The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era Read online

  Japan launched a brutal campaign of conquest in China in 1931; in 1939 Germany embarked on the murderous acquisition of an Eastern European empire and in the process conquered much of Western Europe as well. The two countries forged a nominal alliance that included fascist Italy as well. During World War II they were known as the Axis powers. Japan subdued much of Asia and Germany became the master of most of Europe before the two were finally beaten, at great cost in blood and treasure, in 1945.

  Could anything like the ghastly experience of the 1930s and 1940s occur in the twenty-first century? The precipitating event did, after all, repeat itself after a fashion: the economic slump that began in 2008 became, by most accounts, the most severe since the 1930s. And while Germany and Japan have long since become firmly democratic in their politics and quasi-pacifist in their foreign policies, two other countries could conceivably play the roles that the fascist powers assumed in the interwar period. Those two countries are China and Russia.

  Each was, as the first decade of the new century ended, a large and militarily formidable country that had the potential to upset existing political and economic arrangements in East Asia and Europe, respectively. For much of the second half of the twentieth century the two had been governed by communist regimes that aspired to spread their form of government, by force when necessary. In the first decade of the twenty-first century neither had discarded all the trappings of its former communist identity: a communist party still ruled China, and Russians harbored nostalgia for the disbanded communist empire of the Soviet Union.

  In the mid-1990s, in no small part out of resentment at the dominant global role of the United States, the two formed what they called a “strategic partnership.” In that term could be heard, however faintly, the echo of the Axis alliance of World War II. China and Russia became charter members, along with five Central Asian countries, of the Shanghai Cooperation Organization, founded in 2001, one of whose apparent purposes was to offset American power. Like virtually every country, China and Russia each suffered, as had Germany and Japan in the 1930s, from the financial crisis of 2008 and the resulting economic distress.

  The fascist powers were able to do enormous damage because the democracies did far too little to stop them early on. The strongest of the democracies, the United States, did the least, sending military assistance to Great Britain but refusing to engage its own forces in East Asia or Europe until Japan attacked the American naval base at Pearl Harbor on December 7, 1941, and Hitler’s Germany followed with a declaration of war on the United States.

  In the earlier period the United States was predisposed to stand aloof from the geopolitics of East Asia and Europe by a national tradition that dated back to the warning of its first president, George Washington, against becoming entangled in the affairs of other (and in the eighteenth century much stronger) countries. In the twenty-first century that tradition has long since been set aside, but the economic constraints under which the United States will have to operate will affect its responses to whatever challenges to the East Asian and European security arrangements China and Russia may choose to mount. On the spectrum of such challenges an assault on the scale of the ones fascist Germany and Japan launched counts as the worst case: a United States limited in its capacity to meet such a challenge would make it worse still.

  Fortunately, the worst case is an unlikely one. There is little prospect that China and Russia will drag the world back to the 1930s. The economic downturn of 2008 and beyond, although serious, does not seem destined to cause economic distress to the devastating extent that the Great Depression did, and thus will not create a breeding ground for a latter-day version of fascism. China and Russia, while in important ways dissatisfied with the existing order of power and authority in the international system, will not adopt murderous, racist ideologies like the ones that motivated imperial Japan and Nazi Germany. Except among radical Islamists, such ideas have been pushed beyond the boundary of acceptability since 1945.

  Nor, while they insist that their countries will not and should not conform to the democratic political standards of the West, does either China or Russia hold itself out as a distinct, non-Western model for other countries to imitate, as the Soviet Union and Nazi Germany did. China has enjoyed great economic success and other countries may well wish to follow the Chinese example, but if they do, they will not be breaking with the prevailing economic norms of the West. To the contrary, they will be carrying out the most orthodox of free-market policies: keeping their economies open to the world, building infrastructure, maintaining a stable price level, and practicing fiscal responsibility. These are policies that Western governments and international financial institutions routinely commend to one and all.

  Nor is it probable that China and Russia will join together in a coordinated campaign to overturn the international status quo. Indeed, during World War II the Axis powers, despite their proclamations of solidarity, did almost nothing jointly. Similarly, despite the rhetoric of partnership and their common membership in the Shanghai Cooperation Organization, actual Sino-Russian cooperation has strict limits. In fact, each is wary of the other. Russia, in particular, regards China, with its far larger population and more dynamic economy, as a long-term threat.

  All apart from the political and economic currents shaping Chinese and Russian affairs, finally, it remains true in the twenty-first century, as in the twentieth, that international economic integration, of the sort that the fascist powers spurned, is the surest route to wealth. This is the case for China and Russia as much as, if not more than, other countries, and a war of the kind that Germany and Japan once eagerly prosecuted, far from enhancing the wealth of those who waged it, would bring ruinous destruction to all its participants.

