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6 June 2013

Is America too broke to stand up to China?

When Margaret Thatcher died, much was said about the Falklands, but rather less about Hong Kong. While Britain fought to regain the former from Argentine invaders, the latter was returned to China without so much as a shot being fired. The British government had no choice, of course – militarily and economically, China’s influence over Hong Kong was irresistible. 

In an important article for Foreign Policy, Noah Feldman argues that Hong Kong foreshadows a  confrontation of much greater geo-political importance:

  • “Of all the potential direct flash points for real violent conflict between the United States and China, Taiwan is the scariest... If… Beijing wanted to shore up its legitimacy by distracting the public from a lagging economy, a hawkish Chinese leadership with close ties to the People's Liberation Army could send an as-yet-unbuilt aircraft carrier into the Taiwan Strait. The U.S. president would then face an immediate and pressing dilemma: to respond in kind, inviting war, or to hold back and compromise America's global superpower status in an instant. The Cuban missile crisis looked a lot like this.”

Would America really risk war over Taiwan – which it does not even recognise as a sovereign state? In practice, there’d be no need for anything as dramatic as the Cuban missile crisis; America would simply acquiesce to the build up of Chinese military forces in the area, thereby signaling to Taiwan’s leaders that the game was up.

Unlike Hong Kong and Macau, there’d be no formal transfer of sovereignty – but the diplomatic impact would be profound:

  • “If the United States were to abandon Taipei, it would have to insist to China, as well as Japan, South Korea, and U.S. citizens, that Taiwan was in a basic sense different from the rest of Asia – that the United States would protect Asian allies from hegemony despite letting Taiwan go.
  • “Failure to do so credibly would transform capitulation on Taiwan into the end of U.S. military hegemony in Asia. It would represent a reversal of the victories in the Pacific during World War II. It would put much of the world's economic power within China's sphere of control, not only its sphere of influence. To be the regional hegemon in Asia would mean dominating more than half the world's population and more than half its economy.”

Does America still have the strength to stop this from happening? After the Second World War, America was able to stand up the Soviets – providing the bulwark that smaller countries needed in order to resist the spread of communism; but there are many differences between the post-war period and the current situation, not least America’s profound economic dependence on its main rival: 

  • “The United States alone accounts for roughly 25 percent of Chinese sales. Total trade between the countries amounts to a stunning $500 billion a year. The Chinese government holds some $1.2 trillion in U.S. Treasury debt, or 8 percent of the outstanding total. Only the U.S. Federal Reserve and the Social Security trust fund hold more; all American households combined hold less.”
  • “194,000 Chinese students attend U.S. universities; some 70,000 Americans live and study and work in mainland China.”

Of course, one can view this not so much as America’s dependence on China, but the mutual dependence of the two nations on one another. For this reason – and because of their own problems back home – the Chinese leadership have good reason not to push America too far.

Or, to put it another way, America is likely to remain the world’s sole superpower – but only for so long as this suits the Chinese.


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