Monday, March 23, 2015

Keeping an Eye on the Long Game: Part LXIII

At a time when many discussions about China tend to be of a worrisome type, emphasizing China's positives while ignoring her challenges, Dan Blumenthal over at FP has a solid article out which gives a little more depth to what China is.
the easy days are over. Resources are shrinking. The situation is Xinjiang is getting worse. And an anti-corruption campaign announced by CCP secretary Xi Jinping shortly after he took office in November 2012 is starting to pick up steam in the military. Meanwhile, China’s land borders no longer appear as secure, as terrorists infiltrate China from South and Central Asia. For the first time since the Cold War, the PLA faces a real set of tough strategic and investment trade-offs and challenges to its weapons program development.

First, China’s fiscal situation is under severe strain. Its debt burden increased from $7 trillion in 2007 to $28 trillion in mid-2014, while Chinese national wealth has only increased by $5 trillion since mid-2008. As my colleague Derek Scissors argued in a November essay, “Chinese growth since 2008 has been built entirely on sand.” China is also aging rapidly: its labor force shrunk by 2.44 million in 2013, and by a whopping 3.71 million in 2014. Moreover, its gross domestic product grew at only 7.4 percent in 2014 — a 24-year low — and Beijing is aiming for around 7 percent for 2015. The current economic slowdown could potentially derail the PLA’s gravy train. Its military budget will have to align with China’s fiscal realities. The CCP will have to meet pension obligations to retirees and try and service the debt.

Second, Xi’s anti-corruption campaign is going after PLA elites. In early March, the PLA announced that 14 more of its generals were targeted in the anti-corruption crackdown. And in October, Beijing indicted Xu Caihou, a former vice-chairman of the Central Military Commission, the body that oversees the PLA, on bribery charges. Xu, who died last week, was the highest military official in decades to be publicly accused of corruption.
A wounded and slightly paranoid China is not necessarily for us a better China - but it is one that in the near future may be more inwardly focused than one externally focused.

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