Should We Contain China?

A rising China can be viewed as a global economic powerhouse or a potential threat to peace and tranquility in the world a few decades hence. The dilemma of letting China grow or containing it is perplexing leaders, policy makers and analysts across the globe. China is a $1 trillion economy with its fangs spread not just across the region but also globally. In the first four months of the year, 2007, US exported goods and services worth $19,323.6 million while imports from China were at $95,647.9 million, thus indicating a trade deficit of $76,324 million.

Macro economists and congressional representatives are worried. Part of the problem they say arises from the Chinese undervaluing the Yuan some claim by as much as 40 percent leading to the high level of trade deficit. No doubt, the Chinese as well as hundreds of manufacturers, traders, businesspersons and consumers would not be too concerned of the high level of this deficit as far as they are able to exploit Beijing’s potential in manufacturing to make profits and get cheaper goods from jogging shoes to underwear.

However, U.S. Congressmen are certainly not impressed, and are bringing in the Currency Exchange Rate Oversight bill. The opinion on the Bill is however divided as many feel that a legislation, which attempts to enforce currency restrictions on sovereign states, is manipulative and may not stand the test of international regulations. Should we also control other giant economies with trade imbalance with the US as Japan, which during the first four months of the year has run a deficit of U.S. $27,974 million? Therefore, what is the option, let China undercut the US economy by running a huge trade deficit year after year. The dilemma is obvious.

Then take the other strategic field of defense and security. By the most common parameter of defense budgeting, analysts and policy makers the world over seem to be worried about China’s galloping defense budget. At $ 45 billion for fiscal 2007, it has crossed that of Japan for the first time, though this sum is considered a gross underestimate as many wager anything between $ 85 billion to $ 125 billion as real expenditure by China on its defense. They also site programs such as long range missiles, anti satellite systems, aircraft carrier, fighter development and others to prove that China is spending much more than what it declares and given that the rate of increase hovers over 11 percent every year for the past decade or so, Chinese defense capabilities would challenge the US globally.

The Chinese are livid at suggestions of hidden costs in defense budgets and have been characteristically offensive calling the most recent Pentagon report on China as making, “outrageous comments about China’s security and military strategy and its military capabilities. This report is strikingly distorted about the ‘Chinese military threat’ and is really just too exaggerated.” They also never fail to mention that the US Defense budget is ten times that of China’s official defense expenditure.

A realistic appraisal of Chinese defense modernization should indicate that even with envisaged budgetary spend and pace of development, the U.S. will continue to outpace China at least three to five times even after another hundred years unless there is a catastrophic change in geopolitical and economic trends. More over an advanced Chinese military need not necessarily be considered, as a threat as it may take over some of the responsibilities presently undertaken exclusively by the Western Alliance be it in Iraq or Afghanistan.

A pragmatic overview may therefore reveal that economic linkages developed by China with the World can hardly be reversed without causing severe strain on many states including the USA. China’s military power can be synergized into the global security system to take advantage of the vast manpower of the PLA. Western countries have a great deficit of, “boots on the ground”; China could well make it up, if it wants or if we can veer it to. However, it is not easy to transform big states as China. The choice is between containment and cooptation. The latter may perhaps be preferable.

Before we decide to restrain Beijing, we should also find out can we hope to contain China? Let us mull over this and review it next week.

Rahul K Bhonsle
Rahul K. Bhonsle is a Strategic Risk and Knowledge Management Consultant and writer with specific focus on defence and security, especially in South Asia.