China At 70: Middle Kingdom In Modern World

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On October 1^st 2019, the People’s Republic of China celebrated its 70^th Anniversary. It also marked a sort of milestone of when China stopped being a “developing country” and became a “developed country,” if US officials can be trusted on this, and it is quite apparent.

Back in 1949, China was poor and isolated by the West. Currently, it is the world’s largest trading nation and second largest economy, a global leader in technological innovation, and a major actor in many regional and international institutions.

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Two things are the most significant changes in China’s foreign policy:

• The way it deals with the US currently, no longer as its inferior, but now as an equal, which also is a part of the underlying cause of the current Trade War and multiple-field antagonism the US attempts to exert on it. And Washington is quite obviously unsuccessful in its endeavors;
• On the global scene, still China expands its influence in the economic realm, but that is also changing. A symptom of this are China’s recently more vocal positions in the United Nations among other things. The One Belt One Road initiative is proof of its plans for even further economic influence expansion as well. Currently it is gaining influence in Africa and in the poorer parts of Asia, thus its influence continues being limited, but that appears to be changing with Russia saying it would intensify cooperation on the One Belt One Road.

In the most recent years, President Xi Jinping has maintained China’s 6% GDP growth, which according to some is stretched, but it has been kept high by debt.

Some of the issues that plagued China prior to 2013, such as building of ghost cities and roads to nowhere has eased, select companies are now being allowed to default. And it is becoming painfully apparent for capitalists in the West that a state-controlled economy can absorb bad debt in ways that a market economy can’t – though some still suspect China’s banks of having up to 10 times more bad loans than presented.

China’s Economy, Massive Export and Import Growth

China’s GDP growth can be seen on the graph from the World Bank. From 1978-2018, China’s real GDP increased by 9.5% annually – enough to double every 8 years. And while real GDP is slowing, from 14.2% growth in 2007 to an IMF-estimated 5.5% growth in by 2024, even slow numbers by China’s standards are breakneck by the rest of the world.

A smaller growth is expected in 2019, but still above the 6% mark. That is mostly due to the Trade War with the US. Focus Economics panelists see the economy growing 6.2% in 2019, before decelerating to 6.0% in 2020. For 2018 the growth was 6.6%.

In terms of trade China is unrivaled on a global scale. China has experienced uninterrupted trade surpluses since 1993. Total trade multiplied by nearly 100 times to $4.2 trillion in only three decades and, in 2013, China surpassed the United States as the world’s biggest trading nation.

Electronics and machinery make up around 55% of total exports, garments account for 13% and construction material and equipment represent 7%. Sales to Asia represent over 40% of total shipments, while North America and Europe have an export share of 24% and 23%, respectively. Although exports to Africa and South America expanded rapidly, they only account for 8% of total shipments.

Due to favorable global trade conditions and China’s accession to the World Trade Organization in December 2001, the country has experienced an astonishing growth of 26.9% annually in real goods and services exports during the 2002-2008 period.

To feed its production and massive exports, China has an astounding demand of raw materials. It needed so much that in 2015 it boosted global commodity prices for almost everything.

Supply of imports into China is mostly dominated by Asian countries, with a combined share of around 30% of total imports. Purchases from Europe and the U.S. account for 12% and 8%, respectively. As a major global buyer of commodities, imports from Africa, Australia, the Middle East and South America have increased strongly in the last decade to represent a combined share of around 50%.

The People’s Liberation Army

Since 2015 the People’s Liberation Army has undergone massive reforms, which are, similarly to the economy, unprecedented in scale and depth.

The 2015 reform aims to add a new dimension to China’s armed forces – to provide for more a compelling strategic deterrence and ability to win a local war, if such war breaks out. As Andrei Kokoshin said in his analysis, published in 2016. [pdf]

“The military reform resulted in a dispersion of powers between the structural components of the Central Military Commission, which is supposed to provide for a more sophisticated system of “checks and balances” in this area that is particularly unique to China. The management of such a large number of bodies by the Central Military Commission becomes a much more complicated task (taking into account more than a threefold increase in number). This supposedly means consolidating of the role of Deputy Chairmen of the Central Military Commission. It is clear that it will take much time and effort to make this new system sufficiently effective.”

The reform introduced some radical changes, which are required since there was a urgent necessity of staff reshuffling, due to systemic corruption.

“Radical change of command and control (organization and equipment) structures is a classical maneuver to legitimize a massive staff reshuffling. In turn, staff reshuffling may improve the military forces’ efficiency in problem solving and ensure the proper loyalty of commanders and political commissars to the country’s party and state authorities.”

