Trying to unwind this demonization trend

Another John Milligan-Whyte and Dai Min piece in China Daily on how to--in my words--slow down this demonization trend on China here in the States.  I cite it because my WPR column on Monday is exactly about the trend.

How can China end America's relentless 60-year-old policies of arming Taiwan? Deng Xiaoping's policy is to let time take care of currently irresolvable disputes . .  . Half a century after the Cuban Missile Crisis almost escalated into World War III, Cuba has never been invaded. America has not relented in its regime change policies toward Cuba. But President Kennedy agreed with General Secretary Khrushchev that America would never invade Cuba. As a result the USSR stopped dangerously arming Cuba's reaction to America's regime change policies.

That's actually a smart twist on what I wrote in "Blueprint" about trading the Taiwan scenario for a better strategic understanding with China ("locking in China at today's prices"):

• President Hu announces clearly in communications with President Obama that under no circumstances will China invade Taiwan militarily or seek to force its unification by arms; and in return for that memorandum of understanding
• the administration works to repeal the 1979 Taiwan Relations Act and its provisos about arming Taiwan and always maintaining a military capability to defend it.
• Once the act is repealed, the U.S. and Taiwan and China enter into trilateral security talks to de-militarize the situation (or better yet, have ASEAN host because that's the closest thing in the region to an alliance of sorts), but the Taiwan-Chinese political and economic relationship remains theirs and theirs alone to discuss.

Tell me that's not a better than the arms race we've got with the Chinese on the subject, or the one both sides fuel in the region (China with behavior, the US with arms transfers)?

Next up:

What can China do about American and South Korean continuous naval exercises each month projecting America's military power in the Yellow Sea? Deng Xiaoping's policy is that China should be unaligned in hostilities between nations, and always aligned with peaceful coexistence. China broke off military exchanges in reaction to the Obama administration's sale of military equipment to Taiwan when cross-Straits relations are improving. Now the Obama administration very much wants such military cooperation and exchanges. China should return to peaceful coexistence protecting policies. How? China's navy should join the American and South Korean naval exercises in the Yellow Sea. China also should continue to take a neutral position on the regional disputes such as the recent warship sinking event of South Korea.

Fine and dandy.  I don't think we should be in the business of military exercises in the region where China is excluded.  The whole point of those things nowadays is outreach more than improving operations.  Break down the walls.

Now for the South China Sea:

What can China do about having jurisdictional disputes with its neighboring countries which have now been complicated by China and America asserting conflicting "vital national interests" in the South China Sea? How can China put jurisdictional disputes back into their normal peaceful mode? China and the nations that it has jurisdictional disputes with can form a joint development corporation called "South China Sea Joint Development Corporation" to economically develop the disputed areas peacefully. It is easier to negotiate the size of each participating nation's investments, responsibilities and share of the profits of such a corporation with multinational win-win policies. The joint development corporation approach avoids the zero sum game ownership disputes during which no nation can safely develop the economic benefits nor safe guard its national pride and interests in the disputed areas.

On February 22, 1984 Deng Xiaoping discussed what now for decades have been China's successful solutions to the Taiwan and Hong Kong sovereignty issues with the Center for Strategic and International Studies. He said, "I have also considered the possibility of resolving certain territorial disputes by having the countries concerned jointly develop the disputed areas before discussing the question of sovereignty. New approaches should be sought to solve such problems according to realities."

Nowadays, The Center for Strategic and International Studies and other leading American think tanks should carry out the study Deng's proposal and present it to American policymakers and the American people. The Center for America-China Partnership and leading Chinese think tanks will help it do so.

That, to me, is an offer worth taking up.  Beats declarations of interest that only heat the situation up further with no outlet revealed.  Get the eggheads on the case, drag it out for months so everyone can have their say, run a few get-acquainted mil ex's in the meantime.  Work the thing for a real solution instead of gamesmanship.

It's all naive BS until somebody gets off their rear-end and actually does it.  Then it's big-time statesmanship.

Nice piece.

Of course, if China really wants to stop the demonization trend, Beijing needs to swallow hard on the Nobel Peace Prize and give up on that squelching effort. It's crude and won't work with anybody and just makes China look weak and scared.

I should acknowledge that John's and Dai's Center for America-China Partnership will be hosting me in Beijing and elsewhere for a stretch of time next month.  

Two I've been waiting on: UAVs poised to explode across civilian sector and China's preference for boys eroding

WSJ story up first.  Dovetails very nicely with the "Six Degrees of Integration" entry we had in the sample Wikistrat "CoreGap Bulletin."

The first prediction was an easy one for anybody who's worked for the military as long as I have:  UAVs will become a part of everyday life, just like the Internet and GPS before them.  When you work with the military, you simply come to accept these fantastic advances as routine, especially when you have years to get used to them mentally before they're unleashed upon the public.  I didn't come along early enough to catch arpanet (DARPA's original Internet; DARPA being the Defense Advanced Research Projects Agency), but I had years of exposure to GPS prior to its release into the wild, and it wasn't hard to imagine that it would change things--always being able to track exactly where you are. 

So with the UAVs getting smaller and smaller, the difference between them and what model plane enthusiasts have long toyed with gets less and less, meaning the latter enter the game. Already, as the piece points out, there's this gray area of regulation known as "recreational use of drones."  As one former CIA counterterror guy who now works for a drone company puts it, "The only thing you're bounded by is your imagination--and the FAA in the United States."

I used to predict that UAVs would be all over by now, because I could see the trajectory unfolding a decade ago, like with GPS, but then 9/11 kind of chilled that feeling, because all of a sudden, everybody was scanning the skies for dangerous objects. But with the Long War providing such a strong and persistent requirement, things got quickly back up to speed. 

And when you think about it, helicopters are actually pretty hard things to fly and so they come with plenty of crashes, so unless carrying bodies is a requirement, why not switch over to drones everything else.  Think of all the traffic and weather copter work. Then there's the paparazzi stalkings of celebrities or using helos to scout disaster zones.  None of that requires a body in the vehicle--just the video feed.

I know, I know.  Politicians looking for photo ops will suffer, but so will celebrities seeking to avoid them.

Great line from the piece from a divorce attorney:  "If the Israelis can use them to find terrorists, certainly a husband is going to be able to track a wife who goes out at 11 o'clock at night and follow her."

Safety issues galore.  Wait until the first murder happens in a civilian context.  Privacy issues too, of course. Bullying will follow, as will scams.  It'll be a new way to sneak into ball games or to virtually attend exclusive events ("Look, there's the President!"). And, of course, terrorists will use them successfully.

And many journalists will write "Pandora box" pieces, but life will go on, becoming that much more interesting/complex/weird and ultimately routine enough on this score.

Second one I've been waiting on and it's apropos of my Chinese daughter's birthday this week:  FT story on how property bubble is latest bit to erode Chinese preference for sons.  

The one-child policy came faster than urbanization could change age-old norms, so we soon got the dearth-of-females issue that a few demographers have beat to death as a cause for future wars ("Horny guys of the Middle Kingdom--unite and let's conquer . . . oh hell, let's just hop a plane to Vietnam and get a bride this weekend  I'm buying the first round!").  But when we were there adopting Vonne Mei, I remember all these young women seeing me hold her:  they'd bring over their boyfriends, point at me, and then punch them in the shoulder, spewing a few sharp lines.  Guy would look stunned and embarrassed, rub his shoulder while staring at me, shake his head a bit, and then meekly follow the young woman away.  You could just imagine what she said. 

But the vibe was really two fold:  "See!  Americans like girl babies!" and "See, that's how a Western man helps his wife by taking care of the child!"

