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10:35AM

Why the Chinese military can only get so big

Pentagon hawks tend to do these wonderful extrapolations of Chinese defense spending: taking the highest estimates of gross economic size and then imagining that nothing changes in Chinese politics or economics or society that would threaten the military's share.

This is, of course, complete and utter nonsense, to wit:

WSJ interview with CEO of Frensenius, one of the largest health-care companies in the world.  Based in Germany, already huge around the planet (one-third of the dialysis in US), and gearing up for a big push into China.

The focus?  Dialysis.

What? China has all these patients all of a sudden?

Well, yes.

Yes in that it's always had a sizeable portion of people who've needed it, but maybe had their demand unmet due to poverty.

Yes also in that dialysis requirements tend to rise with the wealth of a country.  The truly poor tend to go without, but the middle class and rich, as their numbers swell . . . tend to demand it - go figure.

Then there's the rising "wealth" of the government itself: China can, and is more willing to, pay for such services as part of government-sponsored health-care:

WSJ: How's the dialysis business in emerging markets?

Mr. Schneider: Fantastically well. [Historically] there's not that much demand for dialysis products or services because it's a fairly expensive treatment. Now, there's a whole lot of catch-up demand. Once a country nears $8,000 to $10,000 in annual per capita GDP, [governments] and insurers really start to pay for dialysis. That's when things take off.

Coincidentally, a lot of non-democratic governments tend to go democratic in that range.

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Reader Comments (1)

In either event, the size of a country's military will be no true measure of its lethality or effectiveness. It will rather be its technological savvy instead, i.e. cyber warfare capabilities, drone warfare, intelligence, etc. You only need a finite number of boots on the ground to occupy a city, and some cities you'd never occupy, such as Tehran or Beging.

July 24, 2012 | Unregistered CommenterSteven

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