China vs. USA

2005

Why Russia Lost the Cold War

The Soviet Union lost the four-decade cold war in 1991. The US and its Western allies won the cold war due to economic superiority. Economic superiority provided the wealth to fund the arms race, foreign aid, proxy wars and other cold war strategies. The economic benefits to western consumers provided an additional wedge. The Berlin Wall kept people from escaping the Soviet bloc as it fell behind. Ultimately, the Soviet Union was not able to match the US on both the military and economic front causing the empire to falter and fail in 1991.

The ultimate power of a superior economic system is a lesson the US should remember.

The Crouching Tiger is Growing Rapidly

China has been growing at a torrid pace, 8% annually for the last 25 years. China’s current rate of growth is double the US. The World Bank and IMF calculate the size of the Chinese economy adjusted by Purchase Power Parity (PPP) at $7.1 Trillion versus $11.6 Trillion for the US economy.

China’s goal is to catch up economically with other world powers. In May 2005, Chinese President Hu Jintao stated China’s aim is to lift the size of its economy to $4 trillion by 2020 — effectively quadrupling its gross domestic product of five years ago. China’s GDP on a PPP basis could match the US within 20 years as suggested by a recent Economist forecast.

China is already translating its economic prowess into military terms.

When Will China’s Military Match the US?

China currently has standing armed forces of 2.1 million exceeding the US forces of 1.4 million. By all other measures, the US has dramatic military superiority. US military spending at $ 430 Billion in 2004 exceeds Chinese military spending of $ 80 B (adjusted for PPP). Chinese military spending as adjusted for PPP varies widely according to RAND, the Department of Defense and others. RAND in a government-funded study estimated Chinese military spending would reach 40% of US military spending in 2025. The 2004 US Department of Defense report estimated a range of $ 160 to $ 250 Billion for China.

Sec. of Defense Rumsfeld said in June that China’s defense expenditures are much higher than Chinese officials have published. “It is estimated that China’s is the third-largest military budget in the world, and clearly the largest in Asia,” Rumsfeld said in a speech to Asian defense leaders in Singapore. Defense officials estimate China spends two to three times more than it admits on defense, leading U.S. officials to believe China has one of the largest defense budgets in the world, and by far the largest in Asia.

There seems little doubt based on various US reports; China has its sights set on being competitive with the US on a military basis.

How Will the US Fare in the Next Arms Race?

US military strategy has been based on concepts like first-strike capability, overwhelming superiority and maintaining expensive technology leads. Nearly half the military spending on the planet has been by the US over the last decade. Our incredible economic advantage has allowed us to maintain this military edge, a high standard of living and the unique status of the only superpower.

As the size of the Chinese economy approaches parity with the US and Chinese military spending and technology become a competitive factor; the extravagant health care system in the US will become an Achilles heel.

China spends 5.5% of GDP on health care currently, one-third of current US expenditure of 16% of GDP. Federal projections show national health care expenditures hitting 20% of GDP in a decade. This is several times our military spending.

If China were to instigate an arms race, Congress and the President would find their budgetary options compromised by the health care juggernaut.

This is just one more reason our country should address our unsustainable health care system instead of waiting until we have a crisis.

Sources:

RAND, “Modernizing China’s Military: Opportunities and Constraints” (ISBN: 0-8330-3698-X)

American Forces Press Service, “Chinese Military Power Report Addresses U.S. Concerns” By Kathleen T. Rhem, WASHINGTON, July 20, 2005