  The unlikelihood of a full recurrence of all the horrors of the 1930s and 1940s does not, however, mean that the global security order is certain to remain entirely free from threats of war in the years ahead. Avoiding the worst of all possible futures does not guarantee the best of them. Even if China and Russia do not unleash murderous campaigns of conquest, this does not mean that each will settle comfortably into a twenty-first-century routine as a staunch supporter of the post–Cold War security and economic orders. Each has grievances, actual and potential, against the existing order of things. The extent to which either or both choose to act on these grievances will matter a great deal. Those choices, in turn, will depend in part on the strength of the American position in their respective regions, East Asia and Europe; and the economic constraints on the United States will weaken that position in both places.

  CHINA

  China is the obvious candidate to disrupt the twenty-first-century international order. As the most populous country on the planet and with the highest rate of economic growth, sustained over three decades, of any of the world’s almost two hundred sovereign states, its impact on international affairs is large and destined to grow larger. Indeed, by the time of the global economic disruption of 2008 China had become so important economically as to prompt suggestions that a special Sino-American forum—a “G-2”—be established to cope with the crisis.

  China’s long history of cultural and political primacy in East Asia gives its people another reason to expect to play a major role in the affairs of their region and the international system as a whole. The country’s experience of decline, and with it domination, humiliation, and exploitation by foreigners in the nineteenth and twentieth centuries—the official version of Chinese history that the communist government constantly emphasizes—gives its people reason to resent existing international arrangements, which they had virtually no say in devising. China therefore has both the means and the motive to act as what students of international relations call a “revisionist power,” seeking to undermine the world’s political and economic status quo and replace it with institutions and practices more favorable to itself.

  For this there is a historical precedent, and not a happy one. At the beginning of the twentieth ce
ntury Germany, like China at the outset of the twenty-first, was a rapidly rising power. The Germans came to resent the distribution of power and influence among the great powers, including the way colonial territory was allocated. As a latecomer to the upper echelon of international politics, having been unified only in 1871, Germany had not been in a position to take a major part in the nineteenth-century acquisition of overseas empires by the strongest European countries. While maintaining an adversarial relationship with France, from which their army had captured the province of Alsace-Lorraine in the Franco-Prussian War of 1870–1871, the Germans drifted into opposition, as well, to Great Britain, in some ways the leading European power as the one with the largest empire and strongest navy.

  The result of the Franco-German and Anglo-German rivalries was World War I, which began, according to one not entirely facetious description, because Great Britain owned the world and Germany wanted it. The growth of China’s power, its historically based aspiration for wider international prerogatives, and what some students of international politics regard as the inevitable drive by every sovereign state to maximize its own international standing at the expense of the power and privileges of other countries have combined in the twenty-first century to create the potential, if not necessarily for World War III, then at least for a robust challenge to the security of East Asia and therefore to the economically constrained guardian of stability in the region, the United States. China might, for example, seek a reduction in the American military presence or the operations of the American forces, or demand the redrawing of maritime borders, or insist on political and economic concessions from neighboring countries. It might even attack Taiwan, the island off its coast over which it claims sovereignty.

  China’s official rhetoric is designed to give the opposite impression of its aspirations, to soothe the anxieties that its growing strength provokes. The country is dedicated, its leaders proclaim, to a “peaceful rise” in the international system. This implies, to be sure, an ascent, but one that will not threaten others’ interests and will contribute to what the Chinese government envisions as a “harmonious world.” China’s actual policies, however, are not quite so straightforwardly accommodating.

  While not devoting as large a fraction of its economic output to military purposes as did the Soviet Union during the Cold War, China has steadily expanded its army, navy, and air force, thereby making itself a formidable regional military power. Over time, it is expected to have the forces to operate militarily outside its home region. Specifically, while its ships now patrol its own coastal waters, China is apparently considering building a blue-water navy, complete with aircraft carriers, which would be able to challenge the world’s only global navy, that of the United States. The German decision to build a high-seas fleet to confront Britain’s then-dominant Royal Navy was, as it happens, one of the developments that led to World War I.

  Furthermore, although it is not making obvious preparations to go to war over any of them, China does have border and territorial disputes with several of its neighbors. The map of Asia, including the designation of the boundaries of national territorial waters, is not fully settled. China also has strained relations with Japan. The strains date back to World War II and Japan’s brutal occupation of much of the Chinese mainland, an episode with which, in China’s eyes more than six decades later, Japan had not fully come to terms, and for which it had not adequately apologized. The communist government in Beijing, it should be noted, has actively sought to keep alive Chinese memories of Japanese atrocities as a way of mobilizing nationalist sentiment on its own behalf.

