How Can China Survive in Competition with the U.S.?

An American academic once made the following prediction, “In the first half of the 21st century, it will be U.S.-China relations that shape the world, and in the second half it will be U.S.-Russian relations.” What we can gather from this statement of opinion is that, firstly, the 21st century will continue to be led by America, and secondly, that China will be unable to mature into a power to equal the U.S., but will decline as a competitor with the U.S. in the mid-21st century, replaced by Russia.

Any developing country is considered a challenge to America’s dominant position. From the 1950s onward, when the U.S. formally ascended the throne as world hegemon, it has used peaceful evolution and the arms race to dismantle the Soviet Union, and has used currency warfare to smash Japan. Both countries, at one time the second most important in the world, have gone into decline through competition with the U.S. Now China, too, is approaching a similar position and whether it likes it or not, it must accept that it is in competition with the U.S. And yet, China does not have the military capability that the Soviet Union once had; nor does it have the economic strength that Japan once had; its disparity with the U.S. is greater than either of those former competitors. For China to seek victory in its competition with the U.S. is almost a folly; praying for survival — that is, for the country not to disintegrate, and for the economy to not slip into decline — is a more realistic goal.

　　

So how can China survive its competition with the U.S.?

First, on the technological level: He that masters new technology leads the world of tomorrow.

A comprehensive history of world development shows that the rise of any great country is heavily supported by technology. Ancient China’s long stint as world leader was thanks to the four great Chinese inventions — paper, printing, the magnetic compass and gunpowder — as well as technology such as ceramic production and silk weaving; Britain’s rise was thanks to steam power; Germany’s rise owed much to the internal combustion engine; and America’s leading position in the world today is based on electricity, information technology and space technology, among others.

What technology will China look to for its development? It cannot rely on cheap labor, nor can it rely on real estate; it must first exploit new technologies to lead the world in the future, and secondly, it must close the technology gap between itself and the U.S. as quickly as possible. This is the kind of competitiveness found in a nation’s development!

(A) Which new technologies will lead the future of the world?

What kinds of technology will lead the world into the future? The first is energy technology. The world’s energy supply is currently met largely by oil and coal, which are nonrenewable, and could well be exhausted within the next few hundred years or even the next few decades. In the future, whichever country is able to develop renewable energy sources to replace coal and oil, be it nuclear energy, hydroelectric, wind, solar energy, or biomass, will also be able to lead the world. The second is electrically-powered transport technology. Currently, the vast majority of machinery is fueled by oil, whereas most newly-exploited energy sources are stored as electrical energy. If the electric engine replaces the petrol engine, and becomes widely used in cars, planes, tanks, and boats, this could be as significant as the first industrial revolution.

The third is resource recycling technology. The world’s current resources are limited. Coal and oil are obvious examples, but there will also come a day when metal mining deposits, which are exploited without controls, are completely exhausted. China is currently sourcing resources from around the world to sustain its economic growth, and if it cannot exploit resource recycling technologies, then its economic development will not be able to withstand a rupture in the supply chain.

If China wants to survive its competition with the U.S. or to achieve sustainable development, it must put more effort into new energy technology, electric motor technology and resource recycling technology, and strive to make groundbreaking advances before America. Whoever is first to master these technologies will be the one to lead the world.

(B) Closing the technology gap with the U.S. as quickly as possible.

The current gap between China and America in terms of electronic technology is relatively small, but in terms of information and space technology, the gap remains very large. In the past, when Sino-Japanese relations have been strained, the Chinese have boycotted Japanese goods on their own initiative. However, no matter how strained relations between the U.S. and China become, the Chinese people do not have the confidence to boycott U.S. goods. There is a simple reason for this: the lives of the Chinese people are inextricably tied to U.S. products. In terms of space technology, the GPS systems installed in Chinese cars are American made. In terms of information technology, the CPUs in Chinese computers are made by the American firms Intel and AMD, while the operating systems and office suites are designed by Microsoft. The Internet was invented by Americans, who control nine of the world’s 11 root servers. If the Americans were not happy, they could cut off China’s Internet, severing its connections with the outside world. They could use their operating systems to give Chinese computers the “black screen of death,” or paralyze Chinese computer systems through the “back doors” of CPUs. Thus far, China has remained entirely passive in its competition with the U.S.; even when bullied it has not dared to stand its ground and strike back. The reason for this is that America is in control of core technologies; China is controlled by America, and is indebted to it in too many areas. Conversely, America is not subject to enough controls by China, and is not indebted enough to it. Only if China one day manages to carve a niche for itself in America’s hegemony on space, Internet and electronic technologies will it be able to return fire on an equal footing when facing up to the challenge of America.

