Thread by @Noahpinion

1/Today I wrote about a worrying topic that has been much on my mind of late: China's dominance of its Asian neighbors.

Taiwan, Japan, India, Vietnam, and plenty of others have big reasons to worry.

noahpinion.substack.com/p/invincible-e…

2/For me, as for a lot of people in Asia, the key moment was the Hong Kong protests.

They were absolutely enormous. Almost 2 million Hong Kongers, out of a total population of 7.5 million, turned out in the streets to demand universal suffrage.

3/The protests failed. China simply implemented a draconian new security law, threw prominent activists in jail, and accelerated the process of subjugating Hong Kong.

It was never even a real contest.

noahpinion.substack.com/p/i-will-never…

4/I think other countries in Asia looked at that and got very worried.

They realized that China was not the benign power that it had styled itself as, and that its defenders claimed it was.

pewresearch.org/global/2019/12…

5/Most of China's neighbors have some reason to fear it.

Taiwan, of course, has the biggest reason. Hong Kong sent Taiwan a clear message: "You're next."

foreignaffairs.com/articles/east-…

6/And China has stepped up its invasion threats.

washingtonpost.com/world/asia_pac…

7/A Chinese conquest of Taiwan would, in turn, leave Japan strategically vulnerable, as @Scholars_Stage has argued.

Given China's multiple territorial disputes with Japan, and general animosity toward it, this has got to be worrying.

scholars-stage.blogspot.com/2020/02/losing…

8/Meanwhile, China is steadily encroaching on India's territory, and many Indian soldiers have died in recent border battles with China.

hindustantimes.com/india-news/chi…

9/Vietnam, Indonesia, Malaysia, and the Philippines all have maritime disputes with China too.

cfr.org/global-conflic…

10/China's defenders argue, of course, that the country will be a benign, friendly hegemon.

But people watching Hong Kong, or China's actions in Xinjiang, know by now how unlikely that is.

theatlantic.com/magazine/archi…

11/So the question now becomes: Can China's Asian neighbors resist its power, or are they doomed to be as powerless as the Hong Kong protesters were?

I'm no military analyst, but I suspect that in the long run, economic power will be a decisive factor here.

12/The thing about China's economy -- already the world's biggest manufacturer and exporter, and the biggest overall by some measures -- is that it's essential. It has its own force of gravity, that countries and companies find very very hard to escape.

bloomberg.com/news/articles/…

13/Some believe -- or believed -- that China's state-directed economy would collapse like that of the USSR.

But as of 2020, writers at The Economist (!!) are wondering whether China has figured out a new, successful model of state capitalism.

economist.com/leaders/2020/0…

14/And of course the crushing of COVID has only exacerbated this perception of Chinese strength. Kids are out partying on the streets of Wuhan, even as death tolls soar around the world...

https://twitter.com/Reuters/status/1339568672801771521

15/Even before COVID, China looked special in that it sailed through two huge financial crises without experiencing a recession.

bloomberg.com/opinion/articl…

16/Now, let's not just gaze in awe and fawn over China's accomplishments here.

Their model has real downsides. Its successes come at a cost. For example, its recession-fighting techniques probably reduce productivity.

bloomberg.com/opinion/articl…

17/China isn't magic. It avoids recessions by having state-controlled banks lend a ton of money to construction companies. But construction is an industry without many productivity improvements. And they build a lot of useless stuff, too. Eventually that takes a toll.

18/Here, via @adam_tooze, is a chart showing how return on assets for Chinese companies has been falling.

adamtooze.substack.com/p/chartbook-ne…

19/So it's quite possible that China's system is just not quite as good as that of Taiwan or Japan or Korea, and that it'll never reach their standard of living.

But as Stalin may or may not have said, "quantity has a quality all its own"...

20/China is already about 40% of Asia's entire GDP, and that fraction will probably continue to grow for a while.

Even without reaching rich-world living standards, it's big enough to overmatch ALL of its Asian rivals at once.

21/OK, so how do China's neighbors resist its power?

The obvious solution: Assemble a gang.

22/Build up a trading bloc to balance China's immense market, and make it easier to shift supply chains out.

asia.nikkei.com/Economy/Trade/…

23/Build up military alliances.

apnews.com/article/austra…

24/Do diplomatic stuff like pushing for Taiwan to be included in the WHO.

reuters.com/article/us-hea…

25/But here's the crux of the matter: Even assembled all together, China's Asian neighbors are just too small to overmatch it, the way Germany was overmatched by France + Russia + Britain in World War 1.

They need one more member for the gang. They need America.

26/But will America join that gang?

In past decades we would have, but now we're divided, dysfunctional, and declining.

Look at how Trump pulled out of TPP.

brookings.edu/blog/unpacked/…

27/China is also becoming a football in America's neverending, always-intensifying culture wars.

This is preventing the U.S. from taking leadership in the region. Look at this bullshit Ted Cruz just pulled:

scmp.com/news/china/art…

28/Without American help, China's neighbors might have no choice but to submit to its increasingly frightening hegemony.

I really hope America can wake up in time to make a difference in this struggle.

(end)

noahpinion.substack.com/p/invincible-e…