The actual numbers involved in US debt are staggering. And, of course, for all the end-of-America triumphalists out there, big debt is everyone's problem, not just America's. Here is an excerpt from the book:

China...is the biggest holder of U.S. obligations, with some $2.5 trillion in "reserves," the lion's share of it in U.S. debt obligations. America owes unimaginably large amounts of money to lenders (such as China), about $20,000 per American household, three-fourths of China's GDP, a fact worth repeating, a fact that makes rapid repayment impossible. 

Proverbs 22:7 instructs us: "The borrower is servant to the lender." But the lesson requires some exegesis to fit smoothly into context. The burden of the U.S. foreign debt may be better explained by the oft-repeated Wall Street wisecrack, which we repeat: When you owe the bank $1 million, the bank has got you; when you owe the bank $1 billion, you've got the bank.

Neither side can walk away; we're locked. The debt binds China especially and other governments that have the money. Selling the debt would send the dollar way down and thereby destroy the value of their dollar holdings and severely damage their economies' massive export-based sectors. Worse yet, sell it for what? Their "reserves" are so huge that there is nothing else they can hold them in, not at that scale. From a Chinese viewpoint, it's exasperating.

I do want to caution that China will not grow at 10% forever. Those predicting a $123 trillion Chinese economy in 30 years are the same geniuses who thought that CDOs could turned lead into gold. But the global economy has rearranged over the past 20 years, and the implications are huge.

The End of Influence is a short book by Stephen Cohen and Brad DeLong that has been been making news in foreign policy circles. It talks about the fall of neo-liberalism and the rise of neo-mercantilism. I'm not going to blog about a book that I haven't read yet, so here are the thoughts of Matthew Yglesias, who has read the book:

What you really get here is a brilliant short tour of the rise and fall of the neoliberal project on an international basis. They offer what will strike some as an almost laughably uncynical account of the motives behind this project, but that makes the documentation of its ultimate failure all the more compelling. As they lay out, it proved to actually be the case that the only route to sustainable economic development anyone could find involved substantial state-directed export-oriented growth. This, in turn, required the United States to play the role of global importer of last resort. 

The up shot of this is that more and more America doesn’t have “the money” in the world system. And not only is the money in the hands of Asian exporters and oil producers, a very large portion of it is in the hands of sovereign wealth funds. In addition, the Panic of 2008 has left governments in the developed world with large ownership stakes in a variety of firms. As a result, we’re going to have to transition to a very different-looking world economic order—one in which self-conscious government planning is going to play a bigger role, one in which US living standards will decline relative to our major trading partners, and in which American cultural and ideological influence is likely to wane.

An excerpt of the book is available here at FP.com.

This has to be one of the biggest historical ironies of all time. 

Somehow we missed this, but back in October, officials from Putin's United Russia Party met behind closed doors with senior officials from the Chinese Communist Party. The goal? To learn from China how to construct a one-party state that combines political control with strong economic growth. 

Communist China transitioned fairly smoothly to a market economy, while Russia lost an entire decade to economic chaos. Since then, China has become the world's supplier of manufactured goods. Russia's economy looks third-worldish in comparison, mostly dependent on resources. 

Russia turning to China for guidance also marks a change in the times. In the 1990s, Russia went to America for advice. But Russia's economic failure during that decade eroded faith in the American system, not to mention the current crisis. In 2010, Russia still doesn't have a plan to solve the country's many problems, only a personality. For a sustainable solution, Russia is now looking to China for inspiration. 

Perhaps Russia is finally proving that Marx was correct. History repeats itself: the first time as a tragedy, and the second time as a farce.

The NYTimes has an excellent piece on Afghanistan's decision to award a huge copper concession to China. The mine at Aynak is the world's largest untapped reserve of copper.

China outbid competitors from other countries for the mine by more than $1 billion. China's efforts to snatch up minerals in Afghanistan mirror its moves to grab oil contracts in Iraq. This is part of China's strategy to aggressively safeguard its long-term access to critical mineral resources. 

It is impossible not to see this as China reaping the benefits from America's military sacrifice, while refusing to contribute to the war effort in either Iraq or Afghanistan. In both countries, America is hamstrung by bad optics-- if it won the copper concession, then it would be liable to charges that it invaded for resources. China has no such concerns.

China is currently at an inflection point of sorts in its rise- it is ruthlessly advancing its own global interests while shirking the traditional responsibilities that come with that level of influence. It wants to be treated as a developing nation while swinging at the weight of a superpower. This is clearly unsustainable.

The NYTimes mostly overlooks the other layer here: the competition for power in Central Asia. Russia, although shackled by its dark legacy in Kabul, is jealous of Chinese maneuvering. India sees Afghanistan as part of its sphere of influence, and as vital to its national security. So do Pakistan and Iran. With so many suitors, and security underwritten by Americans, the Afghans have an abundance of geopolitical options.