You could see both norms beginning to take hold in the minds of young women who were getting better educations, were no longer trapped in the village, and were looking at urban careers in their future.  All these things combine to delay pregnancy, but they also shift the preference from boys to girls.  You need boys if working the fields is the big thing, but if you're going to age in urban settings, it's the girl who's far more likely to take care of you in your old age in an interpersonal sense (the Chinese adage of "A daughter is a warm jacket for a mother"), and if she's going to have a career now, then the difference between her and the moneymaking son erodes further, especially since the daughter doesn't cost as much as the son when it comes to marrying them off.  Custom in China has it that parents must buy the son a flat before he can marry.  

The FT piece points out that the tide has already turned in major metros like Beijing, going back almost 15 years.  China went majority urban a few years back and will urbanize at a stunning rate going forward.  Hence, the big sex imbalance fear, like most demographic issues, is already finding solution by the time we discover its outlines.  Doesn't mean there won't be a single generation significantly impacted; just means the problem is a lot more temporally bounded than realized.

And when you talk about that one generation being impacted, remember that a lot of these guys, if unable to find wives at home, will either travel for them or emigrate on that basis.  My favorite historical example of such willful flexibility:  Chinese male "coolies" come to America in the 1800s and end up building big chunks of the frontier West as manual laborers--like the RRs. They can't bring their women along and many are never able to return.  So who are one of their prime targets for inter-racial marriages? Irish Catholic widows, showing that where there's a will, there's a way.

In the end, China's "unique" problem goes away like it does everywhere else, because modernization tends to erase such "unique" values (that weren't really unique in the first place but simply represented a people trapped in time). Now, you could say Chinese couples are "time traveling"--a concept I want to explore in the Wikistrat globalization model: when change comes so quickly that it makes people feel like time is being compressed and thus they're rocketing forward in time in some domain. Think about it here:  thousands of years of custom altered in roughly one generation. That, my friends, is real time travel.  And it's social revolution.  China's rise has this impact at home--and abroad.

WPR's The New Rules: A Zero-Sum Future Doesn't Add Up

Writing recently in the Financial Times, long-time economic journalist Gideon Rachman lamented the passing of a post-Cold War "golden age," in which "countries shared a belief in globalization and Western democratic values." In Rachman's calculation, that consensus has been battered by the global financial crisis, which ushered in a "new, less-predictable era."

Rachman, whose book entitled "Zero-Sum Future" comes out next February, is clearly prepping the literary battlefield by positioning himself as an "anti-Robert Wright." The latter's book, "Non-Zero: The Logic of Human Destiny," argued that human progress has been characterized by -- and thus depends on -- our increasing appreciation for and adoption of cooperative behaviors. So when Rachman predicts more unpredictability, he's really predicting less cooperation and more conflict -- today's currency wars translated into tomorrow's shooting wars.

Read the entire column at World Politics Review.

WPR's The New Rules: The Two Chinas' Long Road to Common Ground

The Nobel Committee's decision to award jailed Chinese democracy activist Liu Xiaobo the 2010 Peace Prize came just days before China's Communist Party elite anointed political princeling Xi Jinping as President Hu Jintao's clear successor, highlighting the two Chinas that now seem to be passing one another like ships in the night. One China is propelled from below by a coastal workforce that is increasingly self-confident in its skills and accomplishments and growing income. The other, larger China is managed from above by political leaders who increasingly worry over the nation's social stability as they grow more self-defensive in their ruling style. 

Read the entire column at World Politics Review.

Big-War Thinking in a Small-War Era: The Rise of the AirSea Battle Concept @ China Security journal

Big-War Thinking in a Small-War Era:  The Rise of the AirSea Battle Concept 

Amidst increasing US-China tensions in East Asia, America has upped the ante with the introduction a new war doctrine. The AirSea Battle Concept is a call for cooperation between the Air Force and Navy to overcome the capabilities of potential enemies. But the end result may be an escalation of hostilities that will lock the United States into an unwarranted Cold War-style arms competition with China.

Read the entire article at China Security.

Taiwan Relations Act: The Brer Rabbit defense

My friend Galrahn dutifully--and correctly--takes me to task for not specifying, in last week's post, that the Defense Department is obligated by law to both provide for Taiwan's defense against China (sell them arms) and maintain a US military capacity to resist Chinese force.  He says that my critiquing the Pentagon on this is unfair.

While Galrahn's points are technically correct, it's also certainly true that the Defense Deparment has a lot of leeway on how they can interpret meeting that requirement.  After all, what stops us from simply noting that we've got a lot of nukes and they can be enough to deter China from invading Taiwan.  Nothing in the Taiwan Relations Act of 1979 specifies conventional capabilities versus nuclear.  It just says "to maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan." Give Taiwan enough defensive firepower, promise a nuclear back-up and call it a day.  But we choose, or rather, our Defense Department now chooses, to build an entire big-war warfighting concept around this scenario (no, no, nothing provocative there).  Nothing in the law demands that level of strategic focus or conventional effort.  So no, Galrahn, my rant wasn't misdirected. Pointing the Pentagon's finger at Congress and saying, "I'm just following orders" doesn't cut it here.

We've made a series of choices inside the Pentagon to elevate the meaning of Taiwan going back a decade and a half.  No outside power forced these choices; the military made this call on its own. The Taiwan scenario has become the calling-card scenario for the big-war force, much sturdier than the pathetic North Korean scenarios of collapse, or the bomb-heavy vignettes for Iran (unless you think we want to occupy that place too any time soon).  Simply put, until the Taiwan Strait crises in 1995-96 got the DoD turned-on to China as the near-peer competitor, you simply never heard about the Act as a baseline justification for force structure.  It merely explained arms sales to the island.  I know this, because I worked force structure issues for the Navy at the Center for Naval Analyses in the early 1990s (it was, like, bullet 4-a on slide 53, and when you saw it, you'd turn to the guy next to you, and intone knowingly, "Of course, the Taiwan Relations Act of 1979," and then you'd be back to business).  The Act was a completely backburner issue until the Sov residual threat got so low in those early post-Cold War years (after it became likewise apparent that the "rising sun" wasn't going to fulfill anybody's fantasies except Michael Crichton's--yes, I actually had senior military officers tell me in great seriousness to read the book to understand the future looming Japanese threat), that the Act sort of surfaced like a bureaucratic bedrock at low tide.

The Taiwan Strait crises also birthed many of the original network-centric warfare concepts.  It really was a seminal series of events--the proverbial wake-up call.  But then 9/11 comes and we don't hear about it all that much anymore--save for those pesky arms sales and the usual huffing and puffing from Beijing on the subject. 

The difference today is that the AirSea Battle Concept--basically a navalized, mini-me version of the AirLand Battle concept vis-a-vis the Sovs in Europe during the 1980s--is clearly based on this scenario, with a paltry assist from Iran (not a great country you want to lump in, image-wise, when you seek China's help on Iranian nuke developments, but a sale is a sale).  And I gotta tell you, that's some chutzpah, basing a new high-end combat ordering principle on the same nation you're seeking all this cooperation from--like salvaging your economy right now.

Seriously, anybody has to admit that making an entire air-sea, big-war battle concept out of the Taiwan Relations Act is going above and beyond the call of duty.  In my opinion, it goes beyond defense policy to a good share of foreign policy as well, cementing in something for the long haul that may not serve our overall purposes in our evolving bilateral relationship with China.  

Is this a step we debate as Americans?  No.  Is this something our president explains to us, or our Secretary of State?  Not really. It's just an inside-the-Beltway affair led by a think tank that results in some language here and there in various planning docs and ultimately finds its expression in the budget.  Would the Navy or Air Force protest?  Above their pay grade, as they say, although plenty of retired flags from both services will tell you openly they think this is an odd path to be on, given the larger picture.  But most, if not all, will readily admit, as I do in an upcoming China Security piece, that, once you accept the deterrence logic on Taiwan, America needs to make the AirSea Battle Concept happen as merely the next-step ante to stay in this poker game.  And frankly, given the shopping list ginned up, any protest would sound very much in the Brer Rabbit mode.  After all, these are tight budgetary times, and quite frankly, Gates' logic begins with the need to find synergistic savings.  So why target the best thing going (enshrined in law!)?  I mean, the Chinese do the same, do they not?

