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ALC Class 14-003


Country Assessment Research Paper
02 August 2014

China: A Rising Superpower


Written by
SSG Nicholas Heurich
Graded by
SSG Joe How Dare You Jones
Adapted for Television as
From China with Love II: The Reckoning

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China is a growing economic and military power that is rapidly moving from a regional
participant to a global player on the world stage. The country has made great strides
economically and has become the worlds leading producer along with the largest consumer of
energy, surpassing the United States. Furthermore, their rapid technical advancement has
shortened the technology gap between them and their western counterparts. Although they have
made extraordinary progress in a relatively short amount of time, there are growing concerns
with Chinas ability to maintain such growth and technological advancement. That along with
continued humanitarian concerns make Chinas future a bit more muddled than previously
believed.
Chinas impact on its Regional partners has been growing as their economic and military
might is brought to bear. Their prosperity has given them the chance to become the most
influential Asian power in the region and the Chinese government has seized the opportunity.
China is currently in territorial disputes with Japan over the Senkaku Islands in the East China
Sea; Korea over the East China Sea Air Defense Identification Zone (ADIZ); Malaysia, and the
Philippines over the Spratly Islands and maritime territory rights to portions of the South China
Sea; Vietnam over the Paracel Islands; Taiwan over the sovereignty of its state; India over
control of Aksai Chin and most of the Indian state of Arunachal Pradesh; and numerous smaller
scale disputes with North Korea, Brunei, Bhutan, and Indonesia (FlorCruz, 2014).
In recent years, China has become the undisputed military power in Southeast Asia. The
Chinese governments territorial claims and their attempts to assert them have become more
brazen as their influence in the region has increased. Recent maneuvers by the Chinese
government against their regional neighbors support the claim that their posture is becoming
more and more aggressive. Chinese Coast Guard vessels routinely intercept Philippine vessels

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attempting to resupply their garrison in the Spratly islands. Their numerous military flights
through the Japanese and Korean ADIZ in the East China Sea are meant to intimidate and
reassert their claims to airspace and maritime rights in the area. Moreover, the Chinese oil
exploration ships have been underway in disputed waters in the South China Sea at the behest of
the Vietnam and Korean governments (Dingli, 2013).
Taking Chinas recent actions to account, it is reasonable to believe that Chinese
aggression and coercion in the region will only become more aggressive and brazen as their
influence and military capabilities expand. They will be more willing to leverage their economic
and military might against regional neighbors to advance their interests in their sphere of
influence. As a second order effect, increased Chinese aggression and influence in Southeast
Asia may force regional neighbors into an increased reliance on US and western allies for
leverage against Chinese economics and foreign policy. As demonstrated by Taiwans reliance
on the US and its allies to remain independent of Chinese governance, other nations will emulate
their strategy and attempt to use US economic and military power as leverage against Chinas
advances (Wu, 2014). Japan, South Korea, and the Philippines already rely on US military power
for assistance in their defense. The US is heavily involved in the defense and military maneuvers
with the Philippines, South Korea, Australia, and Japan. It is not inconceivable that they or other
regional nations request US military and economic intervention if relations with China
deteriorate further. Currently, the US has supported Taiwan with limited training and sales of
military hardware. A hard line Chinese stance for reintegration of Taiwan and aggressive
military posturing may force the US and its allies to assist Taiwan in more prolific ways.
Combined training exercises and US military garrisons on the Taiwanese island would be a
natural next step to assure Taiwanese sovereignty.