Second, foreign policy: encouraging development from a unipolar to a multipolar world.

For many years China has followed the foreign policy line advocated by former leader Deng Xiaoping, namely “concealing one’s capabilities and biding one’s time,” a strategy which focuses on managing China’s own affairs without encroaching on anyone’s interests, avoiding intervention in international affairs which do not directly involve China, and not clearly stating China’s position or just watching on as bystanders. Such policies are not conducive to an expansion of China’s diplomatic influence. China should actively promote a new worldwide political and economic order that will benefit the common development of all mankind, and take on the kind of responsibilities fitting for a future world power; it should not wait until its rivals harm its interests before it reacts.

(A) Actively pushing for reform of the U.N. Security Council.

The current structure of the U.N. Security Council preserves the political framework in place at the end of World War II, and does not reflect the political and economic landscape of today’s world. Across the world, countries are clamoring ceaselessly for its reform. America has promised several times to support Japan, Germany and India in their bids to become permanent member states. China, while stating that it understands the situations of all the aforementioned countries, has not promised to support any one of them. This kind of ambiguity will not win China the diplomatic interests it deserves. China views America as the world’s hegemon; adding more member states to the Security Council will cause power to be distributed and will weaken American hegemony. For this reason, China should give its full support to plans to reform the Security Council. Specifically, this reform should occur in the following ways. Firstly, progress must be gradual. The first step is to increase the number of permanent member states from five to seven. Once this structure is stable, the seven can be increased to nine, this being the final total number of member states. Secondly, positions on the Council should be divided across continents, with the three powers America, China, and Russia as the cornerstone of the council. In practice, this would mean that America, China, and Russia would be automatically elected, with two positions on the Council apportioned for Europe (excluding Russia), one for Asia (excluding China), one for Africa, one for Latin America, and one for the rest of the world. Thirdly, elections on each continent should be linked to elections at the U.N. Each place on the Security Council would be filled by a nominee from a coalition of states on each continent, with the remaining place filled by a candidate nominated by every member country across the globe.

(B) Forging an alliance of Asian states, promoting political and economic integration in Asia.

Europe has the European Union, Africa has the African Union, and Latin America has the Union of South American Nations. Only Asia has no unified alliance of nations. China could use the opportunity brought about by reform of the U.N. Security Council, with a representative for Asia elected by an alliance of Asian nations, to propose the establishment of an “Asian Union,” bringing together countries from East, Southeast, South, West and Central Asia. It might also invite Russia to join, forming a powerful regional political and economic alliance, and gradually push for political and economic integration in Asia. The Asian Union could be headquartered in Hong Kong or Singapore. But bear in mind that such a union must not submit to outside influence!

(C) Actively promoting the development of the BRIC countries, making up-and-coming economies heard on the international stage.

Currently, the BRIC countries refers to China, Russia, India and Brazil. Recently, South Africa joined the BRIC group, with the BRIC term changed to BRICS. All of these countries are up-and-coming economies, and China should strengthen its cooperation with such countries, actively welcoming new member states which have international influence, and strive to make the impact of the BRICS countries akin to that of the G-7 or G-20.

Third, economics: breaking American hegemony, establishing a plural currency system for international trade.

After World War II, America established a world currency system led by the dollar. Every country calculates its output value in dollars; international trade transactions are completed in dollars. The advantage which the U.S. dollar hegemony gives America is that the dollar reserves accumulated by each country through international trade are either spent in America or are lent to Americans to spend. If America’s consumer debt becomes too great, it can always resort to printing dead currency and exchanging it for gold and silver from other countries. This equates to a situation where the world is supporting the U.S. economy.