My point is this:  is this the best we can do at this point in history?  China doesn't need any help triggering a balancing response across Asia, as I've noted here many times; they do it brilliantly on their own.  Frankly, we don't need much of a hedging strategy as a result; the containment policy writes itself--again, thanks to Chinese heavy-handedness.  

But the larger effort isn't particularly being made:  we are not building a better, bigger positive relationship with China, especially in mil-mil relations, to supersede the legacy negative one.  You can tell me that the Pentagon is just doing its job--following Congressional orders, as it were.  I just want something more imaginative at this point in history, you know, something that preps the diplomatic "battlefield" a bit--something the navy does well throughout history.  

And I just don't see it happening.  Our offers of cooperation with China typically involve asking them to join our party on our terms, whatever the situation in question.  Will you do what we want you to do in Iran/Sudan/Myanmar/North Korea/South China Sea/etc.?  You know, show us you're responsible by giving us what we want.  [Then there's the awkward but oddly workable--if entirely unfair in burden sharing--"limited liability partnership," as I call it, in Iraq and Afghanistan, where our blood pays for Chinese treasure.]  

And big surprise, rising powers don't negotiate well on those terms.  America rarely did during its decades of rising. That sort of trajectory makes you arrogant and full of yourself, and China is definitely in that mode.  

And yes, while that sort of thing needs to be subtly resisted, we need to be preparing for the leaner years--as in, our leaner years and China post-some crash or inevitable slowdown.  We need to building something--again--positive, and mil-mil relations can be spectacularly positive in that way.

I don't think we've thought through, in any comprehensive sense, what our devotion to this blue law from from the Cold War is costing us--opportunity-wise, or the signals that it sends, or what we risk with it in a strategic sense.  I think it's simply on the books, so the bureaucracy grinds its answer, and when sanctuary from a scary budgetary climate is sought, that "requirement" is not just an oldie but a very goodie.

It's just not where we're going as a power or where this system is going.  We are steering by our wake, because it feels comfortable and good, and--damn it--it's the law!

And I don't see a lot of strategy in that.  I see people, like Galrahn, patting the Obama administration on the back for simply having foolish behavior fall into their laps and doing the right thing by it--again, because it feels good and it makes us seem more important than--quite frankly--we really are.  Our "cooperative strategy," as he calls it, is pretty much what it's always been in the Pacific:  make us the most important bilateral partner with as many states there as possible.  Again, with the Chinese playing the fools (i.e., old Soviet role) on this one, that's not a hard strategy to pursue, but it's one that retards the Asian integration process to a certain extent, in the name of hedging against, and somewhat containing, China.  

And if we were set to play global policeman with budgetary ease for the next couple of decades, I would be the first to say, fine and dandy.  Wait on these guys to grow up, and democratize, and a whole bunch of other requirements.  But I don't think our finances or globalization will wait on those evolutions, so I think we need to start thinking about making do with the landscape--and players therein--as they're presented to us.  Because keeping China in this retarded state of "pol-mil" development (and I use that term of art purposefully) isn't wise, in my opinion.  I think we need to do more--faster--than just keep them in their place until they demonstrate the preferred type of global following skills (I mean, leadership).  I think that attitude retards our own, much needed pol-mil development (yes, we actually have some things still to learn about this globalization of our making).

Unless you think U.S. military power is what makes us who we are. I've always thought it enables us to display leadership, but that it's not a substitute for it.  

And that worries me--this unstated, barely articulated strategic course we seem to be on.

I got accused a lot--and rightfully--of granting Bush-Cheney better rationales for their policies than they themselves had. I think Galrahn does the same here with Obama and Clinton.  I think Hillary is the shining star simply by default, because I see no great accomplishments, just well-worn reactions to a perceived rival's foolish behavior.  Remember, these guys came in with Jim Steinburg's "strategic reassurance," when "nice" China was having a good year (2008-09) and we were grateful for their saving the global economy (and let's admit it, no China, and things get a whole lot worse).  Now China is having a bad year, as Galrahn rightfully notes, and now we're all about overstating our interest in the South China Sea so as to match China's absurd claim of sovereignty.  If that's isn't chasing events or trends, than what is?

This is Schadenfreude masquerading as grand strategy--too much of it, actually, on both sides.  Mirror-imaging in this regard ("Look how popular we are in Asia right now!  Vietnam loves us! Take that, China!") isn't all that imaginative.  China's "charm offensive" got offensive, so now we've fallen into one by default.

And you know, hoping Brett self-destructs isn't the same as getting the Packers into the Super Bowl.

There are other paths and there are other voices.  If we want to get this future right, we should invent it ourselves.

Deng: Develop the place, then decide the sovereignty

Another John Milligan-Whyte & Dain Min piece, this time in China Daily.com.  They argue that China needs to stop standing on the sidelines fuming about joint US naval ops/exercises with locals and simply join them, which I think is brilliant.  If China wants to assert the normality of their naval ops in their local waters, then they need to exercise with everybody at every opportunity.  They need to make their presence a welcome, stabilizing thing, because right now, their own operations in their own waters ARE destabilizing, because they are perceived to be about establishing/claiming sovereignty in a way that trumps the diplomatic process.

The underlying logic of the piece is even smarter--right out of Deng's mouth:

What can China do about having jurisdictional disputes with its neighboring countries which have now been complicated by China and America asserting conflicting "vital national interests" in the South China Sea? How can China put jurisdictional disputes back into their normal peaceful mode? China and the nations that it has jurisdictional disputes with can form a joint development corporation called "South China Sea Joint Development Corporation" to economically develop the disputed areas peacefully. It is easier to negotiate the size of each participating nation's investments, responsibilities and share of the profits of such a corporation with multinational win-win policies. The joint development corporation approach avoids the zero sum game ownership disputes during which no nation can safely develop the economic benefits nor safe guard its national pride and interests in the disputed areas.

On February 22, 1984 Deng Xiaoping discussed what now for decades have been China's successful solutions to the Taiwan and Hong Kong sovereignty issues with the Center for Strategic and International Studies. He said, "I have also considered the possibility of resolving certain territorial disputes by having the countries concerned jointly develop the disputed areas before discussing the question of sovereignty. New approaches should be sought to solve such problems according to realities."

Smart stuff.

Make the development happen first, and then calmly divide the spoils, rather than get all huffy up front and suggest the only acceptable answer is that somebody wins and somebody must lose.  In the end, China will end up winning most of the time, NOT because of the supply of its military power, which will consistently backfire in its application, but because of the power of its domestic demand, which everyone will want to satisfy because there is good money to be made in doing so.

WPR's The New Rules: Nation-Building, not Naval Threats, Key to South Asian Security

It is hard for most Americans to fathom why the U.S. military should be involved in either Afghanistan or northwest Pakistan for anything other than the targeting of terrorist networks. And since drones can do most of that dirty work, few feel it is vital to engage in the long and difficult task of nation-building in that part of the world. These are distant, backward places whose sheer disconnectedness relegates them to the dustbin of globalization, and nothing more.

If only that were true. 

Read the rest of the column at World Politics Review.

The book reviewed in the piece is Monsoon:  The Indian Ocean and the Future of American Power.

