Great WAPO piece on how China's economic slowdown can complicate relations with the US.
Chinese leaders are under pressure to take steps to help the economy as a rare change in power looms. This fall, the Communist Party will choose a new general secretary and officials through the government.
“They cannot afford, during a period of political transition and political turmoil, to suggest any loss of economic control,” [Eswar] Prasad said.
China and the United States are the twin engines of global growth, and both need each other to take steps to keep economic activity going.
China has a number of tools at its disposal to stimulate economic growth — some harmful to the United States, others potentially neutral or helpful. China routinely subsidizes companies that locate there, reducing the competitiveness of U.S. businesses. More favorable programs include China’s effort to boost government spending and lower interest rates to increase lending . . .
It’s also possible the United States might take steps that could aggravate relations with China.
When the Federal Reserve embarked on another aggressive campaign to lower interest rates in late 2010, China howled, saying it would devalue the dollar and help U.S. exports. And indeed, the dollar did come down some, and exports boomed.
But the dollar has since rebounded, likely as investors have sought security in U.S. Treasury bonds.
China might signal similar concern this September, if the Fed launches a round of so-called quantitative easing to jolt growth.
Point being, we are locked in a symbiotic relationship with China. There is no good global economy without us and there is no good global economy without them.
This is what gets me when Pentagon strategists casually consider war with China, to include direct attacks on the Chinese homeland. What happens to the global economy when the two intertwinned biggest national economies decide to start blowing each other's citizens up? The global economy would tank at a speed that would stun everybody. There wouldn't be any days or weeks of bombing campaigns. We'd have global economic turmoil of a stunning nature well before that, as the markets would freak out.
But I advise people to read the CSBA scenarios as they pertain to war with China, because they are downright hallucinatory. From my China Security piece of a while back:
Reading through CSBA’s full-up exploration of ASBC, the resulting war between China and the United States strains credulity beyond all reason. Three maps in particular depict what are logically lengthy strike campaigns against China’s radar/space facilities, ballistic missile facilities and submarine bases. In total, they suggest a China-wide bombing campaign by the United States of such tremendous volume that, as CSBA’s authors note, America would be required to dramatically ramp up short-term production of precision-guided munitions. Toward that end, one supposes, America should preemptively terminate all trade with China; trade that would financially underwrite the production lines of such weapon systems—again, to service a theoretical protection of “the free movement of goods around the world.”
Beyond that fantastic scenario extension lies CSBA’s plans to basically destroy the entire Chinese air force and submarine fleet, plus institute a “distant blockade” that would see us interdict and search—and here the irony balloons—China’s seaborne trade, which ought to be fairly simple since so much of it involves the US economy. And because it’s not easy to stop committed large ships (don’t tell Somalia’s pirates), CSBA broaches the notion of using Air Force bombers to “provide ‘on-call’ maritime strike.” One can only imagine how many thousands of Wal-Mart containers the US military could send to the bottom of the Pacific before the White House would hear some complaints from the US business community. But why let that reality intrude?
Sounds crazy enough, right?