China is the biggest and fastest-growing rising power (Garret, 2010:29). Its rapid and profoundly steady economic growth increasingly facilitates the simultaneous expansion of its military power. Beijing’s gravitas as an actor in the international system was considerable even before the last 30 years of impressive growth. In 1970 China already held a permanent seat in the UNSC and had 20 nuclear-tipped ICBMs (Burr, 2000). This essay analyzes whether China’s 30-year-long economic development and its far-reaching implications pose a genuine threat to the United States. It does the same with China’s military development. But before outlining how we are approaching these central questions in this paper, we need to clarify what we understand as a ‘genuine threat’. Succinctly, we interpret here a ‘genuine threat’ to be an eminent danger or direct challenge to another actor’s existence or his vital interests.
We first tackle the question of China’s economic development, examining the potential challenges this may pose to the US, to demonstrate, that the challenges posed are mostly outnumbered by the opportunities at hand. The argument of growing interdependence and the enmeshment of China in the structures of global economic governance will be evaluated, to examine its potential significance for Sino-American relations. Subsequently, an analysis of the military dimension of China’s rise will follow, examining the challenges posed by Beijing’s ascension in Asia and beyond, with the aim of identifying the space for conflict, accommodation and understanding with America and its regional interests. Throughout the essay, we refer to the ‘China Threat’ theory, developing their arguments and testing them against evidence at hand. We agree with Ramo (2004:7), that of the most interesting aspects of the ‘China Threat’ debate is that the ‘louder…it becomes, the less sense it makes’. Our findings suggest that attempts to present China as an existential, pressing and genuine threat to the US, are, at this stage at least, exceedingly exaggerated.
Chinese Economic Development: Threat, Challenge, or Opportunity?
Nicholas Kristof, predicted in 1993 (p.59) that, ‘if continued, China’s rise will be the most important trend in the world’. Well China has in fact continued to rise rather steadily for 17 years since that prediction, and it seems China will continue to rise in the proximate future (Makiel, 2008). As Bijian (2005:18-20) points out, the main driver of China’s rise, the motor behind its expanding influence, is its profound economic growth. In the last 32 years, China has averaged GDP annual growth rates ‘of more than 10%’ annually (Kaplan, 2010:22). This trend accounts for China being the ‘fastest-growing’ economy in the world (Makiel, 2008:24). Since 2010, China has emerged as the world’s second largest economy after the US (Barboza, 2010). Overtaking its regional competitor, Japan, China emerged as the most powerful economic actor in Asia.
Despite these impressive economic achievements, this paper will argue that China’s emergence as an economic superpower, is certainly not a threat, and though it does pose some challenges, they clearly are of less magnitude than the great opportunities it presents. To begin with, it is important to remember that America remains by far the most technologically advanced economy and still possesses roughly four times China’s share of the global wealth- China is not pushing America in the sidelines of the global economic order just yet. Moreover, China is still a developing country, still ranking 97th in terms of GDP p.c. (IMF, 2010). One may rush to say this is irrelevant. Well, this is not true in the case of China. China’s priority is economic development and modernization (Bijian, 2005). For as long as China lags behind in terms of economic development and living standards, China’s leaders will concentrate on thriving in this arena (Bijian, 2005:18). It is critical for the progress of China as a nation, the survival of the CCP and its leadership, as well as for social cohesion and national unity (Shirk, 2008:7-8,256).
‘[China] has come to rely on international markets, global institutions and free trade to achieve economic growth’-(Halper, 2010:1)
Moreover, as Waldron (2005:719-721) points out, there are several reasons to believe that though possible, it will certainly not be easy for China to continue to rise at that pace. It will indeed require the prioritization of the economy over all other issues, and also the minimization of any tensions in its foreign relations, as China is dependent ‘to an unhealthy degree on exports’ (Waldron, 2005:719). There are many additional factors why Chinese economic progress largely depends on the country’s (evident) commitment to ‘heping juegi’. Notions of ‘codependance’ (Garret, 2010:29) and interdependence are central to understanding, why Beijing and Washington genuinely need each other for their mutual economic advancement.