Another mention in People's Daily.com

Once again it is John Milligan-Whyte and his partner Dai Min, who write a weekly column for both People's Daily and China Daily.  If you recall, they mentioned my stuff once before, sent me a copy of one of their books, and I wrote a WPR column about it.  As I said in the WPR article, their stuff is clearly biased toward the Chinese case, much as mine is biased toward the U.S. case (they make no bones about it and neither do I), but it's the best, most straightforward counterparty example I have come across on the Chinese side for Sino-American alliance in this century, so you have to take it seriously if you take that goal seriously.

To remind from their byline:

John Milligan-Whyte has been called the "new Edgar Snow" and "21st century Kissinger" and is the winner of Social Responsibility Award from the 2010 Summit of China Business Leaders. John Milligan-Whyte and Dai Min are co-hosts of the Collaboration of Civilizations television series, founders of the Center for America-China Partnership, which has been recognized as "the first American think tank to combine and integrate American and Chinese perspectives providing a complete answer for the success of America and China's success in the 21st century," and the authors of the America-China Partnership Book Series that created a "New School of America-China Relations." 

I recently had a long Skype call with the two, because I wanted to check them out and get some sense of where they're coming from.  John has a long legal background as a lawyer in Bermuda for several decades.  He connects with Dai Min a few years back and makes the permanent leap to Beijing, sensing an historic opportunity for business dealmaking, especially as China's second-tier cities take off.  But what really drives these two is their unwavering commitment to fostering a better relationship between China and the U.S., which is what drew them to my stuff. 

I get asked a lot:  does anybody push for Sino-American strategic alliance in the US like you do?  And I always say, in terms of the strategic thinking community, no.  Some, like Niall Ferguson, speak about the symbiotic nature that already exists, but more as a symptom than as a basis for larger cooperation.  The reason why I push on this is that, like I argued in China Security (see just below) back in 2008, my logic of global integration and globalization's advance says this relationship must be or globalization essentially goes backward, something I don't think the planet could handle in many ways, because the sheer numbers involved in an emerging global middle class mean we've reached that all-sink-or-all-swim-together moment--resource- and cooperation-wise.  Knowing my timeline on the inevitability of political pluralism in China (I target a late 2020s/early 2030s as the rough half-century mark after Deng's initial revolutionary reforms), I then see the next two decades as perhaps the most crucial in human history--as in, get the big pieces right and all works out, but set the two biggest pieces against one another, and this can all go very badly--and backwards.

So I'm comfortable being perceived as too out-there and a bit naive on this subject, because I know I'll see the day when this logic comes to pass, and I'll be on the right side of history--betting on improvements and compromise and cooperation over degradation and ultimatums and conflict.

And so I do find these two thinkers awfully interesting, because they're tilting at the same windmill, but on the other side, where, quite frankly, I think the receptivity is much better at this point in history (a faltering #1 is more scared and thus more inflexible than a rising #2).  Thus I see a future collaborative effort between my work and what these two are seeking to accomplish via their center and foundation.  Collectively, we're a bit rag-tag compared to the powers-that-be, but I enjoy living and working primarily on the basis of the power of my ideas, and John and Dai Min are very similar in this regard (John, arguing like a lawyer in court, and Dai Min, possessing the mind of a business-developer/marketer).  Like most visionary types, they come as awfully self-promoting (John's theatrical way of speaking makes you realize this guy is ALWAYS in court), but being one myself (and long being accused of the same--to include the "entertaining" delivery), I don't have a problem with that. I enjoy working with people who really want to change the world and aren't shy about it (working with Steve DeAngelis is very similar, as he too is always about not just a business but a revolution in doing business).  I have no desire to live a life that does anything less.

Anyway, here's snippets of the piece (the start and the finish--where I am mentioned again):

President Obama announced he was launching a new era of partnership when he was in the process of recruiting the team of veteran China policymakers and advisors. Nonetheless, the positive approach he instinctively favored disappeared. Conventional and then hostile policies and actions began defining his administration's relationship with China. 

His policymakers are implementing an increasingly hostile approach referred to as hardball in the US press. It could be deliberately seeking to cause China to not continue Deng Xiaoping's successful policies of opening up economically to U.S. companies and of peaceful coexistence with America and or other nations. It could be simply disastrous U.S. policymaking responding poorly to the U.S. economic and national security crises. In any case, the hardball approach makes collaborative and therefore successful U.S. and Chinese policies hard to imagine or implement.

A U.S. president launching a new era of partnership with China is unconventional. It goes against the US policymakers' views and widespread U.S. feelings that China is a threat to Americans. But leading the changing of the direction of U.S. policies toward China is a presidential prerogative whether it begins covertly at the height of the United States' unsuccessful Vietnam War or covertly and then when private agreement is reached, it is changed once more overtly during the current U.S. economic, employment and other crises. 

A U.S. president cannot effectively begin to successfully establish a new era of partnership or solve economic and national security problems until he finds advisors and experts with policies able to achieve his goals. To do so, President Nixon reached out to Professor Kissinger at Harvard because Kissinger shared his worldview and goals and others did not. President Obama is currently overseeing the changing of many advisors who were key players in the first two years of his administration. He is looking for but not yet finding breakthroughs or new policies providing solutions to U.S. economic and national security problems. 

Neither America nor China can fully meet the economic and national security needs of their nation without the sincere, coordinated and constant help of the other. It is not possible in this century for one of the two largest economies in the world to fail, and the other to succeed. Because his administration is not finding the effective policies toward China needed to solve the U.S. crises, President Obama is open-minded and decisive. If China presents him with and supports solutions, he will grasp why they are solutions and lead in explaining them to U.S. policymakers and in implementing them. But until he finds solutions and has China's support in implementing them, he cannot take on the fear of China and hardball thinking policymakers in the US. Let's be clear about this, he needs Chinese policymakers to reach out to him with solutions because neither he nor his advisors have them today. Second, he can only act when a set of solutions has been privately negotiated and agreed, Kissinger style, and he is absolutely sure China will support the solutions when he announces his support for them . . .

...

. . . President Obama has pledged that he will double U.S. exports to China in an effort to increase U.S. competitiveness and stimulate its economy. To increase exports to China, the United States will need to remove policies that restrict trade with China and propose policies that are mutually beneficial for both nations. 

Increasing U.S. exports to China also requires preventing a trade or currency war. Nonetheless, economic and trade policymakers in President Obama's administration have implemented tariffs on steel, tires and other goods made in China, introduced more than 23 anti-dumping, anti-subsidy and special protectionist tariffs, and launched at least six Section 337 investigations against China for alleged unfair practices in export trade. At least a 53 percent increase in the number of cases involved 7.6 billion U.S. dollars worth of Chinese exports, which is 800 percent more than in the previous year. The U.S. is seeking to increase its exports to China while setting up trade barriers for China's exports. China is the world's largest importer, and currently China and the U.S. are each other's second largest trading partners. There are threats of new tariffs if China does not agree to the United States' proposed carbon emissions cap and trade proposals and lately talk of a currency war and tariffs over cap and trade. This is occurring in addition to longstanding U.S. trade restrictions on what can be sold to China because U.S. military strategy is traditionally preparing for war with China. 

This is not the optimum path for American policymaking. Or is it? Americans are suffering from relentless and unsuccessful wars, unsustainable global trade deficits and government debt, high unemployment and the worst economic crisis in a hundred years. To many U.S. policymakers who learned their craft in the Cold War, hard ball seems to be the realistic approach to the United States' most important bilateral and multilateral relationship. It is obvious to them that China, with its second largest and fastest growing economy, is an increasingly dangerous threat to U.S. economic and national security. Their zero sum game view of how global economics and geopolitics work assumes and acts as if for America to be successful, China must be unsuccessful. They are wrong. They do not realize that or they do realize that and are trying to engineering or blundering into a showdown. 

