also known as MAD.

But the MIC (click to listen to the warning of President Dwight Eisenhower) remains dominant and continues to control much of spending in our country. Can you believe that after a few years of stability after the fall of the Berlin Wall, our defense budget has largely continued to increase over the past decade, with next year being the highest inflation adjusted amount since the height of the Cold War? Mind you, the fossil industry and farm lobby, plus host of other interests, also do quite well. Our political system needs a major overhaul, but as that is the responsibility of Congress, and lobbyists mostly determine policy, don't count on any viable enlightened legislation surfacing anytime soon.

But, on the other hand: the USA is the greatest country ever, and we are the envy of humanity today. Life in general is full of compromises, and you optimize within existing constraints. We're doing okay.

So the issues above leave China as the common challenge: militarily, economically and environmentally. The Group of Eight can steer this country either to become a deadly enemy, or, conversely, for the mutual benefit of all, towards amity as a supreme global partner.

The situation today, though, is on the borderline of ominous. China's reaction to the Nobel Prize award to Liu Xiaobo was disappointing, and only shows how threatened they feel. I have recently written two articles regarding China (messages to Hu Jintao and Xi Jinping), not expecting any response, as such, but sufficiently stressed to worry if I would be able to leave the country when I visited the Shanghai Expo a couple of months ago.

For one, forget about China conquering the world through war, for they spend one-sixth on defense compared to the U.S. Be a tad concerned about their economic surge, but understand that there are limits, remembering Japan being touted as a future #1, for example. From what I've observed, actually look for a major shift in their concern for the environment, as they have good reason to want to become greener.

So here is my take on the future of China:

1. China will remain #3 with respect to Gross Domestic Product for a long time to come, but this is easy to predict, for the European Union is at $16.5 trillion, USA $15 trillion and China $5 trillion. Actually, the U.S. is not even in the top 5 in terms of GDP/capita. We are #9 and China is #94.

2. China will most probably get old before it gets rich. I qualify because, when I stopped through Shanghai, I learned that the one-child policy in this city is being lifted to a two-child option. I expect nothing much to change, though, as children are a burden in a sprawling metropolis. Japan is a good example that generous benefits to have more children are not working too well because economy and lifestyle rule. The next worldwide Population Bomb is the explosion in the numbers of old people. By the way, an old country will begin to lag because one worker cannot support too many people. In the U.S. this ratio (worker to retired) was 5:1 in 1950, 3.5:1 today and will be 2:1 in 2060. China today is a comfortable 5:1, but this ratio was 30:1 in 1978 and the slide is continuing, rapidly. Soon one worker might well support three or four parents, a wife and a child. The Chinese social security system is spotty. Yes, a ratio of 1:5 could prevail for some.

3. China will increase its military budget sufficiently so as to effectively intimidate and posture nearby countries to gain control of marginal property, but has already decided to cool defense spending. In other words, China has smartly decided that it makes no sense to challenge America at war. They will prioritize the economy and environment.

4. China will not implode like the Soviet Union, where half the people consisted of various minorities. Ninety-two (and might well be 96%, depending on your definition) percent of Chinese are Han and even in the western territories, there is an ongoing plan to increase Han dominance (Uighurs were 90% the population in 1949, but this region is now more than half Han). However, remember that China initiated this same policy in Cambodia with Pol Pot--the Killing Fields-but pulled back.

5. China will continue to remain difficult about conforming to any global warming agreement, but they will look better than the United States, for our Congress will do nothing for at least eight years. China will sound greener because their environment is a mess, and the people are finally saying something about it.

While there are those who believe that China will rule the world, including a few close friends of mine, the odds, I think, are greater that in time some of the above hurdles will prove to be insurmountable. India could have more people by 2030, and they are better positioned in next generation technologies and systems, but they have a few fatal flaws. Russia is getting old, fast, and amazingly enough, they are leaning back towards communism. The European Union is disintegrating. I remain concerned about the double hammer of Peak Oil and Global Heating, but feel reasonably comfortable that if Humanity can survive a next economic crash, America will remain dominant.