Importantly, it is true that China’s Central Bank holds the world’s largest foreign currency reserves, including the largest share of US dollars. Some like Miller (2010) see a danger in this, stressing that China’s dollar reserves equip it with leverage over the US. Such analysis neglects the fact that if China does attempt to speculate against the dollar, this means China will lose billions because of the dollar value it holds. Hence, it has become partially China’s interest for the dollar to be stable and thriving as opposed to unstable and collapsing. Furthermore, it is important at this stage to reiterate that China needs to devote a larger effort to remain a reliable economic partner, as potential repercussions are graver. Reversely, US’s long held position at the peak of the global economic pyramid enables it to turn more easily to other rich economies to secure increased partnership (even at a higher cost).
Additionally, China has been buying American debt in IOU’s and bonds. This paper agrees with Garrett (2010:29-31) that the format-‘China buys American debt and Americans buy Chinese goods will endure’. This is the case because both benefit through this model, addressing their imbalances to strike a mutually beneficial equilibrium. ‘China Threat’ proponents might again be alarmed by this ‘erosion of America’s economic sovereignty’ (Ridley, 2005). They again seem to be missing the whole picture. Instead of interpreting this development as a danger, they should be welcoming it as a positive step. Chinese purchases of US debt integrate China further into the world economy, but also tie China to the flourishing of the American economy. Based on the analysis conducted above, it should also become clear that if US fails/stops for some reason to continue repaying its debt, this would first and foremost damage Chinese economic interests, leaving the CCP leadership with very restricted room for manoeuvre.
China’s Integration in the World Economy
Apart from buying America’s currency and debt and US being the largest importer of Chinese goods, China has integrated economically with a series of other capitalist economies. It has bought the rights of Greek ports, Irish debt, German technology, and is the EU’s largest supplier of a series of commercial goods. China’s experts now increasingly man top offices in the IMF and the World Bank. Added to this, China’s commitment to economic cooperation was exemplified in joining the WTO (Kynge, 2006:226-227). Indeed with opt-outs –not very different ones though than many Western WTO signatories including America. China’s WTO accession exemplifies Beijing’s determination to be a reliable centre of economic power, abiding by the accepted norms and regulations of international trade (Lardy, 2002:21). Put simply, engagement, or better, enmeshment works (Roy, 1996:766). Kynge (2006:227) summarizes well the above-developed argument:
‘China is perhaps too much wedded to the world, too deeply insinuated into its organizations and treaties, and too dependent on others to bite the hands that feed it’.
China has also become a ‘key’ market for Japanese and Taiwanese goods. These trade ties, should come as a reassuring sign to ‘China Threat’ proponents like Kristof (1993:67-68) and Bernstein and Munro (1997:29-30) whose anxiety reverses around Taiwan and/or the Senkaku islands. One could argue that given the economic interests derived from the economic interaction of these three parties, chances of confrontation decline. Especially, given that China, who ‘China Threat’ proponents see as the most aggressive of these three actors, is the one who needs economic stability the most. The economic argument sheds light to why the diplomatic and economic cost of any serious tension over territorial disputes constitutes the latter very unlikely.
The Real Problem? – Chinese Currency Manipulation
Beijing has been systematically preventing the Chinese Remninbi (RMB) from appreciating (Morrison&Labonte, 2010). Hence, with the RMB undervalued, Chinese exports are rendered disproportionally competitive. This policy, not only boosts Chinese exports, but also facilitates attracting FDI. As certain American enterprises find it difficult to compete with the (‘artificially’) cheap Chinese exports, US Congress deems that China is effectively ‘exporting unemployment’ (Bergsten, 2010). Though figures are often exaggerated, this Chinese policy indeed harms certain American economic interests.
