Has someone at the Pentagon been reading azizonomics.com? While I recognise that all great powers will devise contingency plans, it should come as no surprise that Pentagon resources are being directed toward devising a strategy to fight none other than the single largest Treasury creditor, China. After all, as I have pointed out time and again, they are not happy that so much of their productive output is going to stock Wall Mart, Target and J.C. Penney in exchange for the increasingly devalued dollar. From Salon:
This summer, despite America’s continuing financial crisis, the Pentagon is effectively considering trading two military quagmires for the possibility of a third. Reducing its commitments in Iraq and Afghanistan as it refocuses on Asia, Washington is not so much withdrawing forces from the Persian Gulf as it is redeploying them for a prospective war with its largest creditor, China.
According to the defense trade press, Pentagon officials are seeking ways to adapt a concept known as AirSea Battle specifically for China, debunking rote claims from Washington that it has no plans to thwart its emerging Asian rival. A recent article in Inside the Pentagon reported that a small group of U.S. Navy officers known as the China Integration Team “is hard at work applying the lessons of [AirSea Battle] to a potential conflict with China.”
A U.S. mobilization in Asia is well underway, in faith with a spring 2001 Pentagon study called “Asia 2025,” which identified China as a “persistent competitor of the United States,” bent on “foreign military adventurism.” Three years later, the U.S. government went public with a plan that called for a new chain of bases in Central Asia and the Middle East, in part to box in the People’s Republic. Similarly, the nuclear energy cooperation deal signed by the U.S. and India in 2008 was an obvious containment maneuver aimed at Beijing. In late March, press reports detailed a major buildup of American forces in Asia, including increased naval deployments and expansive cooperation with partner countries. Meanwhile, the Pentagon is forging ahead with a multi-year effort to transform Guam into its primary hub in the Pacific, an initiative so vast that John Pike of the Washington, D.C.-based GlobalSecurity.org has speculated that Washington wants to “run the planet from Guam and Diego Garcia by 2015.”
Unlike America’s allies in Asia and Europe, however, China is not about to outsource its national security obligations to a foreign power, particularly when it comes to the South China Sea. There more than ever, and not without reason, Beijing identifies the U.S. not as a strategic partner but as an outright threat. In 2007, when China destroyed one of its weather satellites with a ballistic missile, it served as a warning to Washington after the ramming six years earlier of a U.S. spy plane by a Chinese fighter jet off the coast of Hainan Island. Though the crisis that followed was defused diplomatically, it was interpreted by some in Washington as vindication of the throaty Asia 2025. In fact, the clash followed a dramatic rise in the frequency of U.S. overflights in the area during the twilight of the Clinton years, which triggered a demarche from Beijing that slipped through the cracks of the transition to the Bush administration. The Hainan incident, as affair is known, was the inevitable outcome of a highly intrusive American surveillance regime.
For the first time since the end of the Cold War, the U.S. government has encountered the practical limits of the 1992 Defense Planning Guidance. In its story about AirSea Battle and the China Integration Team, Inside the Pentagon revealed an oblique, if profound insight from Andrew Krepinevich, the highly regarded head of Washington’s Center for Strategic and Budgetary Assessments. China, he said, is clearly jousting for control of the Western Pacific and “we have to decide whether we’re going to compete or not. If we’re not, then we have to be willing to accept the shift in the military balance.” Otherwise, “the question is how to compete effectively.”
Of course, it is an obvious fact that China has no interest whatsoever in war with America in the near future. China remains a clear second to America in military might. And — with China becoming stronger by the day, and America crippled by debt, by poor management, and by deindustrialisation — why would the Confucians risk this favourable long-term trend? As Confucius put it:
“To lead an uninstructed people to war is to throw them away”
No: China has slowly sapped America’s strength with cheap imports, and credit. The real danger to global peace is that America might try to reverse its long, slow decline from global hegemony through proxy or outright warfare before China becomes too strong to make that impossible.
azizonomics 
When was the last time a nation went to war with its largest trading partner? It would destroy both economies, and lead to a global depression.