The key point is that until President Obama and the American people are presented with a plan for how America and China can both be successful in the 21st century, we are on the slippery slope. Chinese policymakers' safe response is to provide President Obama with a new grand strategy introduced for discussion in a white paper for the Presidents of American and China. China's leaders and President Obama should also read and discuss Thomas Barnett's "The Pentagon's New Map and Blueprint for Action: A Future Worth Creating." The Sino-U.S. relationship must be made profoundly better soon. Therefore it must be fundamentally different soon. The 20th century is over.

Blast from my past: "The Inevitable Alliance" (2008)

Debating China's Future

with 

Li Cheng, Thomas P.M. Barnett, Harry Harding, Cui Liru, John J. Mearsheimer, Joseph S. Nye Jr., Rob Gifford, Mao Yushi, Bates Gill, Tang Shiping, Zhao Tingyang, Robert J. Barnett, David Shambaugh, June Teufel Dreyer, Pan Zhenqiang, Dan Blumenthal, Shi Yinhong, Robert S. Ross, Kenneth Lieberthal, Zha Daojiong, John Hamre and Xiang Lanxin

CHINA SECURITY, VOL. 4, NO. 2, SPRING 2008

Thomas P.M. Barnett

The Inevitable Alliance

China’s main strategic vulnerability right now is that it possesses economic and network connectivity with the outside world that is unmatched by its political-military capacity to defend. This forces Beijing to “free ride” on Washington’s provision of global security services, a situation that makes China’s leaders uncomfortable today – as it should. American blood for Chinese oil is an untenable strategic transaction.

The United States faced a similar situation in its “rise” in the late 1800s and set about “rebranding” its military force over a several-decade period that culminated with a successful entry into World War I. Since World War II, the United States has maintained a primarily expeditionary force that is able to access international crises, and since the end of the Cold War has done so with unprecedented frequency. This too is an untenable strategic burden.

America needs to encourage China’s effective re-branding as an accepted worldwide provider of stability operations. The problem today is two-fold: 1) major portions of America’s military require China to remain in the enemy image to justify existing and new weapons and platforms; and 2) the Chinese military is hopelessly fixated on “access denial” strategies surrounding Taiwan, meaning it buys the wrong military for the strategic tasks that inevitably lie ahead.

So long as both nations insist on such mirror-imaging, their respective militaries will continue to buy one military while operating (or, in China’s case, needing to operate) another force that remains under-developed. Such strategic myopia serves neither great power’s long-term interests, which are clearly complimentary throughout the developing world.

The good news is that both China and the United States are within a decade’s time of seeing new generations emerge among their respective political and military leaderships. These future leaders view the potential for Sino-American strategic alliance far differently than do the current leadership generation. If Washington and Beijing can navigate the next dozen or so years without damaging current ties, I fully expect to see a Sino-American strategic alliance emerge.

I do not present this as a theoretical possibility, but as my professional judgment based on years of extensive contacts through both nations’ national security establishments.

Grand strategy often involves getting leaders to understand certain future inevitabilities. The global primacy of the Sino-American strategic alliance in the 21st century is one such future inevitability.

Thomas P.M. Barnett is the senior managing director of Enterra Solutions, and author of The Pentagon's New Map: War and Peace in the Twenty-First Century (New York: G.P. Putnam’s Sons, 2004).

This week in globalization

Clearing out my files for the week:

• Martin Wolf on why the US is going to win the global currency battle:  "To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US."  We win because we have infinite ammo.  But better that we come, per my Monday column, to some agreement at the G-20. 

• Sebastian Mallaby, also in FT, says that, despite the current currency struggles, the "genie of global finance is out of the bottle" and not to be stuffed back in.  Wolf had noted $800B capital inflows to emerging markets 2010-2011, which is gargantuan, thus the crazy struggle of some places to keep their currencies low.  As for America stopping China from buying US bonds in retaliation for our not being able to buy Chinese assets?  China holds only about one-third of the US T-bonds abroad ($3T total), so it can buy all its wants from others in the system.  There is no turning back, he says.

• Meanwhile, the Pentagon makes plans to turn back the clock on the globalization of defense manufacturing.  A new spending bill provision--inserted at DoD's request--includes the power to exclude foreign parts suppliers (read China). Just about every US-based defense firm uses offshore suppliers, so this is going to get very expensive very fast.  It'll be a lot harder to find that $100B in savings over five years. This is almost a fifth generation warfare version of shooting yourself in the foot--first, before the other guy can.  China does nothing here, that frankly we shouldn't be able to handle, but we move down a path that instantly adds a significant tax to everything we buy in the growing-by-leaps-and-bounds IT realm.  One hopes there's a half-billion for that American rare earths mining co. that's looking for a new investor.  Interesting how China's becoming vulnerable to, and dependent on, so many unstable parts of the world for resources, and we're going to cut off the tip of our IT nose to spite our face.  I can imagine a cheaper way, but that would be so naive in comparison to spending all this extra money.

• China continues to buy low, as a ruthless capitalist should. Giving us a taste of what it could be like if we don't get too protectionist, it's buying up Greece's "toxic government bonds."--and plenty more in Europe. All of the EU is getting a taste, says Newsweek, as Chinese investors are snapping up bankrupt enterprises and--apparently--putting people back to work.  China also, like a ruthless capitalist, seeks to make bilats reduce the chance of EU-wide restrictions on its trade. Old American trick.

• Another sign of globalization on the march:  emerging economies buying up food and beverage companies in the West that would otherwise naturally be targeting them for future expansion. Bankers expect the trend to continue.  Gotta feed and water that global middle class that keeps emerging at 70-75m a year.  Emerging economies are buying up the companies from equity firms that had previously bought them during down times.

• Great FT story on how Turkey has the Iranian middle class in its sights.  Long history of smuggling inTurkey dips a toe in, would like to drink entire tub eastern Turkey.  Sanctions hold up what could be a major trade, so the black-marketing local Turks mostly smuggle gasoline--and a certain amount of heroin.  But the official goal is clear enough:  be ready to take advantage whenever Iran opens up.  A local Turkish chamber of commerce official floats the notion of a free trade zone at the border. Those 70m underserved Iranian consumers beckon.

• Bloomberg Businessweek stories on how China's working aggressively to get western technology and cooperation to allow it to work its significant coal-bed and shale gas reserves.  Russia's exporting nuclear reactors like nobody's business, and Mongolia's beginning a long boom as "one of the last places on earth with huge, untapped metal ore resources" (guess who's showing up in numbers--with cash).

• India's airline industry can't keep up with demand generated by itsGet me planes and pilots--now! booming middle class. Boeing says Indian airlines will buy over 1,000 jets in the next two decades. Already they're forced to have one-in-five pilots be foreigners.

• Fascinating WSJ story on how China's car economy is going wild, with ordinary Chinese exploring the freedom of the road.  Drive-in service is taking off, weekend jaunts mean hotel business, etc. In past visits I saw a lot of this coming down the pike.  Just like when America's car culture went crazy after WWII, this is a serious social revolution.

Don't forget your meal of eternal happiness!

• "Brazil and China banks join list of world's top credit card issuers."  And so it begins.

• Funny thing about all this South China Sea hubbub: "Corporate ties linking China and Japan have never been stronger," says the WSJ.  Serious driver?  Japan is exporting its mania for golf to China--the fastest growing market for the sport.  It's what middle-class guys do.

Coming soon: the "golf wars"

• WSJ story on Vietnam creating its own Facebook to keep a closer eye on its netizens.  Defeat the anti-capitalist insurgents!What caught my attention: "The team has added online English tests and several state-approved video games, including a violent multi-player contest featuring a band of militants bent on stopping the spread of global capitalism."  I would say we finally won the Vietnam War.

