US President Donald Trump wants to increase military spending, including a costly upgrade to the country's nuclear arsenal to meet the threat from so-called "revisionist" powers, Russia and China. But the move could pose significant risks to the American economy.Image: iStock/curraheeshutter
The US threatened China with nuclear attacks during the 1950s. Image: iStock

Treating China and Russia as “strategic competitors” is nothing new. But labeling them “revisionist” powers to justify US$1.2 trillion to upgrade America’s nuclear arsenal and raise the US defense budget above $700 billion this year is. In so doing, President Donald Trump puts the American economy and security at risk unnecessarily.

At the end of the Second World War, US concern about Soviet influence in Europe led to the “Truman Doctrine” in 1947 which was designed to impede Soviet expansion.

Further, the US and its Western European allies in 1949 formed the North Atlantic Treaty Organization (Nato), a military alliance requiring members to aid each other if they were attacked by an external power — namely the Soviet Union.

To counter Nato, the Soviet Union formed the Warsaw Pact in 1955. West Germany had joined Nato the year before. East Germany was a Soviet satellite. There was no armed conflict between the two opposing alliances, so the period from 1947 to 1991 became known as the “Cold War.”

The Soviet Union collapsed in 1991, creating 15 countries, the largest of which was Russia. Boris Yeltsin, a regional governor from Siberia, defeated Mikhail Gorbachev to become its first president. Yeltsin embraced liberal democracy. Subsequently, then-US president Bill Clinton and British prime minister Tony Blair invited Russia to join the G7, which became the G8.

Russia’s economy collapsed under Yeltsin

But the Russian economy tanked during the Yeltsin government, and chaos ensued. More than 100 political parties made governance impossible. Workers were not paid, there was extreme poverty and poor health care. Yeltsin stepped down and Vladimir Putin was appointed acting president in 1999.

But thanks to an increase in raw-material prices, the Russian economy rebounded and disposable income rose by 160% from 2000 to 2012. Putin’s popularity grew, and he handily won the 2004 and 2012 elections, garnering more than 70% and 60% of the vote respectively.

The booming economy coupled with military strength allowed Russia to forge an independent foreign policy which G7 member-countries viewed as a threat. For example, Putin approved a Crimea referendum in which an overwhelming majority of people voted to return to Russia. But G7 leaders considered that an “annexation” of Crimea and kicked Russia out of the G8 in 2014.

Since then Russia has been accused of causing unrest in Ukraine and perhaps of planning to invade its smaller Eastern European neighbors, earning it increasingly harsh US sanctions. It did not matter that scholars like Chicago University scholar John J. Mearsheimer argued that Russia should not be blamed for the Ukrainian problem, suggesting it was the consequence of Nato reneging on a promise not to expand the country’s “backyard.”

China became the ideal “enemy” because it was Asian, communist and capable of challenging US global hegemony. Its economy grew more than 30-fold between 1980 and 2017, from US$400 billion to $12.8 trillion, which, in turn, helped pay for a stronger military.

Treating China and Russia as threats has turned into a self-fulfilling prophecy. To counter what they considered a US threat, the two countries have hastened weapons development

Treating China and Russia as threats has turned into a self-fulfilling prophecy. To counter what they considered a US threat, the two countries have hastened weapons development.

Last year China revealed that it was upgrading intercontinental ballistic missiles capable of carrying multiple nuclear warheads, building aircraft carriers, hyper-sonic glider missiles, fifth-generation jet fighters, submarines, surface warships and electromagnetic rail guns.

Russia is equally if not more vigorous in developing new weapons platforms to counter the US/allies. Like China, it is rapidly producing new generations of jet fighters, ICBMs, and other arms.

What’s more, the China/Russia threat rhetoric was based on questionable assumptions.

Former defense analyst and now Trump advisor Michael Pillsbury theorized in his book, The One Hundred Year Marathon, that China is using “deception” to supplant US dominance. His assumption is based on Go, the Chinese chess-like game that uses “deceptive steps” to surround an enemy. Why Go players rely on deception was never explained.

