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11/27/2008

Global Trends 2025: China and Japan

Following are the thoughts on China and Japan from the latest assessment of the National Intelligence Council, “Global Trends 2025.” 

--- 

Few countries are poised to have more impact on the world over the next 15-20 years than China. If current trends persist, by 2025 China will have the world’s second largest economy and will be a leading military power. It could also be the largest importer of natural resources and an even greater polluter than it is now. 

U.S. security and economic interests could face new challenges if China becomes a peer competitor that is militarily strong as well as economically dynamic and energy hungry. 

The pace of China’s economic growth almost certainly will slow, or even recede, even with additional reforms to address mounting social pressures arising from growing income disparities, a fraying social safety net, poor business regulation, hunger for foreign energy, enduring corruption, and environmental devastation. Any of these problems might be soluble in isolation, but the country could be hit by a ‘perfect storm’ if many of them demand attention at the same time. Even if the Chinese Government can manage to address these issues, it will not have the ability to assure high levels of economic performance. Most of China’s economic growth will continue to be domestically driven, but key sectors rely on foreign markets, resources, and technology as well as globalized production networks. As a result, China’s economic health will be affected by that of other economies – particularly the United States and the EU. In addressing these challenges, Chinese leaders must balance the openness necessary to sustain economic growth – essential to public tolerance for the Communist Party’s monopoly of political power – against the restrictions necessary to protect that monopoly. Facing so many social and economic changes, the Communist Party and its position are likely to undergo further transformations. Indeed, Communist Party leaders themselves talk openly about the need to find new ways to retain public acceptance of the Party’s dominant role. So far, however, these efforts do not appear to include opening the system to free elections and a free press. Moreover, barring the “perfect storm” described above, we do not foresee social pressures forcing real democracy in China by 2025. That said, the country could be moving toward greater political pluralism and more accountable governance. 

Chinese leaders could, however, continue managing tensions by achieving significant growth without jeopardizing the Party’s political monopoly, as they have for the past three decades. Although a protracted slump could pose a serious political threat, the regime would be tempted to deflect public criticism by blaming China’s woes on foreign interference, stoking the more virulent and xenophobic forms of Chinese nationalism. 

Historically, people who become accustomed to rising living standards react angrily when their expectations are no longer met, and few people have had grounds for such high expectations as do the Chinese. 

China’s international standing is based partly on foreigners’ calculations that it is “the country of the future.” If foreigners treat the country less deferentially, nationalistic Chinese could respond angrily. 

--- 

[Re: Japan and future relations with the United States and China.] 

On the foreign front, Japan’s policies will be influenced most by the policies of China and the United States, where four scenarios are possible. 

In the first scenario, a China that continues its current economic growth pattern will be increasingly important to Japan’s economic growth, and Tokyo will work to maintain good political relations and increase market access for Japanese goods. Tokyo may seek a free trade agreement with Beijing well before 2025. At the same time, China’s military power and influence in the region will be of increasing concern to Japanese policymakers. Their likely response will be to draw closer to the United States, increase their missile defense and antisubmarine warfare capabilities, seek to develop regional allies such as South Korea, and push for greater development of international multilateral organizations in East Asia, including an East Asian Summit. 

In a second scenario, China’s economic growth falters or its policies become openly hostile toward countries in the region. In response, Tokyo would likely move to assert its influence, in part by seeking to rally democratic states in East Asia, and in part by continuing to develop its own national power through advanced military hardware. Tokyo would assume strong support from Washington in this circumstance and would move to shape political and economic forums in the region to isolate or limit Chinese influence. This would cause states in the region to make a difficult choice between their continued unease with Japanese military strength and a China that has the potential to dominate nearly all nations near its borders. As a result, Japan might find itself dealing with an ad-hoc nonaligned movement of East Asian states seeking to avoid being entrapped by either Tokyo or Beijing. 

In a third scenario, should the United States’ security commitment to Japan weaken or be perceived by Tokyo as weakening, Japan may decide to move closer to Beijing on regional issues and ultimately consider security arrangements that give China a de facto role in maintaining stability in ocean areas near Japan. Tokyo is highly unlikely to respond to a loss of the U.S. security umbrella by developing a nuclear weapons program, short of clearly aggressive intent by China toward Japan. 

A fourth scenario would see the United States and China move significantly toward political and security cooperation in the region, leading to U.S. accommodation of a Chinese military presence in the region and a corresponding realignment or drawdown of U.S. forces there. In this case, Tokyo almost certainly would follow the prevailing trend and move closer to Beijing to be included in regional security and political arrangements. Similarly, others in the region, including South Korea, Taiwan, and ASEAN members likely would follow such a U.S. lead, putting further pressure on Tokyo to align its policies with those of the other actors in the region. 

Source: dni.gov/nic
 
Hot Spots returns next week.
 