People often compare Barack Obama to John F. Kennedy. Peter Beinart, one of my favorite liberal commentators on American national security, instead compares him to Richard Nixon in his new piece in Time.

Richard Nixon had to handle inherited American foreign policy overreach--the war in Vietnam-- just as Barack Obama is inheriting Bush's overreach in the War on Terror. The U.S. couldn't destroy communism everywhere, so Nixon worked to divide it.  Obama, Beinart argues, is attempting a similar strategy to combat Islamic fundamentalism.  Rather than lump together Iran, Hizbullah, Hamas, Al Qaeda, and the Taliban together, as Bush did, Obama wants to divide these groups, cut deals with reconcilable factions, and contain (or fight) the irreconcilables. This was the feat that Nixon accomplished by reaching out to China. Money quote:

“For roughly two decades, the U.S. had been trying to contain "communism" — another ominous, elastic noun that encompassed a multitude of movements and regimes. But Vietnam proved that this was impossible: the U.S. didn't have the money or might to keep communist movements from taking power anywhere across the globe. So Nixon stopped treating all communists the same way. Just as Obama sees Iran as a potential partner because it shares a loathing of al-Qaeda, Nixon saw Communist China as a potential partner because it loathed the U.S.S.R...It's too soon to know whether Obama's game of divide and conquer will work, but by narrowing the post-9/11 struggle, he's gained the diplomatic flexibility to play the U.S.'s adversaries against each other rather than unifying them against us.”

Despite the awkward title, this report on the history and future of the Chinese Navy from the Office of Naval Intelligence is a must read. From the executive summary of A Modern Navy with Chinese Characteristics:

Over the past decade, the People's Republic of China (PRC) has carried out an impressive military modernization effort, providing the People's Liberation Army Navy PLA(N) considerable technological capabilities. Recognizing that it takes more than technology to create a capable navy, China has also actively pursued the modernization of its doctrine, organization, and training with the ultimate goal of developing a professional force. While much work remains, trends in recent years indicate the PLA(N) is beginning to operationalize its modern force, taking on new and more challenging missions.

In response to expanding national interests and revolutionary changes in warfare brought about by long-range precision weaponry, civilian leadership in Beijing began to view the navy as an increasingly critical component of China's national security structure. To support Beijing's objectives regarding Taiwan, to deny an adversary access to the region during times of crisis, and to protect China's vital sea lines of communication, naval power became the key to China's security concerns. In the late 1990s, Beijing embarked on a program to build a modern navy in a relatively short time. Since the late 1990s, the PLA(N) has purchased military hardware from abroad, built increasingly complex naval platforms in China and made substantial upgrades to aging ships.

At 50 plus pages, its a bit of a read, but well worth it. Grab the libation of your choice and enjoy.

Westerners often think of China as a monolithic behemoth. It isn't. Patrick Chovanec has a must-read piece at the Atlantic that separates China into 9 geographic regions useful for nuanced thinking. An excerpt below:

THE FRONTIER
(Inner Mongolia, Ningxia, Gansu, Qinghai, Xinjiang, Tibet)


The land beyond the Great Wall has long captivated the Chinese with its aura of danger and romance. Wild Mongol horsemen, silk-laden caravans, and the inaccessible mysteries of Tibet offer a thrilling contrast to the regulated confines of Chinese life. But what really set this region apart are its vast open spaces. The Frontier comprises over half of China’s territory and just 6 percent of its population—a landmass and population density similar to the continental United States west of the Mississippi. Its desolate plateaus, scorching deserts, and snow-capped mountains resemble Nevada or Wyoming more than Beijing. 
 

China’s frontier with Inner Asia has always had enormous strategic significance. For centuries, its overland caravan routes—the famous Silk Road—provided China’s richest trade link to the outside world, while its marauding nomads posed an ever-present threat to the Middle Kingdom. To secure control, China developed an extensive network of military colonies and prison work camps, not unlike Siberia’s gulag archipelago. The region’s trackless wastes hide many of China’s most sensitive military facilities. But the Frontier’s greatest strategic value lies in its largely untapped natural resources: oil and gas from the Tarim Basin and neighboring Central Asia; rich veins of nickel, copper, and coal; dairy and wind farms on the vast open grasslands; and vineyards that may someday produce world-class wines.



The key to unlocking these resources is the railroad. By bringing in settlers and connecting them with markets back east, the railroad is transforming China’s frontier beyond recognition. But like America’s Manifest Destiny, China’s “Go West” movement has a dark side. The natives of China’s frontier—the Mongols, Tibetans, and Muslim Uighurs—see their land and ways of life being swept away by a flood of Han Chinese immigrants. When their anger boils over into violence, as it did last year in Lhasa and this summer in Urumqi, the response is invariably swift and brutal. China’s West is being won, but what will be lost in the process?