China/Russia: Mutual Gratification

You ain't gotta like me
You just mad
Cause I tell it how it is
And you tell it how it might be
--P.Diddy

So Drudge reports something of interest here:

China, Russia Will Hold First War Games
Dec 13, 11:27 AM (ET)
By JOE McDONALD

(BEIJING (AP) - China and Russia will hold their first joint military exercise next year, the Chinese government said Monday, as President Hu Jintao called for an expansion of the rapidly growing alliance between the former Cold War rivals.

The announcement came during a visit to Beijing by Russian Defense Minister Sergei Ivanov, who was expected to discuss expanding the Kremlin's multibillion-dollar annual arms sales to China.

The exercises are to take place on Chinese territory, the official China News Service said. But that report and other government statements didn't say when they would take place or what forces would be involved.

"We want ... to promote the development of the two countries' strategic collaborative relationship in order to safeguard and promote regional and world peace," CNS quoted Hu as telling Ivanov.

...Interesting because as The Tiger ("Oohh, joo like ah tiger, baby"-Scarface) reports that the Mark Helprin has his panties in a bunch about China, etc...

In the CIA's reasonable analysis, China's is the world's second largest economy,
with a GDP, expressed in purchasing power parity (PPP), of $6.5 trillion. The
resultant $5,000 per capita PPP GDP, given the risks of China's transition to a
market economy and the concomitant instabilities to be avoided, leaves less room
at the margin for military expenditure than if stability were not in question,
and China in 2003 devoted only 3.5% of GDP to defense. This moderation is
simultaneously an effort to preserve social peace and a realistic view of the
effective pace of military reform and technological transformation. Nonetheless,
in 2003 at least $60 billion went to defense, thrice the expenditure of 10 years
before.

That sum, while less than a fifth of American outlays other than the costs of
the campaigns in Afghanistan and Iraq, does not reflect adjustment for PPP,
which, though not as powerful a multiple as in the civilian sector (due to the
nature of military goods, and procurement abroad) should boost equivalent
Chinese military spending to at least $100 billion. Imagine then if China, as it
easily could, were to double its GDP in the next eight or nine years, and,
taking advantage of a parallel increase in gains per capita, double the defense share of GDP. It would then have (PPP) defense outlays roughly equivalent to ours.

As it easily could? Seriously? Did ya check out the Chinese currency problem? The superhuge inflationary stress on the yuan is causing them to ramp up the interest rates, and that will cool their economy. ...but I said it best at Ben's..

Much of the speculation regarding China's ascent rests on assumption that 'past performance signals future performance'. Just because China has demonstrated over the last while that they can go 18 years at 9% growth (government figures, of course) and not have a recession does not mean it will continue. They are still relatively small in terms of USD GDP. They will have to continue their pace for a long time before they can approach the US.

Also, their supremacy is challenged by their own military philosophy. They don't believe in the 'individual', and so they don't push their air force training. They think that there is a good possibility that one pilot with his hands on the controls, would attempt to take out the government if he wished. Just one Falun Gong member, I suppose. As a result, they are investing in missile technology, rather than their air force.

I think this means on the "land sea air" comparison, China doesn't even count in the air. As for naval supremecy? We'll see when they finally get into the aircraft carrier game.

Like I said though, this is a very long term game, and most financial models simply breakdown after 5 years....and I doubt that the US is going to revert to just a 'counterinsurgency' force, especially when their conventional military is in the process of expanding.

Anyways, we could go on forever talking about just how long the PPP is going to stay on because as time goes on there will be pressure to devalue the yuan, and then we'll talk about how much it can buy in USD....or the Euro, for that matter. The way things trend today, may not trend the same in ten years.... Right now, China's a minor league player with potential....but they could get hurt, make bad decisions, have another Tianemen (sp?), invade Taiwan, have a nuclear meltdown via NoKo....or, a suffer a complete financial meltdown when India takes up the slack and starts competing as a low cost producer.