As the rivalry between China and United States continues to develop, all eyes have been on the recent visit of Xi Jinping. In particular, Jinping’s sojourn to the White House was especially interesting, as the Chinese leader took a particularly bold tone with regard to the military ambitions and plans of the world’s most populous nation.
Tougher Obama desired
Many geopolitical analysts within the United States had hoped to see a tougher President Obama take on the Chinese directly, particularly with regard to the behaviour of the nation in the South China Sea region. With the Chinese premier having taken the time to visit the United States, the more aggressive and hawkish of geopolitical analysts suggested that Obama could take the opportunity to denounce Chinese military buildup in the region. Instead, the US president struck a conciliatory tone, symptomatic of the creeping influence of China in US strategic areas of interest. Some of the more pronounced observers suggested that the United States had effectively bowed to China.
Deprival Super-Reaction Syndrome And Investing. Part four of a short series on Charlie Munger’s Human Misjudgment Revisited. Charlie Munger On Avoiding Anchoring Bias Charlie Munger On The Power Of Prices The Munger Series - Learning . . . SORRY! This content is exclusively for paying members. SIGN UP HERE If you are subscribed and having an Read More
The history of the South China Sea region is a complex one, encompassing numerous nations to believe that they have a stake in the territory. Support from the United States in the region to those countries being overrun by China has been lethargic, or in fact bordering on non-existent. Obama has instead concentrated on replacing US military capabilities overseas, accommodating international rivals, and focusing on domestic policy agendas and legacies.
With the United States taking no discernible action in the South China Sea region, it was predictable that the country with arguably the second most powerful military on the planet would take advantage of the situation. ValueWalk has reported on numerous occasions recently that China is steadily building up its own military capabilities, and in some areas China and Russia have even exceeded US military capabilities, at least according to intelligence reports. This does suggest that the ability of the US to act is being compromised for the first time in living memory, but the behavior in the South China Sea region of China, and the lack of response from the United States, does nonetheless represent something of a climbdown from the US administration.
Since Xi Jinping landed in the United States, the focus of the Obama administration has been on cooperating and building a collaborative relationship with the Chinese government. There are two possible perspectives on this particular conduct. On the one hand, critics of the Obama government will suggest that it is a tangible sign of weakness. Many that believe in the importance of American primacy will suggest that that United States should be adopting a tone of condemnation to the conduct of the Chinese, particularly with regard to the South China Sea region.
US economic context
Conversely, it has been suggested that the lack of activity of the Obama administration with regard to China is more reflective of the overall position of the nation. Although there has been something of an economic recovery in the United States, it is largely accepted by economic observers that the overall position of the country is far from certain. Although America remains the most important economy on the planet, despite the fact that it has been displaced by the Chinese as the largest economy in the world, the amount of debt and deficit that is endemic in the contemporary American experience means that room for manoeuvre is not as great as it once was for American presidents.
The US is already ardently extended overseas in a military capacity beyond that which would be ideal, let alone is the nation in a position to expand its activities to somehow deal with China militarily. And if the US was to condemn Chinese actions, and then be unable to follow it up with a military response, that not only could make Obama look rather weak in the eyes of the international community, but it could also seriously compromise security in the region.
The economic position of the United States is certainly entwined with China, but in addition to this aspect of the contemporary US economy, it is also notable that spending on the military has been significantly reduced. Again critics have sometimes characterized this as being part of a weak liberal agenda, but the reality is that generating further income to divert into military endeavors when that United States already has a huge amount of unfunded liabilities for everyday programs on which the population relies, is extremely difficult if not utterly reckless.
al-Qaeda plan symptomatic
Perhaps the economic position of the United States, and its existing military position, is best exemplified by the fact that ISIS is being fought in the Middle East by the United States openly funding Al Qaeda. Militants that the US was opposed to in the recent past are now receiving overt US funding and support, as the United States is simply too overextended in multiple theaters in order to be able to act against ISIS in the way in which it would choose in an ideal world.
And China certainly holds some valuable cards in its relationship with the United States, considering the large amount of US debt that is held by the Chinese. It has been suggested that the two countries have a symbiotic relationship for this very reason, but a negative view of the situation would be that China has the potential to do serious damage to the dollar should it choose to do so. Of course, the Chinese economy is far from secure either in the delicate Global economic situation that exists at present, and indeed the renminbi was recently devalued by the Chinese government in light of these difficulties.
As the relationship between China and United States develops, it seems clear that China is taking a hawkish attitude towards its military endeavors. Already there is talk of the Chinese expanding into Africa, and the economic and demographic position of the country will make such manoeuvers more feasible in the future. Although that US administration may come under criticism for bowing to such pressure, Washington and the American public may have to accept that the geopolitical situation is evolving as these two powers occupy shifting positions in the world order.