The speculation that building a strong military to supplant US dominance can be applied to any country, not just to China and Russia. Indeed, European and Japanese imperialists modernized their military primarily for conquest. American military might was used to impose its values on the rest of the world.

Russian Television (RT), claims that US think tanks are actually lobbyists propagandizing the interests of Nato, the US government, and the military-industrial complex. RT revealed this month that the Atlantic Council was funded by Nato, the US State Department, and major defense contractors such as Raytheon, Boeing, and McDonnell Douglas.

US defense spending may backfire

Promoting and protecting the aerospace and defense industries (which account for more than 12% of manufacturing) might enhance US economic prospects, but the strategy may also harm the country.

The US public debt to GDP exceeds 100%, and the additional US$1.2 trillion to upgrade the nuclear arsenal, plus Trump’s huge tax cuts will only push the country’s debt-to-GDP ratio higher. What’s more, the current economic bonanza has benefited mostly the rich; the middle and working classes are still struggling. According to the IMF and the CIA’s World Factbook, the average US consumer owes $1.13 on every $1 earned and has experienced only marginal real wage growth.

Since private consumption accounts for 70% of GDP, it is difficult to see how a substantial increase in defense spending could benefit the US economy.

Added to the problem of lower consumption the US must address a crumbling infrastructure, growing poverty, and underfunded education and healthcare. Trump says the country requires $1.5 trillion to repair its roads, bridges and other infrastructures. The World Bank estimates that more than 15% or almost 50 million of the US population is living below the poverty line. Poverty is growing because employment growth is largely in the low-paying service sectors.

Trade disputes threaten the global economy

Protectionism harms everyone. The American Solar Industries Association says the 30% tariff on Chinese-made solar panels could put up to 40,000 jobs at risk. What’s more, China has retaliated by imposing anti-dumping measures against US feed grains. Tit-for-tat trade disputes risk causing a global economic slowdown in the US, China and the world.

Most of the world’s countries, including staunch US allies, do not view China and Russia as threats. The Australian prime minister and his foreign minister say China and Russia have never posed a threat to their country. The Philippines and Vietnam prefer to negotiate with China to settle territorial disputes, agreeing on a code of conduct on the disputed South China Sea. Japan and India are sending foreign ministers to China this year to improve relations.

The US anti-China crowd’s crusade to brand China an imperial power out to dominate Latin America and Africa is a futile exercise. There no evidence of Chinese neocolonialism. On the contrary, Latin American and African countries credit Chinese investment and trade as instrumental for their economic well-being.

Sri Lankan President Marthripala Sirisena was a vocal critic of Chinese investment during Mahinda Rajapaksa’s presidency. Once elected president, Sirisena turned to a Chinese company to develop and manage the Hambantota port.

Europe has positive view of China initiatives

The UK, France, the Netherlands and other European countries are increasingly looking to China for economic reasons. French President Macron, British Prime Minister Theresa May and Willem-Alexander, King of the Netherlands, have expressed interest in participating in China’s Belt and Road Initiative.

Donald Trump, like his predecessors, might have discovered that balancing the interests of the few and those of the country is easier said than done. Secretary of State Rex Tillerson invited Chinese State Councillor Yang Jiechi to visit the US presumably to calm Chinese fears about the National Security Strategy, which calls for a huge increase in US military spending.

The US realizes the dire consequences of a military or trade war with China and military conflict with Russia, prompting Trump and Tillerson to declare that the US-China relationship is the most important in the world and that America will adhere to the “One China” policy. In short, both sides will likely maintain their present partner-competitor posture.

Ken Moak

Ken Moak taught economic theory, public policy and globalization at university level for 33 years. He co-authored a book titled China's Economic Rise and Its Global Impact in 2015. His second book, Developed Nations and the Economic Impact of Globalization, was published by Palgrave McMillan Springer.

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