However, America and other parties affected, have apparatus in their toolbox to address this challenge. Obama employed the diplomatic tool, devoting the largest part of his bilateral with Jiabao in the White House on this issue. The US congress, took a harder line adopting certain protectionist counter-measures. To complicate the issue further, Morrison and Labonte’s (2010:27-28) Congress-summoned report concludes that ‘none of the solutions guarantee that the bilateral trade deficit will be eliminated’; and that if China can keep combining the advantages of ‘low-cost labor and rapid productivity gains’ Chinese exports to America will continue to grow ‘independent of the Exchange Rate regime’. The analysts continue explaining how a swift revaluation of the RMB could actually prove more destabilizing, with China having to massively sell its currency reserves to achieve this. This paper wants to highlight that China is still a developing country, that Beijing has allowed already RNB to appreciate, and that Washington’s efforts should concentrate on finding the most constructive policy-response to this sensitive issue for both China and America. This could be coupled with an emphasis on improving the competitiveness of American goods.
In sum, it seems that, overall, in the decisive sphere of economics, there seems that China and America have found great space for cooperation, trade, multilevel interaction, trust, and mutual profit and development. The magnitude and vitality of these ties suggest that there is very little space for economic warfare or other deliberate attempts to hinder each other’s economic prosperity.
The Military Challenge Posed by China: Real, Imagined or Reasonable?
China’s sustained economic growth has simultaneously enabled a modernization and empowerment of the People’s Liberation Army (PLA). Chinese efforts mainly concentrate on developing PLA’s air-force, transforming China’s ‘White-Water’ Navy to ‘Blue-Water’ and maximizing the effectiveness in terms of utilization and training of the PLA standing army. One could add to these R&D in Space-Satellite Technology and Cyberwarfare capabilities.
Firstly, this paper does not hold that military force is, in itself, a bad thing. Instead, there are legitimate reasons why a vast country like China, with extensive borders to police and protect, in both land and sea, might require an effective and modernised military (Fravel, 2008). However, ‘China Threat’ theorists interpret China’s military ‘build-up’ as a creeping attempt for China to eventually attempt to re-integrate Taiwan by force (Kristof 1993:68) and press for the 200-miles claim linked with the Senkaku/Diaoyutai islands (Segal, 1993). Both claims can be challenged.
As far as Taiwan is concerned, there seems that a considerable degree of diplomatic understanding has been achieved. US commitment to ‘One-China policy’ and the mutual recognition by China and Taiwan that cooperating is safer and more productive at this stage, render predictions of war rather baseless. Kagan (2008:34) sees this war as ‘eventually unavoidable’. The argument is that pro-independence forces will declare independence, enticing China to attack (Manhubani, 2005:54-56). This argument seems less valid if one examines the stance and the leverage of America in this issue. So far, the US have managed to advise and on occasions restrain Taiwan’s leaders from any overt and potentially aggravating attempt to alter the status quo. Deterrence theory best explains why this is -and is likely to remain, the case (Ross, 2002). The US, with its overwhelming military capacity can guarantee Taiwanese security if China, mobilizes against it unprovoked. Reversely, China would be very sceptical before confronting the US militarily for time to come. Furthermore, the US can explain to the Taiwanese, that if they violate or attempt to violate any of the existing agreements, it will be difficult for America to come to Taiwan’s aid (Ross, 1997; Ross, 2002:80-83).
Respectively, China’s 200-mile policy has proven largely a rhetorical exercise. The very time this essay is written, America is having a joint exercise with South Korea within the 200 miles zone. Apart from Chinese flexibility, one must not neglect the comparative naval military capabilities of China and America. Even if China attempted to block the Malacca Straights (scenario developed in Halper, 2010) in 2015 or 2020 using a handful of Aircraft Carriers (that it may have acquired by then), America, potentially joined by France and Britain and other allies who would not accept to see this crucial sea lane closed, could respond with despatching more than a dozen aircraft carriers. Therefore, the author of this paper thus finds speculation on the impact of Chinese aircraft carriers -at this stage when both Congress reports cannot specify when and if these will appear- at least unconstructive (Annual Reports to Congress 2009:53, 2010:57).
