It occurred to me that these two recent stories in the Wall Street Journal concerning China potentially overtaking Germany as the world's third largest economy when it reports its GDP figures for the first half of 2007 later this week and its rising military capabilities--particularly its naval power--are quite interrelated. Let us begin with the first article. It's expected that China will surpass Germany as the world's third largest economy so far this year behind the United States and Japan. Should China have more political weight to match its economic clout?Chinese statistics due this week are likely to show that the country is on track to leapfrog Germany as the third-biggest national economy this year, sooner than expected -- yet another sign of just how quickly the global economic balance of power is shifting.
Overtaking Germany in absolute terms may not be seen as an important triumph to China's leaders, whose priority is raising incomes and living standards that remain far below those of the developed world. And it might not be surprising that a country with 1.3 billion people produces more in a year than Germany's 82 million inhabitants. But passing that milestone could add to increasing anxieties in wealthy nations about China's rise.
Recent estimates put the size of China's gross domestic product last year at $2.8 trillion, breathing down the neck of Germany's $2.9 trillion national output for the period. Only the U.S. ($13.2 trillion) and Japan ($4.4 trillion) have bigger economies, according to International Monetary Fund data. GDP measures the total value of goods and services produced in a nation.
Chinese government data for the second quarter, due out on Thursday, are expected to show that Chinese output grew by around 11% in this year's first half, a rate that economists think China will maintain this year. Even optimistic predictions for German growth, at close to 3%, are no match for that.
As recently as 1999, China was only the world's seventh-biggest economy. It has since leapt past Italy, France and the United Kingdom. If it manages to maintain its current rate of growth, it could surpass Japan in around a decade.
China's imminent overtaking of Germany is only one instance of a broader global shift. As populous countries such as China and India become major forces in the world economy, established powers such as Europe, Japan and the U.S. are becoming relatively less important. Many economists already argue that global growth is becoming less dependent on the U.S. economy, which has slowed in the past year without greatly affecting others.
Declining relative economic weight is also expected to bring declining political influence, a particular problem for European countries that partly drives the quest for closer political integration in the European Union. With a collective $14.5 trillion economy, bigger than the U.S., the 27-nation EU wields influence over trade agreements and economic regulation, and is trying to build a common foreign policy.
The previous article provides a good introduction to this article on China becoming a bigger spender on its military--especially its Navy. China now sees a need to ensure the safe passage of vessels carrying vital supplies to China such as oil and raw materials. In turn, shipping manufactured goods has accounted for China's rise as an economic power to be reckoned with. Thus, shipping lanes need protection as well. The graphic to the right is rather misleading in that a simple numerical count of weapon systems does not take into account the superior capabilities of US military hardware. Although the US has generally had difficulties dealing with conditions of asymmetric warfare such as in Vietnam, Iraq, and even Afghanistan, there is little doubt that American has no peer in a straight-up military confrontation for which its military capabilities have been designed around. Anyway, to the article:
Many believe China's growing ties to the world economy and its dependence on imported oil and raw materials will ensure China's "peaceful rise," as Beijing's leaders have pledged. But these same commercial interests -- and the need to defend them -- are also driving China to pursue military might.
"The oceans are our lifelines. If commerce were cut off, the economy would plummet," says Ni Lexiong, a fellow at the Shanghai National Defense Institute and an outspoken proponent of Chinese sea power. "We need a strong navy."
For Chinese strategists, the country's rapid economic growth -- which underpins the Communist Party's continued hold on political power -- and its military advancement are now inextricably linked. "Security issues related to energy, resources, finance, information and international shipping routes are mounting," says a government white paper published last December that lays out China's defense policy.
In response, China says it will spend nearly $45 billion on its military this year, an increase of about 18% from 2006. It has also embarked on a ship-buying spree, acquiring advanced vessels from Russia, and also building its own. Over time, the strategy could remake the maritime balance of power, first in Asia, and then in the rest of the world.
China's leadership insists that the world has nothing to fear from a better-armed China. The navy, known officially as the People's Liberation Army Navy, is still smaller and less capable than that of the U.S., which has more than 100 major surface combat ships, including 11 aircraft carriers. China has 76 main surface combatants and no carriers, according to the International Institute for Strategic Studies. The Chinese fleet is also untested in modern naval warfare...
But as China's navy becomes better equipped and farther ranging, it is causing alarm bells to ring in Washington, Tokyo and Taipei. The U.S. is strengthening its forces in Asia, partly in response to China. It is also encouraging Japan to boost its own military and naval capabilities, and is even cultivating ties with Mongolia, on China's northern border.
"The improvement in the Chinese military is significant. That is obviously of interest to us and to everyone in the world -- and appropriately so," says Adm. Timothy J. Keating, commander in chief of U.S. forces in the Pacific.
Much of China's concern stems from its dependence on foreign oil. China imports nearly 50% of its oil and is more dependent on imported Middle Eastern crude than the U.S. Roughly 72% of China's imported oil now comes from the Persian Gulf and Africa on tankers that pass through the narrow Strait of Malacca -- a strategic choke point -- between the Indonesian island of Sumatra and peninsular Malaysia.
President Hu Jintao has referred to the potential vulnerability of his country's energy supplies as China's "Malacca dilemma." The country has no ships stationed permanently near the straits.
China also depends on the outside world for a host of other raw materials -- from copper to coal and iron ore -- required to keep what is now the world's fourth-largest economy humming. Nearly all of China's trade moves by sea from the country's east coast. Many exports are carried by China's own burgeoning fleet of merchant ships.
"Economic globalization entails globalization of the military means for self-defense," Zhang Wenmu, a professor of strategic studies at the Beijing University of Aeronautics and Astronautics, wrote last year in China Security, a military-affairs journal. "With these complex and expanding interests, risks to China's well-being have not lessened, but have actually increased..."
While the immediate driver of China's naval development has been the potential for conflict over Taiwan, its longer-term goals are much broader. Navy officers speak of developing three oceangoing fleets, one that would patrol the areas around Korea and Japan, another that would push out into the western Pacific and a third that would protect the Strait of Malacca and the Indian Ocean.
"The navy needs to be able to go wherever China has economic interests," says one senior Chinese naval officer who spoke on condition of anonymity. "China should have naval forces stationed at strategic points," the officer says, even though "this would certainly push China into more direct confrontation with developed countries."
China has helped finance and engineer the construction of a deep-water port in Pakistan that U.S. defense planners say could be used by Chinese naval forces in the future, giving them easier access to the Arabian Sea and Persian Gulf region. U.S. military officers also believe China is operating listening posts in southern Myanmar to monitor shipping traffic through the Strait of Malacca.
China has also begun building a network of satellites that can be used to guide navigation by its own ships at sea, as well as to keep track of other countries' vessels. Chinese military leaders are even talking about building aircraft carriers -- which for decades have been the mainstay of U.S. maritime power.