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Chinas increased willingness to coerce their regional neighbors with economic and
military supremacy would force the hand of US foreign policy. The scope of US involvement in
Southeast Asia will increasingly be at odds with Chinese interests in the region. A tertiary effect
of increased US involvement could be a new arms buildup pitting the United States and its
western allies against China. The relationship between China and the US is similar to that of the
US and Russia at the end of World War II. Russia was technologically and economically inferior
to the US and its allies. Both powers struggled for control of Europe as it recovered from the
war. China shares similarities with that of Russia immediately following WWII. Currently,
China spends 1.99 percent of its GDP on defense (CIA World Factbook, 2014). Furthermore, the
US maintains a comfortable technology gap ahead of China. However, China is steadily closing
the technology gap through increased spending and a diverse espionage program. By 2020,
reports indicate that China may have the capability to project and sustain modest naval and land
forces beyond its regional boundaries (Getz, 2011). As China gains more equal footing with the
US, it is plausible that they could begin a new cold war and arms race that could last for decades.
The United States and China share a somewhat love-hate relationship. The economies of
each are the largest in the world and they are intertwined and dependent on each for their current
and future prosperity. However, the foreign and military policies of each often have the two
countries at odds. China is the leading purchaser of US backed securities and is second only to
Canada in total US trade. In fact, China is the leading importer to the US, totaling 147.5 billion
dollars worth of goods (US Census Bureau, 2014). Chinas economic importance makes it one
of the United States most important diplomatic partners. However, their aggressive tactics
against their neighboring countries, many of which being key military allies in the region, create

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a tense diplomatic situation for the US. Furthermore, Chinas support of US rivals like North
Korea and their propensity to generate humanitarian concerns further strain US-China relations.
A second order effect of continued relations with China as they move into a more
globally aggressive posture is the increased strain on diplomatic relations between the two
countries. The US will be forced to walk a thin line between maintaining economic dependence
and projecting military superiority. The complex relationship may cause the US to abandon some
of its core principals to reap economic benefits. The willingness to overlook Chinese digressions
is demonstrated in the United States reactions to Chinese censorship, population control, and
authoritarian policies. The latest in a long string of humanitarian atrocities are the actions taken
by the government against the western Chinese Uygur population. Forced relocation, involuntary
late term abortions, and forbidden religious worship have been imposed on the Uygur population
by the Chinese Government (Corradini, 2009, 30). Although decried by humanitarian groups and
other western nations, the United States chose to ignore their inflammatory policies to maintain
amicable diplomatic and economic relations. Continuing with such practices will permanently
scar the United States reputation and diplomatic standing with China and other world powers.
Perceived weakness would lower global US influence, creating a surge of diplomatic problems in
other areas of the world.
The continued diplomatic strain between the US and China will boil over into other areas
of competition. Consequently, as economies grow, so do their energy requirements. China and
the United States are the two largest producers and consumers of energy in the world (EIA,
2014). The projected energy requirements of both nations is expected to continue to increase,
driving a 56% increase in world energy consumption by 2040 (Tracy, 2014). As a tertiary effect
of diminished US influence, the United States and China would become involved in an energy

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conflict, struggling over mineral rights and energy agreements with third party nations. China
currently has agreements with adversary nations such as Iran, Russia, and Venezuela for oil and
natural gas privileges (EIA, 2014). Scarce resources and diminished US influence will allow
China to successfully compete with the US for energy resources all over the world. Energy
imports from key US energy suppliers like Canada, Saudi Arabia, and Mexico could be
diminished due to competition from Chinese influence. This can lead to rising energy prices,
economic decline, diminished GDP, and national security concerns in the United States.
China has come a long way and made great strides in the last 20 years. Their military and
technological advancement have been fueled by their rapid economic expansion. However, it is
uncertain if China can sustain such high levels of economic growth as it is artificially driven by
investments and exports. The Chinese government has accrued a large amount of debt investing
in infrastructure, factories, and the military, but their economic consumption has not kept pace,
allowing very little growth in a larger, higher spending middle class. The lack of a sizeable
middle class has kept the cost of Chinese exports relatively low, growing the export market
incredibly fast (Aziz, 2014). However, exports can only sustain an economy for so long. As
partner nations make adjustments to reduce their trade deficits, Chinese companies will be left
with surpluses and no middle class to support it. With no middle class and low household
consumption, the Chinese economy is on course to burst in the next three to five years if drastic
changes are not made (Aziz, 2014). As Michael Pettis of Peking University stated, "Every
country that has followed a consumption-repressing investment-driven growth model like
Chinas has ended with an unsustainable debt burden caused by wasted debt-financed investment.
This has always led either to a debt crisis or to a lost decade of very low growth (Aziz, 2014).