China would rather fight a cold war.
The explicit answer to your question is 1914.
I think it is a terrible idea for all concerned. As I state in the piece, China has no interest whatsoever in war with America. But the long-term trend in China’s position towards America — and this is backed up by statements from people in the PBoC, the CPC and through Xinhua — is towards diversification now, flotation of the yuan and the establishment of a new global reserve currency soon, and yes ultimately towards exporting much, much less to the United States. America is very dependent on Chinese imports — if you think the economy is bad now, if China cut exports to America by 50% we would see hyperstagflation as all those bank reserves suddenly get used up as America comes to terms with less and less goods on the shelves. What would President Rick Perry do about that?
America needs to cut reliance on China now to avert a breakdown in relations. A good start would be cutting corporation tax for manufacturers in America to 0.
Cut corporation tax and then what?
Solely for manufacturers, not for job exporters like Apple and Wal Mart. My recipe is cutting the middle eastern wars, cutting the sci-fi DARPA projects, cutting bailouts and handouts for Wall Street (like TALF for Morgan Stanley wives) and spending the savings on tax cuts and refunds for the poor and middle and spending on needed infrastructure.
I guess with China rising the hawks won’t countenance a dime of military cuts, but paradoxically I think the combination of a rusting infrastructure, dependence on China and deindustrialisation is more of a national security issue than anything else.
Great posts Aziz – I think you’re assessment and your therapeutic plan for the American economy are logical, realistic and should be considered.
Pingback: Why QE Didn’t Cause Hyperinflation « azizonomics
Pingback: Job Creation 101 « azizonomics
China would not fight the USA. This is a waste of resources. It is more likely to expand west and take on Russia for control of the vast resources of Russia. Russia could only hold China back using mini nuclear weapons to holt infantry and tank incursion. As this will cause too much damage for both Russia and China, an insurgent type attack is more likely. Most East Russians are Asiatic anyway, and China could bribe their loyalty far better. Russia as an ethnic concept really belongs west of the Urals anyway.
Like the Japanese, China may move into South East Asia. They already have large business interests there. However I feel outright war to achieve this is unlikely because most South East Asians would not care if China had a greater influence economically.
You will find with Twitter, Facebook and Youtube, the youth of China will be happier being world citizens than, blinkered revolutionists of the past. I feel that the internet has opened the minds of people and all they want is their friends, family, a secure job and life’s pleasures. Most protesters on online forums are apathetic anyway. It allows you to vent your spleen and feel satisfied. 80 years ago revolutionaries must have been jumping out of their skin and itching for chaos. Not now.
Smaller government, smaller military, and peace and understanding with our Chinese brethren are a better solution. The USA needs to use its productive resources, including people on welfare, to improve the nation. Give a homeless man a mop and broom, and the dignity to do a small job within their capabilities and you will see a clean street and a happy simple man. Giving handouts will lead to a frustrated angry man and a dirty street.
Great post, Buddy.
China does not want to fight America. Why would they given that at the current rate America is shrivelling and China is burgeoning? It is the Rick Perry and Sarah Palin types that I fear might instigate a war to “restore America’s dignity” and to try and exert greater American influence in Eurasia (a la The Grand Chessboard).
I am not sure about the idea of China fighting Russia. Recent experience tends to show that Eurasia is uniting against America. Vladimir Putin in particular would never fight China. I don’t know enough about the mentality of the Chinese generals and technocrats, but I do know they have much more to gain by co-operating Russia and subjugating America, or at least once-and-for all ending American primacy.
Pingback: How to Crash the Price of Gold « azizonomics
Putin would never fight China, because the Chinese will adopt Stalinist methods of using the “Secret Service” to shoot a soldier if he takes one step backward. Putin does not have the man power. Hence why Chinese will take the initiative.
Russia is in a birth decline. The girls don’t want babies. Siberia awaits the bold.
Siberia is the new Wild West — massive resources, lots of space and hot women.
Pingback: The Great Treasury Dumping Game Begins « azizonomics