George Friedman on China

I recommend that you read this post in tandem with yesterday’s post about China. Yesterday I highlighted David Goldman’s analysis of the relationship between the United States and China. According to Goldman, we are in trouble, We are about to lose out in the clash of civilizations.

Today, I offer a counterpoint, from George Friedman, of the Geopolitical Futures site. Whereas Goldman quoted an Australian study that told us that China’s military force could neutralize most American military assets in a very short period of time, Friedman considers China to be militarily weak:

Militarily, the United States controls the Atlantic and the Pacific oceans. China controls neither. From a military point of view, it can use missiles and trigger a nuclear exchange, but it has a limited navy and a vulnerable missile force. China is, therefore, not even close to being a global power.

Last I heard, China has been building military bases on islands in the South China Sea. We do well not to ignore the fact.

Whereas Goldman emphasizes the importance of Chinese research and development into 5G networks and artificial intelligence, Friedman takes a different approach:

Roughly 19 percent of China’s GDP comes from exports, about 5 percent of which are destined for the United States. Roughly 13 percent of the United States’ GDP comes from exports, about half of which are destined for North America and only half of one percent of which go to China.

Whether or not it can regain access to American markets or whether it can find new markets for its goods… remains to be seen:

In terms of political power, China has maneuvered itself into a dangerous position. It has failed to defuse U.S. suspicions of Chinese behavior and intentions. In addition, it has not managed trade negotiations with the U.S. successfully. This means that China has permitted economic and military tensions with its single-most important customer to increase. At a time of economic contraction when U.S. imports will decline, China faces disproportionate threats because of its dependence on exporting.

And, we do not know how China will react to losing manufacturing and industry. Everyone knows that the world has become too dependent on China, but is it really that easy to move it all back on shore?:

China’s strong suit is dependence on a supply chain that relies on cheap labor. But the coronavirus has demonstrated to the businesses that created the supply chain that excessive dependence on any one country, as is the case for the U.S. pharmaceutical industry, can destroy a company. The crisis has turned this into a weakness, rather than a strength, as American businesses shift their supply chains away from China. In some cases, this is not a complex or costly thing to do.

In this essay, Friedman ignores the inferior quality of American education, and its inability to produce a sufficient number of competent engineers. In truth, those who excel in STEM subjects in America are invariably Asian. Apple’s Tim Cook says that he cannot produce in America because our country does not have people who are capable of doing the job.

Friedman does not address the problem. Nor does he address America’s debt problem Nor does he address the fact that China is working to undermine the dollar as the world’s reserve currency. From the little that I understand of these matters, if the dollar ceases to be a reserve currency, we are in very big trouble.

Friedman concludes:

Now that we are in the midst of the coronavirus crisis, the U.S. has flooded the country with stimulus money, and that will have consequences. So will the contraction of the Chinse economy, along with political concern internally over the trustworthiness of the Chinese government when it really matters. While it will take several years for both countries to recover, the idea that the crisis has opened the door to Chinese domination is strange, or perhaps wishful thinking. The pain is real, but the order of things is robust.