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The Chinese government knows the risks if they continue on their current economic plan
and has begun to take action to counter an economic downturn. Their new 5 year economic plan
calls for a shift from an industrially based economy to a service and technology based one.
Furthermore, they will introduce more democratic reforms looking to lessen restrictions on
capital outflows and promote offshore investment (Rapoza, 2014). However, even if a Chinese
economic crash is diverted, their economy will still be affected by the economic shift. Industries
and investors will require time to adjust to the new economic structure. This will undoubtedly
effect their economic growth severely. There is a possibility that they could even see several
years of economic decline. With the US and Chinese economies remaining so entangled, any
significant decline in the Chinese economy would, at the very least, marginally affect the US
economy. However, with the US economy being more diverse, it should recover much faster.
A declining Chinese economy will certainly effect their military expenditures in the short
term. A Chinese military looking to reduce the technology gap with western nations would be
hard pressed to make any real gains in that area, although it still may be possible. Even if
technological gains can be made, fielding advanced technology is extremely costly. A
diminished defense budget may not allow for enough advanced equipment to be fielded that
would substantially affect military capabilities (Metz, 2014). Programs currently under
development will be reevaluated and some may be scaled back. However, the Chinese military
should be able to at least maintain their capabilities during the economic transition. Fielding of
the J-20 Stealth Fighter, a homegrown aircraft carrier fleet, advanced submarines, and integrated
computer technologies will highlight some of their new capabilities.
A tertiary effect of a reduced military budget could be the most damaging to US and
regional powers. According to Stephen Metz, Chinas eventual economic decline might

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intensify internal problems and make China aggressively belligerent and prone to miscalculation
(Metz, 2014). A military that has become accustomed to budgetary increases would find its
accounts empty for the first time in decades. This alone could cause political struggle, however a
much more dangerous consequence would see the government giving in to military nationalism.
Chinas stance on regional territorial disputes could reach a boiling point and a now or never
mentality might cause military action. Taiwan seems to be the most at risk in a future state where
the military is able to influence foreign policy. A booming economy and improving relations
with the west were a lot for China to risk. Without such prosperity, China may be willing to act
more aggressively towards their many regional disputes (Metz, 2014).
Even if China is able to avert a financial meltdown, serious problems still loom farther in
the future. In the next decade, China must contend with the consequences of their own domestic
policies. Their infamous, one child only policy has far exceeded its original expectations; so
much so that a looming labor shortage is expected in in the coming decade (Rapoza, 2014). A
diminished workforce is not an ideal situation in an uncertain economy. Chinas unstable
economic structure, its previously discussed perils aside, could collapse from the weight of a
labor shortage alone. The situation will spark demand not only for laborers, but also a skilled,
educated, and intelligent workforce to fill upcoming technology and service positions that are the
future of the countrys economy. China will look to its own population and the global workforce
to fill vacant positions, and they will compete with the US and western states to do it. A global
labor struggle will affect China and much of the developed world (Silverstein, 2013).
Additionally, Chinas younger generation will be burdened with caring and paying for the
countrys rapidly aging inhabitants, who are now a large percentage of the populace. It will
further strain the countrys economy as the Chinese government is forced to create healthcare

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and social security programs to support the geriatric population. Sweeping social changes are
waiting in Chinas future.
China and the United States share a complex relationship. Each is posturing to supplant
the other, but both countries are dependent on each other for prosperity. China has serious
problems to contend with in the coming decade. An unsustainable economic model, territorial
disputes, an aging population, a souring relationship with the west, and a technologically
advancing and growing military all must be carefully addressed if China is to continue to rise
into a world power. Ultimately, the United States needs to prepare for either outcome: an
economically defeated China or a second superpower.

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Works Cited
1. CIA World Factbook: China. (n.d.). Central Intelligence Agency. Retrieved July 29, 2014,
from https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
2. Getz, B. (2011, August 24). Pentagon report: China closer to matching modern
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3. FlorCruz, J. (2014, May 25). What's behind China's territorial spats?. Global Public
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(2014, January 1). U.S. Energy Information Administration (EIA). Retrieved July 31,
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8. Corradini, K. (2009, January 1). Uyghurs under the Chinese State. . Retrieved July 31,
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Retrieved August 1, 2014, from http://theweek.com/article/index/254999/is-chinaseconomy-headed-for-a-crash
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Bloomberg.com. Retrieved August 2, 2014, from http://www.bloomberg.com/news/201311-21/ten-predictions-for-china-s-economy-in-2014.html

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