hms iron duke

hms iron duke

Thursday, 17 April 2025

Why is China Dangerous?


 “Because other people are fools, must you be so too?”

Emperor Marcus Aurelius

What does China want?

April 17th.  What does Xi’s China want?  1. To create the conditions for the ‘safe’ military subjugation of Taiwan. 2. To coerce states in the Eastern Pacific and South and East China Seas spheres of Chinese influence to accept Beijing’s de facto control because the Chinese Communist Party (CCP) are control freaks, and its leadership fears any system – domestic or foreign – that might challenge its control. 3. To use the global geoeconomic system to fund its geopolitical ambitions by fair means and foul. 4. To use Russia and Iran to fix US forces in theatres away from the Eastern Pacific and ensure the Americans cannot intervene in force. 5. In the longer run to curb US power in the Pacific to the point where the Americans are effectively excluded from the Pacific east of Pearl Harbor.   

Dead historians tended to divide the history of the Roman Empire into three eras: the Republicanate, Principate and Dominate.  The Republicanate (which I just invented) is seen by some as a glorious era during which Rome functioned like some latter day Western European democracy but in fact did not.  This glorious era made all sorts of allusions to ancient Greece but was destroyed in the First Century BC by over-mighty citizens such as Sulla, Pompey and Caesar who seized power from the Senate and squabbled mightily amongst themselves but still ruled under the pretence that they were merely primus inter pares and were in fact defending the Republic.  This was the Principate. Then there was the final phase of Rome’s glory which also marked its decline, division and eventual collapse – the Dominate.  During the Dominate the emperors abandoned all and any attempt to pretend some residual constitutional propriety existed and ruled by naked mainly military power.  

The cause of the Dominate was Rome’s so-called Third Century Crisis.  This was caused by the end of imperial expansion, the growing costs of maintaining imperial power across the known world, growing incursions into said Empire from emerging competitors, the breakdown of trade, inflation due to the printing of money by emperors with no understanding of economics, and the myriad political divisions that decline is father to and the growing influence of the military in politics.

How is the West complicit?

Take China today. For thirty years China has been content to get rich and powerful by helping Western leaders maintain the Potemkinesque façade of material prosperity. Under this arrangement, known by the rather misleading term globalisation when it was really Chinaisation the West was made to feel materially comfortable in return for paying China to accelerate its own development and construct an enormous military machine.

As long as the West was content to consume huge amounts of Chinese goods and Western leaders were happy to turn a blind eye to Beijing’s coercion, spying, stealing and all-around collective bullying China was happy to get richer and more powerful.  Some states, such as the strategically illiterate British, even sold their industrial crown jewels and much else to China, such as British Steel, which should have been renamed Chinese Steel. 

There was a problem.  The Chinese Communist Party which controls China with an iron fist, particularly since it crushed (literally) a bunch of students in 1989 who had the temerity to challenge the absolute power of the CCP, needed globalisation. This is because so-called post-Tiananmen deal between the CCP and the burgeoning Chinese middle class involved the latter never questioning the power of the former in return for making the latter ever more materially more comfortable.

The Chinese Dominate

During this period of the Chinese Principate CCP leaders continued to pretend they were ‘of’ the people. Hua Goufeng, Jiang Xemin, Hu Jintao and others all claimed they were children of the proletariat.  Then came Xi Jinping, China’s wannabe Caesar, who in 2018 became “President for Life”.  Xi, a princeling of the Party, crossed the Chinese Rubicon in two ways.  First, he replaced any legitimacy conferred on him by the ‘Party’ by establishing his power on the People’s Liberation Army and showering the armed forces with glittering new weapons. Second, he abandoned any pretence to be the Chinese heir of Karl Marx and replaced Communism with old-fashioned Han nationalism reinforced with a strong dose of Xenophobia.

The reasons for this became apparent during the COVID catastrophe.  Xi realised that one day the West would wake up and finally understand that it had been feeding a dragon that could one day consume it.  When that happened the West’s growing transfer of supply chains to China would stop.  Starved of Western money China would face a problem transferring export generated income into domestic development unless Xi could find alternatives.  The route Xi took was effectively force smaller and poorer powers into China’s orbit through debt.  The problem was that most of the West woke up too early (except the British whose leaders continue to try and sell themselves to China) and Russia, China’s useful idiot, screwed up.

Now, China is faced with a situation not unlike Rome during the Third Century Crisis. It has built an enormous military which is very impressive, but which will soon decline because it will need to be constantly re-capitalised.  However, unless the CCP can maintain at least 6% per annum growth the only way to do that would be to shift money away from social development. When that happens XI will face growing discontent in both the Party and the country and will doubtless seek to suppress dissent.  He will also be tempted to embark on military adventurism to burnish his Han nationalist credentials, with Taiwan clearly in the crosshairs of Chinese gunsights, and maybe others.

Action This Day!

1. Prevent China from creating the conditions for the ‘safe’ military subjugation of Taiwan by US Allies helping to keep America strong where she needs to be strong. In Europe, that means European Allies must deliver two thirds (67%) of NATO’s combined operational capacity for collective defence by 2035 at the very latest, as measured in rapidly usable forces, enablers, and other capabilities to execute advance plans across SACEUR’s Area of Responsibility. America’s European allies must also collectively provide at least 50% of all NATO Defense Planning Process (NDPP) designated capabilities by 2030.

 2. Prevent China from coercing states in the Eastern Pacific and South and East China Seas spheres of Chinese influence to accept Beijing’s de facto control.  This can only be achieved by a new concept of Global Democratic Alliance built around the US and with strong democratic allies in Europe and the Pacific.