  On one issue, moreover, China has repeatedly declared its readiness to go to war: the status of Taiwan. Although the island has not been governed from Beijing since the communist assumption of power there in 1949 and has functioned as an independent country in virtually every way, the communist regime insists that Taiwan belongs to China and promises to fight in response to a formal declaration of Taiwanese independence. Much of the military force that the Chinese government has built is designed to make good on that promise. The Taiwan Strait separating the island from the mainland qualifies as a particularly dangerous place because hostilities there could draw in the United States, which has an informal commitment to Taiwan’s security. In the event of a Sino-American military clash, two large nuclear-armed powers would be at war with each other.

  Taiwan has a particular resonance among Chinese because, having been seized by Japan in 1895 and protected from the mainland by the United States after 1950, it symbolizes the long decades of Chinese submission to the will of foreigners. By all accounts, the commitment to the eventual “reunification” of the island and the mainland pervades every stratum of Chinese society. Taiwan is one issue over which China does seem prepared to challenge the status quo in East Asia by force.

  To be sure, the most destabilizing Chinese policies to date have been economic, not military ones. The Chinese government has kept the exchange rate for its currency low by pegging it to the dollar, leading to large annual trade surpluses that it has converted into a large stockpile of dollar reserves. All this has unbalanced the global economy, and the flood of inexpensive Chinese consumer goods to the United States contributed to the crash of September 15, 2008, by helping to keep American prices low, which encouraged the Federal Reserve to keep interest rates low. This in turn made it cheap to borrow money, and much of that cheap money flowed into commercial and residential property, inflating the housing bubble whose bursting worsened the global economic downturn of 2008.

  Although they had the effect of disrupting the global economy, none of these Chinese policies was specifically intended to do so; they were intended, rather, to serve Chinese domestic economic and political purposes, in particular to sustain through its low exchange rate the expansion of the country’s exporting industries so that Chinese workers could continue to be absorbed into them. The communist authorities apparently deemed this necessary to make their rule acceptable to, if not necessarily popular with, the Chinese people. For Chinese economic policy is premised on the existence of the post-1945 international economic arrangements of which the United States has served as the chief advocate and protector, especially a worldwide openness to the continuing expansion of cross-border trade. China has as great an interest in these arrangements as any other country. Economic considerations make China a champion of the status quo, not a challenger to it.

  Economics has the potential to modify Chinese international conduct in other ways: operating a market economy, of the kind that China has developed over three decades, creates the basis for democratic politics; democracies behave, on the whole, in less bellicose fashion than non-democracies. If and as China becomes more democratic, therefore, it will be less likely to adopt policies that threaten its neighbors, at least in military terms. And the multiplying economic ties between China and Taiwan give both parties an additional incentive to avoid armed conflict in the Taiwan Strait.

  Taiwan aside, moreover, Chinese military aggression in the service of imperial aggrandizement, a common occurrence in European history before the second half of the twentieth century, is not particularly likely. While throughout its long history China has frequently gone to war, and the country’s borders have expanded and contracted over the centuries, Chinese governments have seldom launched military campaigns to extend their control beyond where it now reaches and to subdue peoples who now have independent countries of their own.

  Two Chinese military initiatives of the Cold War period underscore this point. China waged a brief war with India in 1962 along the border between the two countries. China’s purpose in fighting was to defend its own view of where that border should properly be drawn, which differed from the Indian view, but not to capture what all parties concerned regarded as Indian territory. Although the Chinese forces gained the upper hand in these skirmishes, China did not press its military advantage, as it could have done, to move its forces deeper into India. Similarly, a milit
ary incursion into the northern part of Vietnam in 1978 was designed to punish the Vietnamese for policies of which China disapproved, in particular their support for a Cambodian government unfriendly to China. After a short period of occupation, the Chinese withdrew their forces.

  Apart from China’s imperial traditions, any government in Beijing is bound to be preoccupied, for the foreseeable future, with what will loom as the country’s foremost challenge: lifting its huge rural population out of poverty. It is far less likely that the officials who rule China get out of bed each morning eager to assert Chinese power in the world and drive the United States out of East Asia than that their most pressing daily concerns have to do with somehow coping with the rising discontent in inland, rural China, the many protests against one or another of the government’s policies that erupt almost daily, and the tens of millions of people who roam the country without permanent employment.

  As long as widespread poverty persists—and even with the continuation of double-digit rates of annual economic growth it will persist for decades—the Chinese government’s principal focus will be inward. The country’s success in combating poverty since the late 1970s has depended, as noted, on the existing international economic institutions and practices, the ones closely identified with the United States. Any effort to overturn the economic and security arrangements in East Asia, let alone globally, will make China poorer, not richer.

  Finally, demography works, in the longer run, against a Chinese assault on the world’s security and economic orders. China’s policy, begun in the Maoist years, of restricting married couples to a single child will produce, by the third decade of the current century, a rapidly aging population. Countries with aging populations are typically not eager for military adventures, if for no other reason than that they lack the surplus youth to fill the ranks of the armed forces.