Quick! Spot the resource war!

I know it's in there somewhere, just waiting to break out!

The "rising near peer" returns the paranoid favor

The NYT reports that the U.S. military is alarmed at the rising anti-American tone and sentiment of younger Chinese military officers.  This is the same U.S. military that assembles multinational war games in China's front yard and sells advanced weaponry to a small island nation off its coast--in addition to anyone else who will buy it in the region (and yes, business is very good right now, as weapons purchases are up 100% over the past half decade).

The U.S. military, which found its network-centric warfare roots in the seminal shell game known as the Taiwan Straits crises of 1995-1996, now takes inspiration from China's response since then (a build-up of anti-access/area denial assets that rely heavily on ballistic missile attacks to keep our carriers at bay) to launch its own AirSea Battle Concept--a new high-tech warfighting doctrine that makes no bones about specifically targeting the Chinese military.

And we wonder why the Chinese military seem to think we're their number one enemy?  Are we honestly that clueless or has our disingenuity broken through to some higher, slightly irrational plane?

Follow me into this brave, alternative world:

• Imagine the Chinese navy holding multinational exercises with the Cubans and Venezuelans and Nicaraguans (a silly sight, I know) in the waters around Cuba, while Beijing warns us subtly that their 1979 Cuba Defense Act will be pursued to the ultimate vigor required, including the sale of advanced attack aircraft to the Cuban air force.  
• Imagine Chinese carriers conducting such operations, sporting aircraft and weaponry that could rain destruction over most of the continental U.S. at a moment's notice.  
• Imagine Chinese spy craft patrolling the edge of our local waters and flying around the rim of our airspace.  
• Imagine the Chinese selling all sorts of missile defense to Venezuela and other allies "scared of rising American militarism."
• Imagine weapons purchases throughout Latin America doubling in five years time, with China supplying most of the goods.  
• Imagine Chinese naval bases and marine barracks doting the Latin American landscape and Caribbean archipelago.
• Imagine a Cuban missile crisis-like event in the mid-1990s, which led the Chinese military to propose a new evolution in their warfare since.  
• Imagine the Chinese military conducting regime toppling events in the Middle East, involving countries upon whom our energy dependency is dramatically and permanently rising, while China actually gets the vast bulk of its oil from non-Persian Gulf sources like Canada, Mexico, Latin America, Africa and itself.  
• Imagine the Chinese government demanding that the Chinese military produce an elaborate report every year detailing the "disturbing" rise of U.S. military power.  
• Imagine the Chinese military announcing their new military doctrine of attack from the sea and air, with their documents chock full of bombing maps of U.S. military installations that are widely dispersed across the entirety of the continental United States, meaning their new war doctrine has--at its core--the complete destruction of U.S. military assets on our territory as the opening bid.
• Imagine the U.S. military stating that this new doctrine of attacking the entirety of the U.S. territory is necessary to maintaining the regional balance of power in the Western hemisphere, because the U.S. Navy has--in an "unprovoked" and "provocative" manner, begun significant patrolling operations in the Caribbean Basin, whose waters constitute a "profound" national interest to the Chinese.
• Imagine this series of developments unfolding over close to two decades, as China, having lost its familiar great-power war foe, the Soviet Union, firmly glommed onto the U.S. as a replacement enemy image.
• Imagine all that, and then imagine how the U.S. military views the Chinese military.  
• Imagine if the Chinese military offered military-to-military ties under such conditions.  

What do you think the U.S. Congress would say to that?  Would it be considered "caving in" to Chinese pressure?

The truth, unexplored in this otherwise fine article, is that the U.S. military needs--and has needed--rising China as an enemy image for more than a decade-and-a-half now, so I don't know how we can expect anything from young Chinese officers other than returning the favor.

I'm on the BBC World Service yesterday with John Mearsheimer of Chicago (go ahead and listen to the guy--see the post directly below for link), who is stunningly open in his claims that America will never allow China to become an influential power in Asia because we are firmly committed to remaining the world's sole superpower and will basically do whatever it takes to stop China's rise, including a containment strategy that marshals the entire region's militaries to box in the Chinese.  He raised the specter (rather fantastic) of a China with a per capita GDP equivalent to our own in the foreseeable future--a prospect he labeled incredible in its fearsomeness.

[Mearsheimer has a tendency to use the word "power" over and over again, like a mantra, and he clearly meaning warfighting and power-projection capacity.  He seems to have drunk mightily at the neocons table and remains hungover in his appreciation that the American government's number one goal is to remain the dominant military power on the planet and prevent anybody's rise that might challenge that.  He is very much in the George Friedman vein of thought.]

This is the state of our discussion:  the world's biggest and by-far strongest military regularly getting up into the grill of the second-biggest economy on the planet and letting it know--in no uncertain terms--that it will not countenance China exercising military power in its own region!  Why?  Despite being intensely overdrawn militarily around the planet and facing military resource shortages in the very same regions where Chinese economic interests are skyrocketing, it's in our best interest to deny China's rise with all our might.  Safely buttressed by the vast security resources of our NATO allies, it's clear that we don't need any new friends and--instead--must do everything possible to deny their emergence, because more Chinese security means less U.S. security; it is a completely zero-sum game.

Brilliant stuff.  I can't imagine why the Chinese look upon us as anything but the best of friends.  I am flabbergasted at our naivete in hoping for something better to emerge.  This is all working out so brilliantly--for the U.S. Navy and Air Force.  If only we can get a sensible Republican back in who can jack the defense budget back . . . I dunno . . . just up!  

Because when I look two decades down the road, it's clear to me that we don't want to have anything to do with China or its military.  While boxing them in--in East Asia, we and we alone will manage the world's security system, using money that arises from our rapid quadrupling of exports . . . to places like China, which will be cowed into accepting our goods by the awesome specter of our military power!

It's really all so easy when you think about it.  Just zero out all the complexity and interdependence created by this globalization of our making, and we'll be able to boss the entire world around militarily--assuming we have the courage and strategic intelligence to devote as much resources as necessary to completely box in the Chinese military and keep them as paranoid as possible.

Happiness is a warm gun, my friends, pointed at "rising" China. That path will get America everything it needs while costing us nothing of strategic importance.

And yes, we should remain shocked . . . shocked! . . . at the rising ant-Americanism in the ranks of the Chinese military.  I cannot imagine where this mindset comes from.

But read the piece, because it's a good and balanced bit of writing (Wines is almost always totally solid in delivery). The quotes from the Chinese academics echo stuff written here many times--especially the bit about the Chinese military officers being a bit inexperienced and retrograde in their PR skills.  David Shambaugh, the U.S. expert on the Chinese military, is cited offering his usual wisdom on the subject.  Unlike the many hyperbolists on this subject, most of whom get paychecks or contracts from the U.S. Navy or Air Force, he remains a very calm and intelligent voice. [Another pair of intelligent voices on the subject are Mike McDevitt and Dave Finkelstein at the Center for Naval Analyses (complete disclosure--I do some on-call work there, though not with those two)].

And Shambaugh is right, this is an unnecessary and unstrategic and wasteful path for both sides to be on.  We are pretending to play Cold War when both of us should be managing the global security environment--in tandem.  I'm not saying our logic doesn't make sense.  Things like the AirSea Battle Concept make eminent sense--if a war over Taiwan is the ordering principle for the U.S. military going forward.  Me?  I just don't buy that as our North Star for the 21st century and globalization's further evolution.  Instead, I see it as a colossal and stupid diversion of resources and attention span.  