 3. Turn the global geoeconomic system back in the West’s favour and thus legitimate Western geopolitical ambitions by providing both carrots and sticks to China. The Trump administration is using tariffs and reshoring of industries as a blunt tool to create such a shift but as yet there is no apparent geopolitical end such policy aspires.

 4. Blunt the ability of Russia and Iran to fix US forces in theatres away from the Pacific. For example, the NATO European allies must aspire to the creation of an Allied Mobile Heavy Force by 2030 that could deter, defend and defeat the Russians irrespective of US force commitments.

 5. Strengthen US power in the Pacific to the point where the ends, ways and means of Chinese policy and strategy are impossible to realise because the cost of doing so would threaten the hold of the CCP over the Chinese people.   

The curse of empires

China is not intrinsically bad. It is simply behaving like all ultra-nationalists behave when they have the power to impose their will on others. What is bad is the inability of democratic leaders to face uncomfortable truths. This is something I saw last week when I chaired a meeting last week at NATO HQ in Brussels. Ultimately, the Middle Kingdom sees itself as precisely that – the centre of the world, an empire. 

Empires are of course dangerous when they expand, but they are particularly dangerous when they begin to decline, and the settled order of power therein is challenged.  That is exactly what happened in the Third Century to Rome and may well happen to China now as those in power seek to re-establish ‘order’.  Therefore, we are just entering peak danger as far as China is concerned but with strength there is still a good chance Beijing can be persuaded that mutual coexistence is better than mutually assured destruction. Face it, leaders!

Julian Lindley-French 

Wednesday, 9 April 2025

Trump, Tariffs, Geoeconomics and Geopolitics



What does Trump want? Power is back, red in tooth and claw. When US presidents meet with President-for-Life Xi Jinping there is something telling in the respective body languages of the leaders. Unlike in the past it is the American who wants something. They both see themselves as Masters of the Universe, President Trump because he cannot help himself, President Xi because he is, at least the Chinese universe. The more President Trump tries to emulate President Xi, by governing through Executive Order and ignoring both Congress and the Supreme Court, he simply cannot.  President Xi, the unelected victor of a thousand Party power struggles, is self-promotingly, self-assured precisely because he is not bound by such constraints.

 

Why the tariffs? What is self-evident is that the world is back in the old-new age of bipolar competition, but what kind of competition?  This past week has seen geopolitics and geoeconomics merge.  Geoeconomics has been the essence of the tariff wars Trump has unleashed on the world, but geoeconomics is merely the harbinger of geopolitics and the struggle for supremacy across the broad canvas of power both soft and hard. The epicentre of this struggle will be the Pacific but it will also affect the world.

 

The facts speak for themselves. Deluded Western fans of globalisation (often economists) have overseen the greatest transfer of wealth and power from the US and the wider West to China since a similar transfer from Britain to the US in the first part of the twentieth century. Today, the US, the Apex Market and once THE creditor nation has a national debt of some $36.8 trillion or around 122% of GDP and a budget deficit of $2 trillion.  China also has a national debt of $9.9 trillion, which is some 110% of GDP, and a budget deficit of some $570 billion. Beijing is trying to cut its budget deficit caused partly by bailing out major companies caught up in a disastrous property asset bubble.

 

Whilst the figures may seem roughly comparable the key figure of comparison is the annual budget deficit. By holding large amounts of US dollars in the Chinese Central Bank and continually breaking World Trade Organisation rules on tariffs and by imposing tariffs which effectively prevent access to China’s internal market Beijing has gained an unfair advantage.  It also explains why China’s budget deficit is only 25% of that of the US. The most obvious beneficiary of this highly successful Chinese strategy to exploit Western consumerism is the growth in Beijing’s military capability which the West has effectively paid for. In 2025 alone, Beijing increased the defence budget by 7.2%. This means China now has effective and comparable defence budget of $411 billion compared with the US defence budget in 2025 of 883.7 billion.  

 

Moreover, whilst the US economy remains significantly bigger than China’s nominally with a 2024 GDP of around $28.8 trillion compared to $18.5 trillion, if power purchasing parity is used as a yardstick the figures change markedly. ‘PPP’ compares productivity and standard of living. According to the IMF in 2025 China has a economy worth $39.44 trillion compared with a US economy worth some $30.34 trillion.  The figures do not mean China is richer per capita than the US because its population is 4 times greater, but it does demonstrate the rate of growth in relative Chinese state wealth and power. For example, in 2000 the nominal GDP of the US was $10.2 trillion whilst that of China was $1.2. Even using PPP China’s economy was only some 30% that of the US.       

 

Beijing clearly understands the relationship between geoeconomic and geopolitics. In March 2025, China warned the US on X that it was ready to “fight any type of war” with the US. Under instructions from Beijing the Chinese Embassy in the US even went as far as saying, "If war is what the US wants, be it a tariff war, a trade war or any other type of war, we're ready to fight till the end."   This was before Trump’s April 2025 decision to slap 67% tariffs of Chinese imports to the US, and China’s response.  China’s point was clear: the battlefield in this phoney war may be tariffs but as far as Beijing is concerned it is already at war with the US not just over Taiwan but Beijing’s determination to impose its ‘rules’ about power and wealth on the world and Trump’s determination to prevent it. In other words, the struggle is systemic and dangerous.

 

As J.K. Galbraith once said, “Power is as power does”.

 

Julian Lindley-French