David Gewirtz | BIO
Editor-in-Chief, ZATZ Publishing
Like two schoolhouse enemies forced to work together on a class project, the fortunes of China and the United States are inextricably linked. But that doesn't mean both nations have to see eye-to-eye on everything - or that they even play well with one another.
As the United States struggles to pull itself out of numerous troubling challenges - a banking system in tatters, two wars, massive job losses - China appears to be flexing its muscles.
It seems like every week, we learn of a new possible national security threat emanating from China. Is the People's Republic of China a threat to the United States, a partner, or both?
In recent months, the Chinese navy has been harassing U.S. Navy survey vessels operating in international waters of the South Chinese Sea.
Last month, the U.S. Naval Institute reported that modified Dong Feng 21 missiles might be capable of extremely long-range flight and might also be able to destroy American aircraft carriers.
Then there are the reports that Russian and Chinese hackers have penetrated the U.S. electrical power grid via the Internet, leaving behind nasty little programs that could later disrupt the operation of the country’s infrastructure.
Add to that the results of a first-of-its-kind economic wargame run by the Pentagon in March, where China came out on top in a simulated battle for control over the world's economy.
A country's power is often directly related to how strong it is economically. So, in March, the Pentagon tried something completely new. Instead of simulating a battle with tanks and guns, they simulated a battle with banks and currencies. Instead of generals gaming the battlefield, the Pentagon brought in bankers, hedge fund managers, and economists to play at fighting economic war.
The game ended with the U.S. still winning, but barely. Each economic attack further weakened the U.S. Unfortunately, as one country weakened, another kept getting stronger and stronger in the simulation: China. They're innovative, savvy, and proved economically ruthless in the simulation.
China already has huge sway over the U.S. economy. A mere mention earlier this year by Chinese Premier Wen Jiabao about his concern over the safety of Chinese assets in America caused the dollar to lose value overnight.
And, of course, China is America's largest creditor. Depending on how it's measured, we owe China anywhere from $739 billion to $1 trillion - and that sum is likely to rise given how much we're going to need to borrow to stimulate the economy.
Is China a superpower?
The word "superpower" was used originally back in 1944 to refer to the U.S., the Soviet Union, and the United Kingdom. It has come to refer to countries with huge global economic influence, huge domestic production capability, huge military capacity, and, of course, lots of nukes.
Although China is still struggling to tap the economic potential of its huge population, the PRC is the world's second largest economy - we're the first, with about double the GDP of China.
China has nukes, it has a growing military capability, and it has more honor students than we have students - and its new national strategy is to grow its middle class, grow its production capacity, and grow its economy.
Is China a threat?
That depends. Right now, China needs us as much as we need them. This is different from our Cold War relationship with the Soviets. They were pretty much happy to live in their own little economic world, so there was very little in the way of economic co-dependence.
Not so with China. They need us to consume the goods and services they produce. They need us to provide return on their considerable investments here in the U.S. And they need us to fuel a global economy so they can be a fully realized player in the world market.
But they also need us to not screw up. If we are no longer providing value to them, then we're a liability. And that's when we'll need to watch our back.
Like the class project relationship, our relationship with China is one of convenience. Our values and goals as nations are not in lock-step. If, in the eyes of leaders like Wen Jiabao, we're putting China’s growth agenda at risk, then there may be a risk that they'll take some kind of overt or covert action against us.
What about their recent aggressive behavior?
I am not a mind-reader, so I can't tell you what Hu Jintao, Wen Jiabao, Wu Bangguo, Jia Qinglin and the other Chinese leaders are thinking. But I can tell you what it looks like.
It looks like they're testing us.
Based on the actions we know about, it looks like China is testing us in a variety of ways. They're testing how we react to subtle military provocations and they're testing to see just how vulnerable we might be in terms of our financial system (a lot) and our infrastructure (somewhat).
One reason they might want to test us is to see if their investments are sound. If we're showing weakness, they might either want to capitalize on that weakness or factor it into their decision making. Likewise, if we're showing strength, that, too, is important for them to know.
Another reason they might want to test us is to find new ways to exert leverage. Since both countries are heavily armed, neither nation wants to get into a no-holds-barred warfight with the other. But China might want to find ways to weaken us, threaten us, or otherwise blackmail us into doing things their way.
They also might be worried about us
There's one more possibility and I almost hesitate to mention it. China could also be preparing to defend against us, in case we decide to attack (or just decide not to honor our debts). We've all seen the TV shows where a bad guy owes so much money that instead of paying it back, he kills his creditor.
