2014-03-05

China Ramps Up Military Spending; Move Will Strengthen Anti-China Alliance

In The Logic of Strategy: Yuan Devaluation and the Road to Trade War, I look at the economic angle and Edward Luttwak's book, The Rise of China and the Logic of Strategy. One of his points was that a major military buildup by China is alarming to its neighbors and sending them into the arms of the United States, to the point where they are prodding the U.S. to play a role in the region.

This latest news means there will be no easing of tensions.

China's Xi ramps up military spending in face of worried region
The government said it would increase the defense budget by 12.2 percent this year to 808.23 billion yuan ($131.57 billion), as China seeks to develop more high-tech weapons and to beef up coastal and air defenses.

Will the United States eventually decide that the way to slow Chinese military spending is to slow the Chinese economy? As I mentioned in the prior post, there are growing economic arguments against free trade. Trade deficit nations such as the U.S. also benefit in the short-run from trade restrictions because it means the domestic economy must supply more goods and services. The odds are certainly above zero that a politician will see a way to boost the economy and appeal to nationalism with one policy.

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