Although the yuan is not currently a currency used in international trade, China has established currency exchange agreements with six countries, including South Korea, Indonesia and Argentina, and trades with Russia in local currency. The World Bank has recently issued a limited number of bonds in yuan, a currency which has recently taken its first steps toward globalization.

In contrast to the yuan’s weak international position, the Euro is already widely used in international trade, and has become the only currency in the world able to rival the U.S. dollar. China should make use of its own economic influence to bolster the Euro, and create a new world currency system with Russia and the E.U., breaking down the market dominance of U.S. hegemony.

　　

Fourth, national defense: establishing firm measures for national defense, not opposing America, nonalignment, and avoiding an arms race.

The dissolution and decline of the Soviet Union was due to its emphasis on defense over economic matters; the decline of Japan was due to the fact it only had its economy and no national defense (Japan is a protectorate of the U.S.). China must strike a balance between its economic and defense concerns, and must be able to use its defensive capabilities to protect its economic interests, should they be threatened. Given the remarkable power gap between the U.S. and China at present, China should formulate and explicit national defense policy: Establish firm measures for national defense, not to oppose America, practice nonalignment and avoid an arms race.

(A) Establish firm measures for national defense. China remains a country based on solely on its economy, with limited efforts made in the realm of national defense. With its limited resources, China should focus on establishing a defense system, and for the time being, shelve plans to establish a navy on the high seas or a long-range air force, so as to avoid causing other countries to be on their guard, and to encourage cooperation with China.

(B) Do not oppose America, practice nonalignment. The history of Sino-American relations shows that relations between the two countries have only been relatively stable when America has had other rivals to deal with; once it has no other rivals, it comes after China. As the Chinese often say, China is constantly being bullied by America. But there is a limit to how much of a beating America can give China without provoking an all-out conflict, because America could not sustain the costs of such a clash. Therefore, China cannot be brazenly anti-American in its dealings with the U.S., since it does not yet have the capital to succeed America militarily. America does not want a big fight on its hands, and China cannot start a war of words at the slightest pretext.

America has long sought to win over countries on China’s borders by attempting to establish an anti-Chinese alliance. China must break the military alliance between the U.S. and China’s neighbors, and must not establish its own military alliance to counter it. An alliance between China and Russia, or between China, Russia and Europe, is unrealistic. The reason for this is stated above: “China does not yet have the capital to succeed America militarily.” Any country thinking of joining hands with China against America will inevitably fail. In December 2010, Russia announced that it would hold naval exercises in the Sea of Japan in mid-2011, and arranged military exercises to be held with the U.S. in 2012. Countless joint exercises between the U.S. and Russian air forces have already been held, and Russia has already agreed to link its missile defense system with America’s. It seems that Russia is taking very cautious steps to ensure a balance in its relations with the U.S. In the event of a standoff between China and the U.S., Russia would most likely stand back as the two sides battled it out, and benefit from the resulting stalemate. As for the countries of the E.U., China could only hope to form a currency or economic alliance with them, but not a military one. America is of European descent, and European countries share the same religious beliefs and values with America, as well as having a long history of military cooperation. In the event of war between China and the U.S., the best result for China would be a declaration of neutrality by the E.U. For the E.U. to fight against America would be unthinkable!

(C) Avoiding an arms race. The Soviet Union collapsed in its arms race with the U.S.; China must pay heed to this warning. Hence China has clearly stated that it will not challenge American hegemony, and therefore will not struggle with America for supremacy. China does not need to walk the path set by America by building up a stockpile of high-cost weaponry. When it comes to weapons manufacturing, China may never be able to rival the U.S. Two crucial points will determine the winner of any future war: One is information technology, and knowing where your enemy is (principally through use of satellite reconnaissance technology); the other is how your weaponry is powered, i.e., fuel supply. If you know where your enemy’s fuel is stored, and blow it up, even advanced weaponry will immediately be rendered useless. If you know your enemy’s position, but your enemy does not know yours, then your archers could dispose of their gunmen; your mortars could do away with their rocket artillery; your hand grenades could even dispatch with their aircraft (as shown when the Eighth Route Army launched a surprise attack on the Japanese airfield at Yangmingbao). China must invest its limited financial resources in information and energy technologies, and absolutely must not enter an arms race for advanced weaponry with the U.S.