Why?  Again, back to my basics:  thinking about war within the context of everything else and not just within the context or myopic logic of war itself. That "everything else," for me, is best encapsulated by the term globalization, because it's the global economy + all those rising connections + all those rising interdependencies + all those overlapping security interests ("security" ain't the same as zero-sum defense--remember) + all those ever-changing dynamics that arise from all this complexity. Compared to all that, the Taiwan scenario is frozen in time. Fine, I guess, for our military to obsess over it, just like the PLA, because it keeps those otherwise unoccupied by the Long War and frontier integration and nation-building occupied with something they naturally are drawn to as ordering principles. But, in the end, it's make-do work, in historical terms; it's shutting the door on the past and not opening the door on the future. It simply does not rank in a US foreign policy that's coherently focused on shaping a future worth creating.

But this is what we end up with when our primary goal in foreign policy is to--as Clinton puts it--keep all the balls in the air. When everything is equally important, there is no strategy whatsoever. It's just chasing your tail and current events and putting everybody--save yourself--in the driver's seat.  

Obama needs to take control of his foreign policy and start paddling faster than the current, because he is--by not taking more control--losing control of his own national security enterprise, and that is not leadership.

NOTE:  Post picked up by Time magazine's "Swampland" (politics and policy) blog.

Going on BBC World Service's "World Have Your Say" radio broadcast today at 1pm EST

Subject is Nobel Peace Prize being awarded to Liu Xiaobo and the West's growing fear of China in general.

Go here to listen live.

The podcast can later be found here.

WPR's The New Rules: Defusing the Global Currency War

After having cooperated to an unprecedented degree -- on stimulus spending and new bank rules, for instance -- to avoid a global meltdown these past two years, the world's major economies now appear ready to turn on one another with truly self-destructive vengeance. Poorly informed Americans are increasingly convinced that free trade pacts -- and not our uniquely high corporate tax rates -- are responsible for sending jobs overseas, and they want to see China punished with tariffs on its imports for its undervalued currency. With China's neighbors intervening heavily to keep their own currencies from rising too high in response, global chatter about the unfolding "currency war" has reached a fever pitch. Is this any way to manage a tenuous global economic recovery?

Read the entire column at World Politics Review.

Chart of the day: More likely to be India's century than China's?

A compelling analysis from The Economist on how India's freer style of doing business, when combined with a huge and still unfolding demographic divided, could well trump China's current star turn in the global economy.

As I have noted for a while, China's demographic "golden hour" ends right now, as from here on out they add old people to their non-working-age population--despite the continued cut-off pressure applied through the single-child policy (Deng's gift to the world, for which we must be eternally grateful).  

Point being:  China's labor gets more expensive from here on out, but the good news should be, that means China's domestic consumption (higher wages) should become a huge driver in globalization.  It's just that China will no longer have a no-brainer--pun intended--advantage.  From here on out, the extensive growth must yield to intensive growth--as in, brain-fed.  For somebody who believe his work has a lot to do with capacity-building (i.e., raising a generation of strategic thinkers), China looks like a huge market to me already:  they're having outsized impact throughout the world but aren't assuming commensurate responsibility, which I believe the Chinese shudder from out of fear that it'll be draining (yes) and complex (yes) and demand all manner of innovative thought on their part (absolutely).  But the Chinese have no choice; the world simply will demand it all from them.  So developing China's human capacity is magnificently important for the future of the world--as in, we depend on it.  So whenever I hear about China cranking all manner of this or that skill set, I say, bring it on, and--by doing so--elevate your game and ours. Our education is stuck in industrial era mode and must be radically reformed, but we won't do it without the push of serious competition.  

Conversely, China's own internal reforms, I believe, will be increasingly driven by a sense of India coming up on its heels--all good stuff with all the same attendant dangers.  The question always to be asked when great powers compete intensely on the economic landscape is, "What is the state of the military-to-military relationship?"

When I look at China-US, I spot a moribund relationship.  When I spot India-US, it looks promising but still too embryonic.  And when I spot India-China, I spot another extremely weak bond.  

These are the three dominant economies that will have both the will and wallet, over the long haul, to shape the global security landscape.  Europe is taking a pass, primarily for demographic reasons.  Russia is similarly cursed.  China has a solid window, with India's even bigger.  America, a demographic freak of nature, retains it own.

So, from a security standpoint, the most important hearts-and-minds to win are all found within that trio of powers.  Keep the relations open and cooperative, and the economic competition will never spill over into anything truly bad, but keep them weak, and all sorts of bad choices linger out there.

I stick with my tighter logic that says:  go for China and you get India in the bargain, while going for India as a China hedge, if done too vigorously, gets you neither, for China will withdraw from the logic of security cooperation and India, as we all know, hates being played as pawn more than anything.

So the goal must be:  do whatever it takes to work the security cooperation with China, encouraging India to join at every possible junction.  The tiny bit of naval cooperation on Somali pirates is a start, but so much more can be done.  In a world of frontier integration, America needs two friends with million-man armies (with Turkey the next logical spoke in that wheel).  No one but America will retain the warfighting power-projection capacity, but it's clear there are strong limits to what we can do with that and that alone.  My concept of the SysAdmin was always about reorienting our major alliance relationships, and demographics was always the underlying driver.  Why?  The rise of the middle class triggers the resource relationships, and those relationships must be protected.  Same thing that happened with the US in the late 1800s; same thing happening with China, India, Turkey, Brazil, etc. now.  We are in the midst of a huge swapping out of allies, from North/West to East/South, and America is the connection that binds the two eras, because America's system of states-uniting, economies-integrating, networks-expanding, collective security and so on is the underlying template of this era's hugely successful globalization.

China's alleged control of the rare earth materials

From John Batchelor Show

FT story on how "US is scrambling to resume production of raw materials vital for defence equipment and green technology in response to rising fears about Chinese domination of the sector."

The point to be clear on:  China dominates current production of rare earths (95-plus percent) but in no way has a dominant supply/reserve position.  The world has simply allowed China to achieve its dominant production position by abandoning their own mining efforts.  Why?  Very expensive and very environmentally damaging.

Rare earths are a collection of 17 metallic elements with similar chemical make-up.  They present unique magnetic and optical properties that make them highly useful for miniaturization, lasers and energy efficiency. There are considered strategic because of their applications in high-tech industries, to include weaponry.

No one much cared about China's domination of production, until the South China Sea dust-up with Japan led China to allegedly slow exports to Japan (not entirely clear what happen, but impressions were made).  China has also recently signaled that it will cutback on exports to make sure it has enough for its own burgeoning domestic demand.

Now, according to the article, we've got people in Congress dreaming of US self-sufficiency on this score, which will be--like most things in this globalized economy--virtually impossible to achieve.  Long ago, the US was the dominant global producer, but we abandoned the effort due to environmental and cost realities. Article says the last US mine closed in 2002 and is looking for $500m to reopen.  Those guys should send a thank-you letter to Beijing, because I'm betting they'll get their investment soon.

Obviously, if the material is considered strategic, there's good logic for mining at multiple sources.  I would consider this a reasonable space for cooperation with long-time allies so that we're not all doing this in the most expensive manner possible.

WPR's The New Rules: Building Real States to Empower the Bottom Billion

America's top African diplomat recently signaled Washington's desire to establish more official contacts with the autonomous region of Somaliland, which sits within the internationally recognized borders of the failed state known as Somalia. Meanwhile, both our Agency for International Development and the Pentagon's recently established Africa Command worry about Sudan's upcoming vote on formally splitting the country in two. For a country that has sworn off nation-building, it's interesting to see just how hard it is for America to remain on the sidelines while globalization remaps so much of the developing world.

Read the entire column at World Politics Review.

Blast from my past: "The Rise of the Global Middle Class" (2009)

The Rise of the Global Middle Class

by

Thomas P.M. Barnett

Good magazine (Jan/Feb 2009), pp. 90-91.

America has had the biggest demand in the global economy for so long that we can’t remember what it was like when that wasn’t the case. But that’s all about to change.

