Much of China is pure bluster

The world is mesmerised by China’s strengths. There is a general consensus that India is being wooed by the US to provide a counter to it. But how serious is the Chinese threat? Not very, as this article suggests. Almost everyone will dismiss it as nonsense because it says China was, and is, a paper tiger.

But here are five features or facts about China that should always be borne in mind. These make China extremely vulnerable. It can be brought to its knees at any time if it crosses limits.

First, China can’t feed itself and must import a lot of its food as well food for its animals that it eats.  Second, China doesn’t have enough energy sources and must always import. Third, it doesn’t have raw materials and must import most of what it needs. Fourth, finance-wise, it remains an also-ran. It’s trying hard to beat the US and getting absolutely nowhere. Fourth, its military is untested and its government doesn’t have the stomach for a proper fight. Fifth, crucially, it doesn’t have common sense and has two and half useless friends but many score enemies.

Consider these one by one. You will see how much of China is pure bluster.

Achilles heels

China’s arable area is just about a quarter of its landmass. It can’t, even if it stood on its head, grow enough food. So what has it done? It has entered into wheat contracts for the next five years which account for over 50 per cent of tradable wheat supplies. This doesn’t mean it plans to go to war; it means the Chinese communist party is mortally scared of food riots.

But guess what. The Chinese don’t eat much wheat. So what is it going to do with all that wheat? This too shows desperation.

Next energy. It has bought up over 90 per cent of global LNG supplies. That, too, is mainly for domestic use. So that’s another vulnerability. The Chinese communist party is scared on this front also. It has tied up a lot of long term energy supply with the Russians. But Russia is itself on the skids and these contracts could result in far less supply than China needs. Fingers crossed.

Then there are all sorts of raw materials. China is cornering their supplies or trying to. Rare earths are its special focus. But the world has woken up to the threat and is gradually increasing its own supplies and sources. That game is over.

It’s also been creating a lot of scary buzz — via global media and ‘academic’ reports — that it can squeeze the world of industrial supplies. But that’s just a lot of hot air. It can do nothing if other countries tell it to take a walk. It’s a different matter that the rest of the world will not do this.

Next, finance. It’s been making pathetic attempts to make its yuan a global currency. But guess who are its main supporters: North Korea, Pakistan and the equally pathetic Russia. Hard not to laugh out loud.

As C Rangarajan and Usha Thorat pointed out a few days ago, making payments in a currency doesn’t mean that a country will use that currency for its reserves. China doesn’t seem to see this. China in fact lacks the most crucial ingredient that results in a reserve currency. Let alone other things like technology, a reserve currency requires the trust of others. Would any country in its senses, even Russia, North Korea and Pakistan trust China?

Then there’s its much vaunted military. Well, the last time China fought a war was in 1979. That was against tiny Vietnam. And it got a bloody nose. Since then it hasn’t dared. China has a lot of military hardware but its soldiers are just pretty boys marching up and down at parades. From all accounts, they don’t want to fight. The Chinese communist party will avoid a war because it doesn’t trust its own soldiers to fight against a determined enemy.

Finally, common sense. China’s current government lacks it entirely. It has now alienated practically all countries, especially its neighbours. Even Australia. What sort of leadership does that?

Pandering to China

So why is everyone pandering to this paper tiger? Why is the US talking about ‘de-risking’? Because American capital is hugely invested in China and that’s what determines American policies towards China.

It suits the hugely more powerful Americans to treat it like a near-equal because otherwise US capital would earn lower returns. That’s all there is to it. Neither side wants a war. But the CCP wants it even less.

What about India, then? Well, China and the US are both supplying us what we need — cheap goods from China and expensive high tech from America.

As the youngsters say “Cool, bro, keep at it”.