In numbers the People’s Liberation Army has approximately the following numbers, but it should be kept in mind that the reforms are still on-going, so units may be disbanded, reorganized, etc. The data is from the US Department of Defense’s annual report on China’s Military Might. [pdf]

Ground Forces:

• Total ground forces personnel: 1,020,000
• Group armies: 13
• Combined Arms Brigades: 78 (5 amphibious ones)
• Air Assault/Army Aviation brigades: 15
• Artillery Brigades: 15
• Airborne Brigades: 6
• Marine Brigades: 6
• Tanks: 5,800
• Artillery Pieces: 8,000

Navy:

• Aircraft carriers: 1 (and at least 2 more being constructed)
• Destroyers: 33
• Frigates: 54
• Corvettes: 42
• Tank Landing Ships/ Amphibious Transport Dock: 37
• Medium Landing Ships: 22
• Diesel Attack Submarines: 50
• Nuclear Attack Submarines: 6
• Ballistic Missile Submarines: 4
• Coastal Patrol (Missile) warships: 86
• Coastal Guard Ships: 248

Air Force:

• Fighter jets: 1,500 (2,600 with included the fighter trainer jets)
• Bombers/Attack aircraft: 450
• Transport aircraft: 450
• Special Mission Aircraft: 150

Missile Power:

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In addition, the October 1^st 2019 military parade showcased some new missiles, autonomous underwater vehicles and other hardware and arms that are sure to significantly bolster the PLA’s ranks.

China’s influence

The term China “soft power” is widely known and it specifically presents the situation as it is – through its economic power it spreads its influence throughout the world. The One Belt One Road Initiative is an obvious example, and it is going well for President Xi Jinping and Co. Even the MSM hysteria that it is destroying the planet, the environment and so on appears to be completely unsuccessful in slowing down its stride.

Massive investment in Central Asia, Africa and even in some Eastern European countries helps spread Chinese influence.

Between 2000 and 2017, debt to China has gone up from $500 billion to $5 trillion, with the US accusing it of “debt trap” diplomacy. Despite that it continues to offer loans to African countries, it even said that some of them need not be returned, after signing massive infrastructure projects throughout the continent.

China’s lending prowess is more of a mixed bag. While many new loans from China were offloaded with debt relief by Western creditors after defaulting, China has in the past put forth some debt restructuring plans on 140 of their foreign loans. Although at other times, they’ve taken collateral, for example when they took control the Hambantota Port in Sri Lanka.

Most of the loans provided by China have very soft conditions, with higher extended interest rates and short maturities. But in case of default there is sometimes heavy collateral that includes commodities, or even important strategic foreign infrastructure.

China has allegedly started talking about being more transparent and sustainable on their loans in the future. In general, the amount China invests in Africa, for example, is approximately 10 times larger than the US investment.

Despite US accusations, and MSM propagating it many reports and opinion pieces, a survey conducted in a variety of African countries found that 63% of Africans see China’s influence positively. According to the survey, this positive feeling is mainly due to China’s investments in infrastructure.

In comparison, other big players that are spreading their influence on a global scale are the US and Russia, both of which do it through their military power projection, rather than economic one. The US has recently ramped up its economic pressure policy, which isn’t bringing a massively positive effect.

In terms of military presence, China’s footprint is still quite limited and it is specifically focused on protecting various trade routes or its economic interests. That is the case with the first overseas Chinese military base in Djibouti.

The earlier-mentioned report by the Pentagon also underlined the tendency for China to establish more military bases overseas.

“China will seek to establish additional military bases in countries with which it has a longstanding friendly relationship and similar strategic interests, such as Pakistan, and in which there is a precedent for hosting foreign militaries,” the report said.

“China’s advancement of projects such as the ‘One Belt, One Road’ Initiative (OBOR) will probably drive military overseas basing through a perceived need to provide security for OBOR projects,” the Pentagon said.

What the future holds

China has several promising projects part of the “Made in China 2025” program and they are sure to stir up both the internal situation and the global scene.

These include:

• 5G technology – the collaboration of China’s three main telecom companies has allowed it greatly to expand 5G wireless coverage which is at least 20 times faster than 4G, enabling better connectivity among all sorts of devices from driverless cars to smart appliances. The US is left to catch up and attempt to impede the progress, somehow.
• Artificial Intelligence – The Chinese government recently outspent the U.S. government 200-to-1 in artificial intelligence, in keeping with China’s plan to become the world leader in AI by 2030.

The industries that are part of the Made in China 2025 include: Information technology, Machine tools and robots, Aerospace, Ocean engineering and high-tech ships, High-tech rail, Electric cars, Electric power equipment, Farming machines, Advanced materials, Medicine and medical devices. All of these will assist China on its path to self-sufficiency and would make it an even more formidable player on the global scene.

Essentially, all of these set the conditions for much more further developments on the international policy scene, which can be seen in the way China’s become increasingly vocal in defending its positions in the UN. The Chinese economic policy is unlikely to change and it will, in turn, strengthen its political influence throughout.

Militarily, little is likely to change, except China closing the gap in some technologies with the US and possibly increasing the gap in some (such as hypersonic technology).  More overseas bases are coming in to protect the large infrastructure projects, but Beijing taking part in a military conflict are unlikely. The only possibility is a conflict with Taiwan, and that would happen only if Taiwan, with US assistance, begins public or unpublic agressive actions against the People’s Republic (for example, meddle into the crisis in Hong Kong).

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