I’ll let you in on a little secret about globalization: It is demand that determines power, not supply. Consumption is king; everybody else serves at will. So it ain’t about who’s got the biggest military complex but who’s got the biggest middle class. Everybody’s got the dream. What matters is who can pay for it.

For as long as we can remember, that’s been America—the consumer around which the entire global economy revolved. What’s it like to be the global demand center? The world revolves around your needs, your desires, and your ambitions. Your favorite stories become the world’s most popular entertainment. Your fears become the dominant political issues. You are the E. F. Hutton of consumption: When you talk, everybody listens. That was the role the Boomers played for decades in America and—by extension—around the world through their unprecedented purchasing power. But that dominance is nearing an end.

In coming decades, it won’t belong to Americans, but to Asians. So say hello to your new master, corporate America: Mr. and Mrs. M. C. Chindia.

The rise of the Asian middle class, a binary system centered in China and India, alters the very gravity of the global economy. The vast sucking sound you hear is not American jobs going overseas, but damn near every natural resource being drawn into Asia’s yawning maw. Achieving middle-class status means shifting from needs to wants, so Asia’s rise means that Asia’s wants will determine our planet’s future—perhaps its very survival. And as any environmentalist with a calculator knows, it isn’t possible for China and India to replicate the West’s consumption model, so however this plays out, the world must learn to live with their translation of the American dream.

As for the new middle class’s relative size, think bread truck, not breadbasket: Over the next couple of decades, the percent of the world’s population that can be considered middle class, judging by purchasing power, will almost double, from just over a quarter of the population to more like half. The bulk of this increase will occur in China and India, where the percentage shifts will be similar. So if we round off China and India today as having 2.5 billion people, then their middle class will jump in numerical size from being roughly equivalent to the population of North America or the European Union to being their combined total.

The vast sucking sound you hear is not American jobs going overseas, but damn near every natural resource being drawn into Asia’s yawning maw.

No, it won’t be your father’s middle class—not at first. Much of that Asian wave now crests at a household income level that most Americans would associate with the working poor, but it will grow into solid middle-class status over the coming years through urbanization and job migration from manufacturing to services. And for global companies that thrive on selling to the middle class, this is already where all the sales growth is occurring, and it’s only going to get bigger. As far as global business is concerned, there is no sweeter spot than an emerging demand center, because we’re talking about an entire generation in need of branding—more than 500 million teenagers looking to forge consumer identities.

There are also essentially two unknowable wild cards associated with the rise of China’s and India’s middle classes: First, how can they achieve an acceptable standard of living without replicating the West’s resource-wasteful version? And second, what would happen if that middle-class lifestyle was suddenly threatened or even reversed? The planet must have an answer to the first question, even as it hopes to avoid ever addressing the second. Here’s where those two fears may converge: As their income rises, their diets change. Not just taking in more food, but far more resource-intensive food, like dairy and meat. Right now, China imports vast amounts of food and India is just barely self-sufficient in the all-important grains category. Both are likely to suffer losses in agricultural production in coming years and decades, thanks to global warming, just as internal demand balloons with that middle class. Meanwhile, roughly one-third of world’s advanced-lifestyle afflictions—like diabetes or cancer—will be found in China and India by 2030. Toss in the fact that much of the population lives along the low-lying coasts, and our notional middle-class couple could eventually cast the deciding global votes on the issue of whether or not global warming is worth addressing aggressively.

Whoever captures the middle-class flag in coming years will have to possess the soft power necessary to shape globalization’s soul in this century, because humanity’s very survival depends on our generation’s ability to channel today’s rising social anger into a lengthy period of social reform. This era’s global capitalism must first be shamed (populism) and then tamed (progressivism), just as America’s rapacious version was more than a century ago. Today’s global financial crisis simply marks the opening bell in a worldwide fight that is destined to go many rounds.

Drug war logic repeated on China currency question

Lemme see: inside every Chinese peasant is an American consumer just waiting to break free!

Stephen Roach piece in WSJ.  He's the former Asia head for Morgan Stanley now back to Yale.

Roach is one of those economists who points out that past experience with Japan says gets a revalued currency won't change our foreign trade deficit with China, which is really with Asia as a whole and has been consolidated by China over the past decade or more through its efforts to become the final assembler of note.

Some bits:

The currency fix won’t work. At best, it is a circuitous solution that would address only one of the many pressures shaping the imbalances between our two nations; at worst, it would lead to a trade war, or risk jeopardizing China’s understandable focus on financial and economic stability.

Besides, in a highly competitive world, there are no guarantees that currency shifts would be passed through to foreign customers in the form of price adjustments that might narrow trade imbalances. Similar fixes certainly didn’t work for Japan in the late 1980s, and haven’t worked for the United States in recent years . . . 

Contrary to accepted wisdom, America does not have a bilateral trade problem with China — it has a multilateral trade problem with a broad cross-section of countries.

And why do we have these deficits? Because Americans don’t save. Adjusted for depreciation, America’s net national saving rate — the sum of savings by individuals, businesses and the government sector — fell below zero in 2008 and hit -2.3 percent of national income in 2009. This is a truly astonishing development. No leading nation in modern history has ever had such a huge shortfall of saving. And to plug that gap, we’re left to borrow and to attract capital from lenders like China, Japan and Germany, which have surplus savings.

If Washington were to restrict trade with China — either by pushing the Chinese currency sharply higher or by imposing sanctions — it would only backfire. China could very well retaliate against American exporters, and buy goods from elsewhere (a worrisome development in what is now America’s third-largest export market). Or it could start to limit its purchase of Treasury securities.

The United States would then have to turn to some other nation or nations, at a higher cost, to finance our budget deficits and make up for our subpar domestic savings. The result would be an even weaker dollar and increased long-term interest rates. Worse still, as trade was redirected away from China, already hard-pressed American families would be forced to buy products that are noticeably more expensive than Chinese-made imports.

But Washington remains unwilling to address our unprecedented saving gap, and instead tries to duck responsibility by blaming China. Scapegoating may be good politics, but proposing a bilateral fix for a multilateral problem is just bad economics.

China should stay the course with its measured currency reforms, allowing the renminbi to continue to appreciate gradually and steadily over time. Contrary to the inflammatory rhetoric of China’s critics, this is not “manipulation.” It is a reasonable strategy to anchor the renminbi to the world’s reserve currency, the dollar, in an effort to maintain financial stability in an all-too-unstable world.

True, but by doing so (see reference #2), China is creating a beggar-thy-neighbor bandwagon effect, as Taiwan, Japan and South Korea all start intervening to keep their currencies cheaper, to the point where Brazil's finance minister declares that an "international currency war" has broken out.

Roach then goes on to talk about fixing China's low consumption rate (only 35% of GDP, or about half of the US), but here I think he falls into the trap that Michael Pettis warns about: there is no easy shifting from investment driving most growth to consumption stepping up.  In short, anything but a slow redirect gets a crash, and so long as the redirect is slow, it's unlike to effect a serious shift.  When you stack those two analyses one on top of the other, you get the feeling that China will go on as it does (addicted to exports) until a crash there forces otherwise.  It would seem we've taken sufficient lumps to force the necessary change here--one hopes, which is the big reason why we feel so down on ourselves right now while wildly elevating China in our minds.

But as I like to say, the China model is brilliant until the first big crash.

The thought that prompted the post was that, just like in the drug war, we want our "enemy" to stop exporting so much of that stuff to the U.S., when it's our demand for that stuff and our lack of self-control which is the real issue.  But as Roach points out, we don't like to deal with our own issues, and in a classic psychological trip, we transfer our anger over our lack of self-control by blaming our "dealer."

Not exactly the Opium Wars, but you get my drift.