Another point we need address is the suggestion that China is developing the sort of capabilities necessary to tackle American military advantages (Halper, 2010:15). This view suggests that China is strategically ‘leapfrogging’ certain key aspects of America’s military capacity. These include underwater submarine platforms in the proximate underwater milieu of China, and anti-aircraft-carrier short distance, surface-to-surface and surface-to-air missiles (Wortzel 1994:165-166). Though this paper understands the above-mentioned argument, it still believes that this suggests no threat per se. It is still required for the US to send its aircraft carriers in China’s immediate milieu for them to be threatened by these Chinese capabilities. Hence, one could argue that the defensive dimension of the Chinese rationale here is stronger.
The Numbers Game
‘China Treat’ theory suggests that China threatens its milieu and America by systematically lying about its military expenditure (e.g. Carpenter, 2007). The argument goes that China’s leaders, malicious and cunning, are undertaking an ambitious military project to reach military superpower status (Tkacik, 2007:1). To achieve this aim without raising alertness, they methodically understate their defence spending. For example, Bernstein and Munro suggest that while the Chinese claimed to have spent $8.7 billion in 1997, in fact, the actual figure (taking also into account PPP) was ‘a minimum of $87 billion’. Similarly, Halper (2010:12) suggests, that in 2008 the Chinese claimed a military budget of roughly $30 billion, when, in fact, they were spending between $105 and $150 million. The Chinese indeed are not very transparent with their defence budget (Roy, 1996:759), not including R&D expenses, arm sales income, and does not take PPP into account. Indeed, critics have a point here; China does spend more on defence than it tells us, or seems at first sight. However, this does not explain why China poses a threat. Even when factoring PPP on the highest US estimates of Beijing’s real military budget, the latter remains a fraction of America’s. Added to this, the world’s sole superpower has been for six decades the epicentre for research on military technology. Worries of China catching up, at this stage, might be slightly premature.
‘China’s hard-eyed communist rulers…put at risk the very national existence of the US’-(Gertz 2002:199).
Let us assume that indeed China is developing a formidable army, and that it will achieve this soon. This still does not reveal much about CCP’s intentions. Intentions (and interests) should be the epicentre of the debate (Roy 1996:765). ‘China Threat’ champions Bernstein and Munro (1997:24) suggest that the People’s Armed Police, over-manned and stormed with ex-soldiers, serves as ‘a reserve for…international conflict’. This suggestion can be challenged on multiple grounds. Primarily, one must not neglect that the world’s most populated nation -even if it was a western liberal democracy, would still require a respectively large police force. Additionally, a country as vast as China, both in terms of borders and population has both the need and the capability to generate a large army. Overall, the fact that China seeks a large army is not bad or irrational or threatening in-itself. The US maintains and spends in military more than the next seven states combined (5 of which are staunch US allies).
Thus the question persists: why is Chinese military power perceived as threatening when American is not. Many China Threat theorists suggest that there are historical factors, issues associated with the illiberal nature of the CCP, the hawkish nature of the PLA’s chiefs and other arguments along these lines. The problem with these suggestions is that CCP and PLA leaders, apart from some absolute red lines (e.g.-Taiwan) and some more flexible ones (200-mile-policy), especially since 2003, emphasize their efforts to ensure a ‘prosperous’ and ‘peaceful rise’ for China (Suettinger, 2004). This has been reflected in the speeches of China’s leaders and Jiabao’s in particular, where he often identifies the parameters and stresses the fundamental significance of China’s ‘heping juegi’. Fravel (2008:312-313), further underlines that China prefers and seeks to settle border disputes diplomatically. China, historically, used forced surgically, with limited aims, non-pursuing territorial expansion, as much ensuring recognition and respect of its sovereign borders.
China’s Real Military Threat(s)?
