China Builds Infrastructure, US Drops Bombs

Mish

Obama bombed 7 nations. Trump threatens Iran. Meanwhile, China builds infrastructure. Its foreign policy makes sense.

The American Conservative asks Is China Waiting Us Out?

The subtitle "While the U.S. bombs, Xi Jinping is building—one power play at a time" provides the answer, but let's investigate the details.

> The one constant in recent U.S. foreign policy—regardless of which party occupies the White House or controls Congress—is that it prioritizes military intervention, both covert and overt, to advance its interests overseas. While President Barack Obama vowed to move the U.S. away from its “perpetual wartime footing,” by the end of his presidency he had overseen the bombing of seven countries and had greatly expanded the drone war. In his last full year in office, the U.S. military dropped 26,171 bombs—an average of 71 bombs per day.

> Candidate Trump railed against the invasion of Iraq during his campaign, at one point blaming George W. Bush directly and saying, “we should have never been in Iraq. We have destabilized the Middle East.” As president-elect, Trump continued to promise a very different foreign policy, one that would “stop racing to topple foreign regimes that we know nothing about, that we shouldn’t be involved with.”

> China has not engaged in a foreign war since it invaded Vietnam in 1979, a war which lasted less than a month and in which the Chinese overreached and underperformed, suffering an estimated tens of thousands of casualties in 27 days. After heavy fighting against the battle-hardened Vietnamese, Chinese forces withdrew, cut their losses, and declared victory (as did the Vietnamese). Their leaders appeared to be acting on the advice of the 6th century BC philosopher and general Sun Tzu, who wrote in The Art of War, “there is no instance of a nation benefiting from prolonged warfare.

> Since then, the Chinese have pursued a more cautious foreign policy and focused the lion’s share of their resources on internal development. As a result of this relentless effort, they have accomplished in 39 years what even the most daring and optimistic China expert would have thought impossible. The government has lifted 800 million of its citizens out of poverty and has set the country on a trajectory that, if maintained, will see its economy overtake the U.S. in terms of GDP by 2032. If purchasing power parity is taken into account, China has already surpassed America as the world’s largest economy.

> By contrast, Washington’s chief investment in the last two decades has been the war on terror, which has greatly contributed to its ballooning national debt. Since 9/11, the Watson Institute for International and Public Affairs at Brown University estimates that America’s wars have cost the country $4.6 trillion, not including an additional trillion for meeting military veterans’ medical and disability requirements through 2056. Nor does that total take into account the trillions of dollars in interest payments—much of which will be paid to Chinese creditors—that will be required to service the debt.

> Meanwhile, domestic infrastructure is crumbling, sometimes literally, rating a D+ according to the American Society of Civil Engineers (ASCE), which estimates that the U.S. will need to invest $4.5 trillion in its failing infrastructure by 2027. President Trump, like his predecessor, promised big spending on infrastructure, which he called “third world” during his campaign. However, his 10-year, $1.5 trillion plan is riddled with flaws and has little support in Congress.

Biding Their Time

The American Conservative concludes: "The Chinese will bide their time, do what they can to avoid conflict, grapple with their internal problems, invest in their infrastructure and citizens, build external alliances, and wait for the U.S., through continued overreach, to weaken and—finally—exhaust itself."

Wasted Time and Money

  • Chinese leadership thinks long term. The US doesn't look beyond next year.
  • The US has blown at least $4.6 trillion in stupid wars.
  • The US invaded Afghanistan in 2001. We are still there. Why? What good has any of it done?
  • The US invasion of Iraq lead to the creation of ISIS. It further destabilized the entire Mideast.
  • Both Republicans and Democrats have expanded war efforts and military spending.
  • Trump looks to cancel nuclear treaties with Russia. Look for more military spending as a result.

The demise or decline of nearly every great economic power in history has been due to unwarranted military expansion.

We are on that path but the outcome is not set in stone. The US has many advantages.

