Remember that golden summer of post-communist optimism called the Clinton years? Back then, globalization of the economy seemed like an undiluted benefit of human progress that could produce nothing but good. But the new millennium brought contrary evidence. In 2001, terrorists exploited open borders to visit destruction on America’s homeland. In 2002, free trade gave the U.S. the first $400 billion trade deficit in history. In 2003, policymakers discovered that economic interdependence didn’t mean much when it came time to form a coalition against Saddam. In 2004 Americans faced rapidly rising prices for oil, steel, and other commodities caused by global economic expansion.
Now, in 2005, it is becoming apparent that globalization may be stimulating nationalism and military tensions, rather than diminishing them as expected. Exhibit A in that case is the military buildup in a place most Americans have come to call “China,” but which is still very much the People’s Republic of China. The Beijing government is applying some of the wealth generated by its rapid economic growth to acquire advanced military technology. The U.S. military commander in the Pacific calls China’s buildup “unprecedented.” Intelligence agencies are projecting that by the end of the next decade, China’s military will be able to target any surface or airborne forces that come within a thousand miles of its territory.
It isn’t hard to see what that would mean for the independence of Taiwan, or larger U.S. interests in the Western Pacific. China is rising and America is declining in the region, and all our allies know it. Defense secretary Donald Rumsfeld was sufficiently concerned to make shaping Chinese behavior one of the four “core problems” addressed in this year’s Quadrennial Defense Review. The terms of reference for the QDR suggest that space-based intelligence systems, stealthy weapons platforms, and an agile logistics system can help cope with the Chinese challenge.
No doubt about it, China’s growing military power makes a good case for expanding U.S. submarine forces, buying a sufficient number of F/A-22 fighters, and having satellites that can eavesdrop on enemy communications. But isn’t the Pentagon, and the Bush Administration, missing the bigger picture? China’s military buildup is being paid for by its record economic growth, and much of that growth is traceable to a yawning trade surplus with America. In other words, American consumers are financing the military threat that so concerns Pentagon policymakers.
This isn’t just rhetoric. The Chinese trade surplus with America has increased over twenty-fold since the Tiananmen Square massacre, and now is approaching a thousand dollars annually for every adult in America. A recent study by the US-China Economic and Security Review Commission found that China accounts for the entire U.S. trade deficit in advanced technology, because the composition of Chinese exports has shifted from textiles and toys to high-tech products like computers.
Not only does this trend explain where the money is coming from to pay for China’s military buildup, but it raises doubts about whether the Pentagon will have the technology edge over China it is counting on in future military encounters. Just as the Bush Administration refuses to see the connection between its lack of an energy policy and America’s problems in the Persian Gulf, so it fails to connect the dots between its economic policies and the decline of America’s power in the Western Pacific.
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