‘Cyber-warfare will provide China with an asymmetric advantage to deter stronger military powers’-(Fritz, 2008:28)
Present-day ‘China Threat’ proponents as Halper (2010), stress that there are three areas today where China challenges directly the US: Cyberwarfare, Surveillance (satellite and conventional) (Myers, 2010) and Space technology/capabilities (WSICP, 2006). Space is an area where in the absence of cooperation there can be no real benefits for the actors involved. In fact, roguish and hawkish actions by any actor can be deterred or retaliated in kind by almost any other satellite-holder. Thus, Space technology mostly maximizes the effectiveness of Chinese surveillance (Myers, 2010). Surveillance, though key for information gathering, is not threatening in itself. Therefore, Cyber-war capabilities are the major source for concern. The effectiveness and extensive record of Chinese cyber-attacks suggest China has taken a leading (and arguably aggressive) role in this crucial sphere. China has proven to command substantial technological know-how and impressive execution skills. In the last decade, Chinese cyber-militia have managed to penetrate key US institutions including the Pentagon, IOs as the WTO (Harris, 2008; Fritz, 2008), as well as corporations as Google who were defeated-out of China’s cyberspace (BBC, 2010). This paper holds that perhaps the major ‘military’ challenge posed by China is in the cyberspace. The threat here is genuine and tangible, but addressable.
Chinese power is rising fast. The ‘faces of Chinese power’ are also increasing (Lampton, 2007:115). Nevertheless, the enmeshment of China in the global economy, the structures of global economic governance and regional economic integration increasingly account for China’s economic prosperity, the nation’s priority. Economic interdependence and the necessity of economic stability and progress in China encourage stability in China’s foreign relations and advance the peaceful settlement of conflicts and disputes. Codependance between China and America, though with challenging facets, remains principally a mutually beneficial relationship, likely to continue. In the economic sphere, there is more room for appropriating opportunities and intensifying cooperation than there is for conflict and completion.
In the military sphere, the challenges linked to China’s military development have been and can continue to be addressed with effective combination of multilevel and on-all-sides diplomacy with deterrence. Such an approach has proved and can continue to be effective on sensitive issues as Taiwan and the Senkaku, and serve as a tested basis for Washington’s policy. The ‘peaceful rise’ goal, is inextricably linked with the goal of rapid and sustainable economic development, and defines the context in which the PLA can operate. Perhaps the major military challenge posed by China is in the field of Cyberwarfare, and Washington has to do more in this sphere if it wants to be guarded against this threat.
This essay has shown that China’s economic and military development do not endanger America either genuinely or directly at this stage. Cooperation and opportunity are the defining features of Sino-American economic relations, whereas accommodation and understanding the military. As a final note, the author of this paper would like to recognise that due to the constraining word limit, he opted not to link China’s economic success with Beijing’s growing soft-power. It would be useful perhaps to delve-deeper into this new debate, initiated by Ramo (2004) and picked-up by Halper (2010), to assess the impact of this facet of China’s power on the US.
*Information cut-off point: December, 2010
 Some analysts stress that it should be thought as third, after the EU (Bergsten, 2008)
 China is now predicted by some analysts to surpass the US by 2030 (Barboza, 2010)
 US’s 20% compared to China’s 4% (CIA’s World Factbook, 2010; Bijian, 2005:18)
 China depends 40% on exports, twice the extent other great economies do (Waldron 2005:719).
 Heping Juegi is the ‘idea of China’s “peaceful rise” to international prominence, as a responsible, threatening and nonthreatening global power’ put forth first by Bijian in 2003 (Suettinger 2004:1).
 This is linked to the purchase of foreign currencies. Bergsten (2010) explains that to keep the RMB undervalued, China purchases over a billion US dollars worth of currency reserves.
 (e.g. through R&D where America still holds a decisive lead, instead of focusing on how to reduce the competitiveness of Chinese products)
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 Storey and Ji conducted a study into Chinese aircraft carriers in 2004, to find that the two of the three aircraft carriers that had passed from China had developed into museums and amusement parks.
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