US Advantages

  1. The US has the largest and most free capital markets in the world.
  2. The US has excellent research institutions and universities. The Chinese come to the US to study, not the other way around.
  3. The US has property rights. China does not have property rights or human rights.
  4. Unlike the EU, it does not take 27 nations to agree to do something to get it done. Unlike the EU, the US does not routinely support breaking up great companies.
  5. Unlike China, no one tells US companies what to do. US companies figure out what the market wants and needs, then they deliver it.
  6. We have Google, Amazon, Microsoft, and Uber and numerous technology companies for reasons 1-5.
  7. China is backsliding on political freedoms. Pollution is enormous.
  8. The US is nearly energy independent. China isn't.

China, despite all its progress is still a command economy, led by de facto dictators.

The military and spending path we are on is clearly not sustainable. Yet, it has always been a huge mistake to write off the US.

Mike "Mish" Shedlock

Comments (32)
No. 1-16
Ron Cataldi
Ron Cataldi

Agree.

Realist
Realist

Simply excellent Mish. I couldn’t agree more. I have been stating for years that China is playing the long game, which impresses me. Similar to well run pension funds that think 75 years ahead, China (though far from perfect) is wise to plan for the long term. When I look at the US, there appears to be very little in the way of long term planning. Many US pension funds are in trouble because they don’t plan for the long term. Cities and even some states may soon go bankrupt due to a lack of long term planning. Infrastructure is crumbling, as are many pensions. Every time I watch CNBC (which isn’t very often) I soon turn back to Bloomberg or something else, because all I hear is useless short term thinking and investment advice. (I believe part of the problem is a political system that has an election every 2 years. This seems to get everyone focused on the short term.)

Realist
Realist

Planning for weather events is also short term in the US. Everyone keeps getting surprised by events that are described as 100 year events. Or thousand year events. In the Netherlands they plan for one in 10000 year events.

JonSellers
JonSellers

The American Conservative is my go to website for communitarian, as opposed to libertarian, conservative thought. Nice to see it pop up here. And while I'm certain it's cookie driven, I actually had Mishtalk show up on my Google News feed the last couple of weeks.

Schaap60
Schaap60

It is well past the time for the US to declare victory (everywhere, including Iraq, Afghanistan, Western Europe) and come home. At a minimum, our presence can be greatly reduced. Some countries don't want us there, others can afford to pay for their own defense. The US can remain engaged in the world without a military presence everywhere. I will add, in addition to the US advantages already mentioned, it appears a lot of Chinese infrastructure spending is wasted (crumbling ghost cities) and the US still has better demographics due to the residual effects of the one child policy.

solarsjhai
solarsjhai

it's amazing to me when i see people such high academic that lack of common senses to the point they are amazingly ignorant

pure bushit, he forgot to mention:

1. us has 21.6 trillions dollars in debt and counting
2. fiscal year 2017, us paid about 523 billions in interests only on the national debt, the 3rd biggest item on behind medicare, defense
3. chinese millenials are debt-free, no student loan, no credit card, etc
4. chinese currency is debt-free currency, us dollar is debt-based currency. and if any one claims to master in economic and be clueless about debt-free and debt-based currency and the benefits of debt-free currency then they are amazingly ignorant
5. student loan debt, pension crises, national debt, credit card debt, mortgage debt are all at the record levels. student loan and pension crises are on the horizon.
6. mish is strong bull on treasury, 10-year treasury is well above 3.0 and never back down under 3.0 for 2 months. treasury bull soon likely become treasury bullshit
our infrastructure are falling apart. even in the rich silicon valley, infrastructure is falling apart.  
  1. yes, china is command economy that is why when they decide to do something, they do it quick. look how fast and how beautiful they build their amazing infrastructure and look at our infrastructure with shame.
  2. the way i look at treasury rate and stock markets lately, i believe baby boomers don't even believe that us government can pay its debt. that's why they exodus in drove and drive higher interest on treasury bonds. usually, when stock markets go down, treasury bonds go up, rates go down. lately, stock markets down, treasury rates up, that spells trouble for us economy.
solarsjhai
solarsjhai

talk is cheap and bullshit. just look at their subway, their infrastructures and compare to our infrastructures. theirs is haven, ours is earth.

