Fire Your Guns 2: PLA Urges Economic Punch v US

♠ Posted by Emmanuel in ,, at 2/10/2010 12:30:00 AM
When we last entitled a post "Fire Your Guns," China was investigating economic sanctions against the United States after the latter supported the sale of billions' worth of weapon systems to Taiwan. Although the US took pains to characterize these sales as defensive in nature, PRC bellyaching was pronounced nevertheless. Now, it seems, military matters are becoming once again entangled with economic ones. A few days ago, I also mentioned how a scholar from the Central Party School, Shaobang Kang, urged ASEAN not to let America screw Southeast Asia over the way the Yanks are doing to China at present via large dollar holdings that are inevitably bound to depreciate. Like many, I tend to think the Chinese are biding their time with the United States. China is still formulating how a world more disinvested of American hegemony would look like--particularly in the economic realm. Among others, its efforts include clamouring for greater LDC participation in Bretton Woods institutions; opposing strict caps on LDC emissions during climate change negotiations; and, of course, resurrecting talk of alternatives to the dollar for global reserve accumulation.

Conflicts between the two are plentiful; there is no denying this fact. At the same time, however, the PRC believes that it did not reclaim authority on the world stage by making rash moves. Slowly but surely, the Chinese are building up their capacity to withstand American pressure and, in time, launch devastating counteroffensives of their own on various fronts. Of course, China will never be America's equal in terms of conventional weapons and it does not try to be. Still, its largesse due to export earnings is helping win (or buy depending on your perspective) friends elsewhere with the basic line of "Look, we're LDCs just like you who know what it's like to have been under the white man's thumb. Follow our example and you can maintain sovereignty and spur economic growth." When the time comes that China calculates support for it exceeds that for America, expect genuine fireworks. In the meantime, however, China will still countenance slights from America while biding for the inevitable payback.

Or maybe not. While the Central Party School line echoes that of PRC leadership at the current time, discourse emanating from the People's Liberation Army (PLA) has been more aggressive for a very long time now. For instance, we've had Unrestricted Warfare, the widely cited work of Generals Qiao Liang and Wang Xiangsui on how alternative means of combat can compensate for China's relative lack of military sophistication vis-a-vis the US. There, they mention the potential for financial weapons to trigger "a near collapse of the social and political order" as "a form of non-military warfare which is just as terribly destructive as a bloody war." Except for Lee Greenwood fans and other diehard America #1 boosters (plus maybe the WSJ op-ed section thrown in for good measure), few doubt that the US with its gargantuan debts now and into the future is vulnerable on this front.

So we have news courtesy of Reuters that PLA generals are calling for China to unleash its economic might on a certain once-proud but now debt-addled North American country. In so many words, the PLA's equivalent of the Central Party School, the National Defence University and Academy of Military Sciences, is calling for China to give America a taste of "unrestricted warfare" right here, right now:
Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.

The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China's National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

The interviews with Major Generals Zhu Chenghu and Luo Yuan and Senior Colonel Ke Chunqiao appeared in the issue published on Monday. The People's Liberation Army (PLA) plays no role in setting policy for China's foreign exchange holdings. Officials in charge of that area have given no sign of any moves to sell U.S. Treasury bonds over the weapons sales, a move that could alarm markets and damage the value of China's own holdings.

While far from representing fixed government policy, the open demands for retaliation by the PLA officers underscored the domestic pressures on Beijing to deliver on its threats to punish the Obama administration over the arms sales. "Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counter-punches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease," said Luo Yuan, a researcher at the Academy of Military Sciences.

"Just like two people rowing a boat, if the United States first throws the strokes into chaos, then so must we." Luo said Beijing could "attack by oblique means and stealthy feints" to make its point in Washington. "For example, we could sanction them using economic means, such as dumping some U.S. government bonds," Luo said.

The warnings from the PLA come after weeks of strains between Washington and Beijing, who have also been at odds over Internet controls and hacking, trade and currency quarrels, and President Barack Obama's planned meeting with the Dalai Lama, the exiled Tibetan leader reviled by China as a "separatist."
There is no surer-fire way of curing America's debt "disease" (their term, not mine, and it's a doozy IMHO) by refusing to stop footing the bill. I have long called for this sort of action to show America who calls the shots nowadays and I believe that doing so should have salutary effects on the world economy, too. After all, it would also force China to think about developing its internal markets more carefully and eliminate the main impetus for currency intervention. Global rebalancing won't result from a continuation of subprime globalization but a short, sharp, shock like that outlined by the PLA.

Ultimately, it doesn't matter if cooler heads prevail; the deficit-swilling nation will receive its comeuppance sooner or later. China has had to wait two centuries to regain prominence and a few decades more before reasserting its regained moxie shouldn't be too much of a stretch. By comparison, America's leaders cannot look past a lousy election cycle. Smart money suggests those who plan ahead stay ahead.