Brian Trumbore


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-11/27/2008-      
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Hot Spots

11/27/2008

Global Trends 2025: China and Japan

Following are the thoughts on China and Japan from the latest assessment of the National Intelligence Council, “Global Trends 2025.” 

--- 

Few countries are poised to have more impact on the world over the next 15-20 years than China. If current trends persist, by 2025 China will have the world’s second largest economy and will be a leading military power. It could also be the largest importer of natural resources and an even greater polluter than it is now. 

U.S. security and economic interests could face new challenges if China becomes a peer competitor that is militarily strong as well as economically dynamic and energy hungry. 

The pace of China’s economic growth almost certainly will slow, or even recede, even with additional reforms to address mounting social pressures arising from growing income disparities, a fraying social safety net, poor business regulation, hunger for foreign energy, enduring corruption, and environmental devastation. Any of these problems might be soluble in isolation, but the country could be hit by a ‘perfect storm’ if many of them demand attention at the same time. Even if the Chinese Government can manage to address these issues, it will not have the ability to assure high levels of economic performance. Most of China’s economic growth will continue to be domestically driven, but key sectors rely on foreign markets, resources, and technology as well as globalized production networks. As a result, China’s economic health will be affected by that of other economies – particularly the United States and the EU. In addressing these challenges, Chinese leaders must balance the openness necessary to sustain economic growth – essential to public tolerance for the Communist Party’s monopoly of political power – against the restrictions necessary to protect that monopoly. Facing so many social and economic changes, the Communist Party and its position are likely to undergo further transformations. Indeed, Communist Party leaders themselves talk openly about the need to find new ways to retain public acceptance of the Party’s dominant role. So far, however, these efforts do not appear to include opening the system to free elections and a free press. Moreover, barring the “perfect storm” described above, we do not foresee social pressures forcing real democracy in China by 2025. That said, the country could be moving toward greater political pluralism and more accountable governance. 

Chinese leaders could, however, continue managing tensions by achieving significant growth without jeopardizing the Party’s political monopoly, as they have for the past three decades. Although a protracted slump could pose a serious political threat, the regime would be tempted to deflect public criticism by blaming China’s woes on foreign interference, stoking the more virulent and xenophobic forms of Chinese nationalism. 

Historically, people who become accustomed to rising living standards react angrily when their expectations are no longer met, and few people have had grounds for such high expectations as do the Chinese. 

China’s international standing is based partly on foreigners’ calculations that it is “the country of the future.” If foreigners treat the country less deferentially, nationalistic Chinese could respond angrily. 

--- 

[Re: Japan and future relations with the United States and China.] 

On the foreign front, Japan’s policies will be influenced most by the policies of China and the United States, where four scenarios are possible. 

In the first scenario, a China that continues its current economic growth pattern will be increasingly important to Japan’s economic growth, and Tokyo will work to maintain good political relations and increase market access for Japanese goods. Tokyo may seek a free trade agreement with Beijing well before 2025. At the same time, China’s military power and influence in the region will be of increasing concern to Japanese policymakers. Their likely response will be to draw closer to the United States, increase their missile defense and antisubmarine warfare capabilities, seek to develop regional allies such as South Korea, and push for greater development of international multilateral organizations in East Asia, including an East Asian Summit. 

In a second scenario, China’s economic growth falters or its policies become openly hostile toward countries in the region. In response, Tokyo would likely move to assert its influence, in part by seeking to rally democratic states in East Asia, and in part by continuing to develop its own national power through advanced military hardware. Tokyo would assume strong support from Washington in this circumstance and would move to shape political and economic forums in the region to isolate or limit Chinese influence. This would cause states in the region to make a difficult choice between their continued unease with Japanese military strength and a China that has the potential to dominate nearly all nations near its borders. As a result, Japan might find itself dealing with an ad-hoc nonaligned movement of East Asian states seeking to avoid being entrapped by either Tokyo or Beijing. 

In a third scenario, should the United States’ security commitment to Japan weaken or be perceived by Tokyo as weakening, Japan may decide to move closer to Beijing on regional issues and ultimately consider security arrangements that give China a de facto role in maintaining stability in ocean areas near Japan. Tokyo is highly unlikely to respond to a loss of the U.S. security umbrella by developing a nuclear weapons program, short of clearly aggressive intent by China toward Japan. 

A fourth scenario would see the United States and China move significantly toward political and security cooperation in the region, leading to U.S. accommodation of a Chinese military presence in the region and a corresponding realignment or drawdown of U.S. forces there. In this case, Tokyo almost certainly would follow the prevailing trend and move closer to Beijing to be included in regional security and political arrangements. Similarly, others in the region, including South Korea, Taiwan, and ASEAN members likely would follow such a U.S. lead, putting further pressure on Tokyo to align its policies with those of the other actors in the region. 

Source: dni.gov/nic
 
Hot Spots returns next week.
 
Brian Trumbore