madashellowell
madashellowell

We seem to have the same appreciation for the accomplishments of COMMUNIST CHINA as we had for NAZI Germany. It was a miracle! The power of dictatorial authoritarian rule. Odd that so many accuse Trump of this while complaining he lacks a dictator's accomplishments.

madashellowell
madashellowell

Mish, we were already engaged in massive military spending. The arms race is on regardless of treaties, or have you not noticed all of the announcements by China and Russia of late....hypersonic missiles just one of them. Trump could have easily pretended all was good in the world, head in a hole in the sand, but it wasn't and he didn't. Not our trade balance, and not our weapons systems and theoretical "deterrents". And have we done an analysis on Chinese and Russian military spending? It sure seems like China is getting mighty bold of late, claiming new territorial waters and islands, and a great deal of saber rattling in response to Trump's demands for reciprocal trade agreements.

JL1
JL1

That 5 trillion should have been used to build USA or just have 5 trillion dollar less in government debt.

Without the Bush/Obama wars US federal debt would be about 15 trillion instead of the current over 20 trillion...

The fallacy that Obama was for poor people is just a fallacy.

Trump promised to end the wars but he was almost taken to a massive war in Syria that would have cost trillions and made the situation worse.

ReadyKilowatt
ReadyKilowatt

“there is no instance of a nation benefiting from prolonged warfare.”

Nations, no. But politicians, hedge funds, and other war profiteers do quite well.

TheLege
TheLege

Mmmm .... China is more active geo-politically than this article suggests. They may not be dropping bombs but they are making numerous 'peaceful' incursions into many parts of the world, including Africa but also making inroads where they can in the Asia-Pac region: in Australia and NZ they exert soft power by hiring (bribing) politicians to take a pro-China line, funding lobby groups to do the same and maintaining links via the huge student population in universities in these countries. Every time someone suggests pushing back against this 'soft power' there are screams of 'racist'!

Like in Africa the Chinese are extending 'infrastructure loans' to countries they know will never be able to pay back thus securing future rights to land (or favours), like ummm, a military base in the poverty stricken country. They are more subtle than the Yanks but they are flexing their muscle too.

Six000mileyear
Six000mileyear

The metaphor I've used is, "China is playing chess, but the US is playing tic-tac-toe."

tz1
tz1

And China has poorly made stuff - the buildings might collapse in the next not high magnitude earthquake. See "What's wrong with China". Don't assume your own cultural norms apply there. They don't. We build things that after a cultural shift (collapse) stops the maintenance, lasted the better part of the century and may still do a second even if frayed. They build facades. I don't say this as an insult, merely as a cultural observation. There is a reason that Somalia after losing its government didn't turn into Galt's gulch.

Kinuachdrach
Kinuachdrach

China is spending a lot on its military -- new rockets, aircraft carriers. Countries around the South China Sea may not buy into the myth that China is playing a long game. There is a Chinese advert you can find on You Tube -- "I am a Chinese Soldier"; it is worth finding, and quite sobering.

China's great strength is economic. China has the manufacturing capacity that the US and Europe off-shored in a fit of mis-guided stupidity.

The US's great weakness is not military spending, although it would be good to cut that back AFTER quitting the global policeman rule and leaving the EuroTrash to their well-deserved fate. The problem is excessive pension and welfare spending, financed with borrowed money.

The solution is to bring back manufacturing capacity (cuts welfare spending and increases tax revenue) and to eliminate the Political Class's deficit spending.

ALLEN8
ALLEN8

We don't care the so called capitalism or socialism,as long as it can benefit more people's lives. Just like DengXiaoping said " No matter it is a white cat or black cat, it is a good cat if it can catches mouse". To be frank,China wins!


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