We, of course, don't think of the U.S. as a bad guy, but the Chinese might not want to take the chance. We're a big, strong country and we've certainly demonstrated that if we have a mind to, we can destroy another nation.
China might be laying down various defenses just in case we collectively go off our meds and decide to pick a fight instead of paying our debts.
What does this mean for America
Wen Jiabao is a formidable man. Like Li Peng, who served as China's Premier from 1987 to 1998, Wen is an engineer by training. He is hugely popular within China, in part due to how he helped manage the Sichuan earthquake disaster last year. All indications are that Wen has a practical side to his governing style, and that can bode well for American relations.
China isn't the only threat out there and we must do everything we can to strengthen America so we can once again respond to multiple threats.
Back in the good old days, when we used to talk about being able to fight more than one war at a time, we were just talking about where we send our troops. In these modern times, however, we're also looking at the financial space and cyberspace as arenas of battle.
We need to do a better job. We need to strengthen our layers of protection against attack from cyberspace. We certainly need to rebuild our financial system.
And we need to invest even more in adding layers of defense to our ships and troops in harm's way. Thay means better shipboard defense systems, better armor for vehicles, better body armor, and the like.
It's costly and a lot of work, but the good news is that the stronger we become, the safer the whole world will be. Plus, the more we invest in securing our ships, troops, and computer networks, the more money we put into our own economy - and that creates more jobs.
China doesn't want to go to war with America. They'd much rather we buy their products and pay off our debts. That will help them build up their economy and help them move their billions of citizens into the middle class.
It's all a big circle. If China eventually gets their billion-plus middle-class citizens, there's little doubt that virtually every one will want to buy an iPod (which, not coincidentally, is partially assembled in China).
So are they a friend or foe? That probably depends on us.
Follow David on Twitter at twitter.com/davidgewirtz.
Editor’s note: David Gewirtz is Editor-in-Chief, ZATZ Magazines, including OutlookPower Magazine. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.
The Chinese people are OK by me, but the giant hypocrites ruling Communist China I do not! Think about it, they're sucking us dry like vampires.
Fee, Fye, Foe, Fumb! I smell the blood of American chumps!
Good observation about what can be called Chinese "racism," which, to be honest, is just putting one's own kind first. Can't argue with that.
China is, to a large extent, ethnically homogeneous. The US is often described as an "idea" or "proposition" nation whose identity transcends ethnicity and race. What Americans often tout as a strength may very well be a serious weakness. That identity is being put to the test, and its trials will only intensify.
You guys need to start paying attention.
Didn't you here what they, the Chinese wanted to do? They want a new global reserve currency instead of the dollar because we keep printing it like it's going out of style, meaning it's becoming confetti to the Chinese.
The Chinese Yuan is pegged to the dollar. So every time the dollar goes down, the Yuan goes down with it. The U.S. dollar is down 40% against the Euro since 2000.
If the wold lets go of our currency, the dollars will flood the system causing everything to rise in price. It happened in 1993 to Great Britain and it cost them billions in order to buy their own money back. They also had to raise the Interest 3 times in a day. i think it was at 15%.
So. Do your research. China is can wipe us out financially if they wanted to. Will they? I don't know.
China has gained a political and economic strong hold on America, not as a friend, but a super power without restraint.
Personally, I do not want business with China, especially when our own government fails to protect us from their deadly imports into our country.
Perhaps, they have only positioned themselves to come out as the top player for which we will all soon feel the sting of the bamboo cane.
If they want our business they better be our friends!
How can China be a foe, when most household products and toys are 'Made In China'? – the economy will see China as it's saviour.
We will be ok, as long as we keep buying their junk and Walmart stays on their side.
They hold $ trillion Dollars in reserve. They can destroy us if they want. Who's fault is that? Ours.
We have a major trade imbalance. $60 billion a month.
and at the same time. We barrow the money when we issue U.S. Bonds.
China wants to lead the country, they want to be in control. China, says American's are lazy and we are too 'nice'. The Chinese are highly critical and judgmental about others who are not of the same race.
China stands for China ... Friend or foe? I've been asking myself the same question. God bless the US!
Opening our computer systems to workers overseas in Asia (especially India) and the like, does not add to our security; it puts it in more danger of being compromised. We need to seriously look at what type of computing is being off-shored to other countries and pull back those parts that could lend itself to a computer attack aimed at weakening the US and its financial markets. We probably will never pull all our computing (and American jobs) back to this country but we need to be smart about what we off shore and what we don't. Financial systems, communication systems with the phone companies, banking systems, etc. don't need to be offshored – not unless we want to give hackers easier access to them. I don't think we do or that we can afford to.
Friendships are to be cherished...one can never have enough good friends!
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